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EX-32.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 906 - Star Gold Corp.ex32-2.htm
EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AS ADOPTED PURSUANT TO SECTION 906 - Star Gold Corp.ex32-1.htm
EX-31.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 302 - Star Gold Corp.ex31-2.htm
EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AS ADOPTED PURSUANT TO SECTION 302 - Star Gold Corp.ex31-1.htm
 

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 10-K

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended April 30, 2020

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____ to _____

 

Commission File Number 000-52711

 

STAR GOLD CORP.
(Exact name of small business issuer as specified in its charter)

 

NEVADA 27-0348508
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
105 N. 4th Street, Suite 300  
   
Coeurd’ Alene, Idaho 83814
(Address of principal executive office) (Postal Code)
   

(208) 664-5066
(Issuer’s telephone number)

 

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT: Common Stock, $0.001 par value
   

Indicate by check mark if the registrant is a well-known seasoned issued, as defined in Rule 405 of the Securities Act:

Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:

Yes o No x

 

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post filed). Yes x No o

 

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of III of this Form 10-K or any amendment to the Form 10-K. x

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o      Accelerated Filer o      Non-Accelerated Filer o      Smaller Reporting Company x

Emerging Growth Company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

The Company had $Nil in operating revenue during the year.

 

The aggregate market value of the Common Stock held by non-affiliates (as affiliates are defined in Rule 12b-2 of the Exchange Act) of the registrant, computed by reference to the average of the high and low sale price on October 31, 2019 was $1,768,819.

 

As of July 27, 2020 there were 78,210,841 shares of registrant’s common stock, $0.01 par value, issued and outstanding.

Page 1 of 54

 

STAR GOLD CORP.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED APRIL 30, 2020
TABLE OF CONTENTS

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING FINANCIAL STATEMENTS 3
     
PART I 4
     
  ITEM 1.- BUSINESS 4
  ITEM 1A. - RISK FACTORS 6
  ITEM 1B. - UNRESOLVED STAFF COMMENTS 10
  ITEM 2. - PROPERTIES 10
  ITEM 3. - LEGAL PROCEEDINGS 26
  ITEM 4. - MINE SAFETY DISCLOSURES 26
     
PART II 26
     
  ITEM 5. - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 26
  ITEM 6. - SELECTED FINANCIAL DATA 28
  ITEM 7. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28
  ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 31
  ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 32
  ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 47
  ITEM 9A. - CONTROLS AND PROCEDURES 47
  ITEM 9B. - OTHER INFORMATION 48
     
PART III 48
     
  ITEM 10. - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 48
  ITEM 11. - EXECUTIVE COMPENSATION 50
  ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 51
  ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 52
  ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES 52
     
PART IV 53
     
  ITEM 15. - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 53
     
  SIGNATURES 54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 2 of 54

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

 

Any statement that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as “believes”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”, or “intends”, or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

 

Risks related to the Company’s properties being in the exploration stage;
Risks related to the mineral operations being subject to government regulation;
Risks related to the Company’s ability to obtain additional capital to develop the Company’s resources, if any;
Risks related to mineral exploration and development activities;
Risks related to mineral estimates;
Risks related to the Company’s insurance coverage for operating risks;
Risks related to the fluctuation of prices for precious and base metals, such as gold, silver and copper;
Risks related to the competitive industry of mineral exploration;
Risks related to the title and rights in the Company’s mineral properties;
Risks related to the possible dilution of the Company’s common stock from additional financing activities;
Risks related to potential conflicts of interest with the Company’s management;
Risks related to the Company’s shares of common stock;

 

This list is not exhaustive of the factors that may affect the Company’s forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of Business” and “Management’s Discussion and Analysis” of this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Star Gold Corp. disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law. The Company advises readers to carefully review the reports and documents filed from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

As used in this Annual Report, the terms “we,” “us,” “our,” “Star Gold,” and the “Company”, mean Star Gold Corp., unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.

 

Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s financial statements and the integral notes (“Notes”) thereto for the fiscal year ending April 30, 2020. The following statements may be forward-looking in nature and actual results may differ materially.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 3 of 54

 

PART I

 

ITEM 1.BUSINESS.

 

Corporate Background

 

The Company was originally incorporated on December 8, 2006, under the laws of the State of Nevada as Elan Development, Inc. On April 25, 2008, the name of the company was changed to Star Gold Corp. Star Gold Corp. is a pre-development stage company engaged in the acquisition and exploration of precious metal deposit properties and advancing them toward production. The Company is engaged in the business of exploring, evaluating and acquiring mineral prospects with the potential for economic deposits of precious and base metals.

 

Star Gold Corp. currently leases with an option to acquire certain unpatented mining claims located in the State of Nevada which in part make up what we refer to as the “Longstreet Property” (or the “Longstreet Project”). The Longstreet Property in its entirety comprises 125 mineral claims: 75 original optioned claims, of which 70 are unpatented staked claims and five claims leased from local ranchers, pursuant to the “Clifford Lease”; as well as 50 claims subsequently staked by Star Gold. The Longstreet Property covers a total area of approximately 2,500 acres (1,012 ha). The Longstreet Project is at an intermediate stage of exploration.

 

The Company has no patents, licenses, franchises or concessions which are considered by the Company to be of importance. The business is not of a seasonal nature. Because minerals are traded in the open market, the Company has little to no control over the competitive conditions in the industry.

 

Overview of Mineral Exploration and Current Operations

 

Star Gold Corp. is an exploration stage mineral company with no producing mines. Mineral exploration is essentially a research activity that does not produce a product. The Company acquires properties which it believes have potential to host economic concentrations of minerals, particularly gold and silver. These acquisitions have and may take the form of unpatented mining claims on federal land, or leasing claims, or private property owned by others. An unpatented mining claim is an interest, that can be acquired, in the mineral rights on open lands of the federally owned public domain. Claims are staked in accordance with the Mining Law of 1872, recorded with the federal government pursuant to laws and regulations established by the Bureau of Land Management. The Company intends to remain in the business of exploring for mining properties that have the potential to produce gold, silver, base metals and other commodities.

 

The Company will perform basic geological work to identify specific drill targets on the properties, and then collect subsurface samples by drilling to confirm the presence of mineralization (the presence of economic minerals in a specific area or geological formation). The Company may enter joint venture agreements with other companies to fund further exploration and/or development work. It is the Company’s plan to focus on assembling a high-quality group of mid-stage mineral (primarily gold and silver) exploration prospects, using the experience and contacts of the management group. By such prospects, the Company means properties that have been previously identified by third parties, (including prior owners and/or exploration companies), as mineral prospects with potential for economic mineralization. Often these properties have been sampled, mapped and sometimes drilled, usually with indefinite results. Accordingly, such acquired projects will have either prior exploration history or will have strong similarity to a recognized geologic ore deposit model. Geographic emphasis will be placed on the western United States.

 

The geologic potential and ore deposit models have been defined and specific drill targets identified the Company’s sole remaining property. The Company’s property evaluation process involves using basic geologic fieldwork to perform an initial evaluation of a property. If the evaluation is positive, the Company seeks to acquire, either by staking unpatented mining claims on open public domain, or by leasing the property from the owner of private property or the owner of unpatented claims. Once acquired, the Company then typically makes a more detailed evaluation of the property. This detailed evaluation involves expenditures for exploration work which may include rock and soil sampling, geologic mapping, geophysics, trenching, drilling or other means to determine if economic mineralization is present on a property.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 4 of 54

 

Portions of the Company’s mining properties are owned by third parties and leased to Star Gold as outlined in the following table:

 

Property name   Longstreet
Third parties   Great Basin Resources, Inc. and Clifford
Number of claims   142 (1)
Acres (approx.)   2,500
Agreements/Royalties    
  Royalties   3% Net Smelter Royalty (“NSR”)
  Annual advance royalty payment   $12,000
       

 

(1)Great Basin Resources, Inc. (“Great Basin”) took assignment from MinQuest, Inc., of the 142 claims which are leased to the Company under the Longstreet Agreement (which was also assigned to Great Basin) (Note 4 of the financial statements contained in Item 8) and Clifford owns 5 claims (also Note 4) which are managed by the Company.

 

(2)On August 12, 2019, the Company and Great Basin Resources, Inc. (“Great Basin”) agreed to amend the Longstreet Agreement (Note 4) to eliminate the required property expenditure structure and to implement new consideration for the transfer of the Property pursuant to that agreement (the “2019 Amendment”). The Amendment eliminated the remainder of the required property expenditures set forth in the Longstreet Agreement, as amended.

 

Compliance with Government Regulations

 

Continuing to acquire and explore mineral properties in the State of Nevada will require the Company to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the State of Nevada and the United States Federal agencies.

 

United States

 

Mining in the State of Nevada is subject to federal, state and local law. Three types of laws are of particular importance to the Company’s U.S. mineral properties: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment.

 

Land Ownership and Mining Rights.

 

On Federal Lands, mining rights are governed by the General Mining Law of 1872 (General Mining Law) as amended, 30 U.S.C. §§ 21-161 (various sections), which allows the location of mining claims on certain Federal Lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. A valid mining claim provides the holder with the right to conduct mining operations for the removal of locatable minerals, subject to compliance with the General Mining Law and Nevada state law governing the staking and registration of mining claims, as well as compliance with various federal, state and local operating and environmental laws, regulations and ordinances. As the owner or lessee of the unpatented mining claims, the Company has the right to conduct mining operations on the lands subject to the prior procurement of required operating permits and approvals, compliance with the terms and conditions of any applicable mining lease, and compliance with applicable federal, state, and local laws, regulations and ordinances.

 

Mining Operations

 

The exploration of mining properties and development and operation of mines is governed by both federal and state laws.

 

The State of Nevada likewise requires various permits and approvals before mining operations can begin, although the state and federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. The Nevada Department of Environmental Protection, which is referred to as the NDEP, is the state agency that administers the reclamation permits, mine permits and related closure plans on the Nevada property. Local jurisdictions (such as Eureka County) may also impose permitting requirements (such as conditional use permits or zoning approvals).

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 5 of 54

 

Environmental Law

 

The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of the Company’s operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to the Company’s proposed operations may be encountered. The Company is currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Unless and until a mineral resource is proved, it is unlikely Star Gold Corp. operations will move beyond the exploration stage. If in the future the Company decides to proceed beyond exploration, there will be numerous notifications, permit applications, and other decisions to be addressed at that time.

 

Competition

 

Star Gold Corp. competes with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties and for equipment and labor related to exploration and development of mineral properties. Many of the mineral resource exploration and development companies with whom the Company competes have greater financial and technical resources. Accordingly, competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact Star Gold Corp.’s ability to finance further exploration and to achieve the financing necessary for the Company to develop its mineral properties.

 

The Company provides no assurance it will be able to compete in any of its business areas effectively with current or future competitors or that the competitive pressures faced by the Company will not have a material adverse effect on the business, financial condition and operating results.

 

Office and Other Facilities

 

Star Gold Corp. currently maintains its administrative offices at 1875 N. Lakeview Drive, Suite 200 Coeur d’Alene, ID 83814. The telephone number is (208) 664-5066. Star Gold Corp. does not currently own title to any real property.

 

Employees

 

The Company has no employees as of the date of this Annual Report on Form 10-K. Star Gold Corp. conducts business largely through independent contractor agreements with consultants.

 

Research and Development Expenditures

 

The Company has not incurred any research expenditures since incorporation.

 

Reports to Security Holders

 

The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the SEC. Electronically filed reports may be accessed at www.sec.gov

 

ITEM 1A.RISK FACTORS.

 

The following factors, among others, could cause the actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-K or presented elsewhere from time to time.

 

Estimates of mineralized material are forward-looking statements inherently subject to error. Although resource estimates require a high degree of assurance in the underlying data when the estimates are made, unforeseen events and uncontrollable factors can have significant adverse or positive impacts on the estimates. Actual results may inherently differ from estimates. The unforeseen and uncontrollable factors include but are not limited to: geologic uncertainties including inherent sample variability, metal price fluctuations, variations in mining and processing parameters, and adverse changes in environmental or mining laws and regulations. The timing and effects of variances from estimated values cannot be accurately predicted.

 

Failure to successfully address the risks and uncertainties described below would have a material adverse effect on the Company’s business, financial condition and/or results of operations, and the trading price of the Company’s common stock may decline and investors may lose all or part of their investment. Star Gold Corp. cannot assure readers that the Company will successfully address these risks or other unknown risks that may affect its business.

 

 

 

 

Page 6 of 54

 

Risks Related to the Company

 

The Company has a limited operating history on which to base an evaluation of the business and prospects

 

The Company has not derived any revenue from exploration of its properties. The Company’s operating history has been limited to the acquisition and exploration of mineral properties. Such history does not provide a meaningful basis for an evaluation of its prospects for success if future determinations are made that mineral reserves exist and to commence construction and operation of a mine. Other than through conventional and typical exploration methods and procedures, the Company has no additional means to evaluate the likelihood of whether its mineral property contains any mineral reserve or, if they do, that it will be operated successfully. The Company anticipates that it will continue to incur operating costs without realizing any operating revenues during the period it explores existing and any future acquired properties.

 

During the fiscal year ended April 30, 2020, the Company had a net loss of $454,850 in connection with the maintenance and exploration of its mineral properties and the operation of the exploration business. The Company therefore expects to continue to incur significant losses into the foreseeable future. The Company recognizes that if it is unable to generate significant revenues from mining operations and dispositions of its properties, the Company will not be able to earn profits or continue operations. At this early stage of operations, the Company expects to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the development stage of their business. The Company cannot ensure it will be successful in addressing these risks and uncertainties and the failure to do so could have a materially adverse effect on its financial condition. There is no history upon which to base any assumption as to the likelihood that the Company will prove successful and the Company can provide investors no assurance that we will generate any operating revenue or ever achieve profitable operations.

 

Investors’ interests in the Company will be diluted and investors may suffer dilution in their net book value per share if the Company issues additional employee/director/consultant options or if the Company sells additional shares to finance its operation.

 

The Company has not generated any operational revenues from the exploration of any properties. In order to further expand the Company’s business and meet its objectives, including but not limited to, obtaining funds to further explore the Company’s existing properties or to finance any acquisition activity, growth and/or additional exploration programs, should those opportunities present themselves, and depending on the outcome of its exploration programs, additional capital funding may need to be obtained through the sale and issuance of additional equity, debt or derivative securities. The Company may also, in the future, grant to some or all of its directors, officers, insiders and key employees/consultants, options or other rights to acquire common or preferred shares in the Company as non-cash incentives. The issuance of any additional equity securities could cause then-existing stockholders to experience dilution of their ownership interests.

 

Should the Company issue additional shares to finance its business activities, investors’ interests in the Company may be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. As of the date of the filing of this report there are outstanding 29,039,849 common share purchase warrants exercisable into 29,039,849 shares of common stock, and 7,145,000 options granted that are exercisable into 7,145,000 shares of common stock. If these are exercised or converted, these would represent approximately 31.9% of the Company’s then issued and outstanding shares. If all the warrants and options are exercised and the underlying shares issued, such issuance would cause a reduction in the proportionate ownership and voting power of all other stockholders. The dilution may result in a decline in the market price of the Company’s shares.

 

Conflicts of interest

 

Certain of the Company’s officers and directors may be or become associated with other businesses, including natural resource companies that acquire interests in properties. Such associations may give rise to conflicts of interests from time to time. The Company’s directors are required by law to act honestly and in good faith with a view to the Company’s best interests and to disclose any interest, which they may have in any of the Company’s projects or opportunities. In general, if a conflict of interest arises at a meeting of the board of directors, any director in a conflict will disclose his interest and abstain from voting on such matter or, if he does vote, his vote will not be counted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Dependence on Key Management Personnel

 

The Company’s ability to continue exploration and development activities and to develop a competitive edge in the marketplace depends, in large part, on its ability to attract and maintain qualified key management personnel. Competition for such personnel is intense, and there can be no assurance that the Company will be able to attract and retain such personnel. The Company’s development now, and in the future, will depend on the effort of key executives such as Lindsay Gorrill, Kelly Stopher, and David Segelov. The loss of any of these key people could have a material adverse effect on the Company’s business. In addition, the Company has expanded the provisions of its stock option plan so the Company can provide incentive for the key personnel.

 

Failure to obtain additional financing

 

Unless and until the Company can generate revenues from operations, the Company’s main potential continuing source of funds will be additional debt and/or equity financings which may not be sufficient to sustain operations. There is no guarantee that the Company, if needed, will be able to raise additional funds through debt and/or equity financing or that any such financing will be able to be obtained on terms beneficial to the Company. If Star Gold Corp. is unsuccessful in raising additional funds, the Company will not be able to develop its properties and may be unable to continue as a going concern.

 

Company Directors and Officers own 26,857,167 shares of the Company’s outstanding common stock (34.7%) which may cause corporate decisions influenced by the Directors and Officers to appear to be inconsistent with the interests of other stockholders.

 

Company directors and/or officers as a group control a combined 34.7% of the issued and outstanding shares of the Company’s common stock. Accordingly, while none of the current directors and/or officers (individually or collectively) can control, as shareholders, who is elected to the board of directors, since these individuals are not simply passive investors but are also active members of Company management, their interests as directors and/or officers and shareholders may, at times, be adverse to those interests of merely passive investors. Where those conflicts exist, stockholders will be dependent upon management exercising their fiduciary duties as members of the Board of Directors and/or as an officer. Also, due to their stock ownership position, members of the Company’s management team will have: (i) the ability to substantially influence the outcome of many (if not most) corporate actions requiring stockholder approval, including amendments to the Company’s Articles of Incorporation; and (ii) the ability to substantially influence corporate combinations or similar transactions that might benefit minority stockholders which may not be supported by management to the detriment of smaller and/or passive investors.

 

There is substantial risk that no commercially viable mineral deposits will be found due to speculative nature of mineral exploration,

 

Exploration for commercially viable mineral deposits is a speculative venture involving substantial risk. Star Gold cannot provide investors with assurance that any of its mining claim contains commercially viable mineral deposits. The exploration program that the Company will conduct on its claim may not result in the discovery of commercially viable mineral deposits. Problems such as unusual and unexpected rock formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, the Company may be unable to complete its business plan and investors could lose their entire investment.

 

Due to the inherent dangers involved in mineral exploration, there is a risk that the Company may incur liability or damages as it conducts its business.

 

The search for minerals involves numerous hazards. As a result, Star Gold Corp. may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which the Company cannot insure or against which we may elect not to insure. Star Gold Corp. currently has no such insurance nor does the Company expect to acquire such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed the Company’s asset value and cause management to liquidate all the Company’s assets resulting in the loss of a stockholder’s entire investment.

 

Exploration efforts may be adversely affected by metals price volatility causing the Company to cease exploration efforts.

 

The Company has no earnings from operations. However, the success of any exploration effort is derived from the price of metals which are affected by numerous factors including: 1) expectations for inflation; 2) investor speculative activities: 3) relative exchange rate of the U.S. dollar to other currencies; 4) global and regional demand and production; 5) global and regional political and economic conditions; and 6) production costs in major producing regions. These factors are beyond the Company’s control and are impossible for the Company to accurately predict.

 

There is no guarantee that current favorable prices for metals and other commodities will be sustained. If the market prices for these commodities fall the Company may suspend or cease exploration efforts.

 

 

 

 

 

 

 

 

 

 

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Governmental regulation and environmental risks

 

The Company’s business is subject to extensive federal, state and local laws and regulations governing mining exploration, development, production, labor standards, occupational health, waste disposal, use of toxic substances, environmental regulations, mine safety and other matters. New legislation and regulations may be adopted at any time that results in additional operating expense, capital expenditures or restrictions and delays in the exploration, mining, production or development of its properties

 

Permitting and Studies

 

The Company is subject to governmental requirements related to permitting and preparation of various studies related to the impact of mining projects on the flora, fauna, the environment and physical areas in and around the area proposed to be mined. There are no guarantees that any studies, the Company is required to prepare, will be favorable to the Company’s intent to mine any project it develops, nor are there any guarantees that the Company will receive all, or any, of the permits needed for it to mine any project it develops.

 

Internal control, fraud detection and financial reporting

 

Should the Company fail to maintain an effective system of internal controls, it may not be able to detect fraud or report financial results accurately, which could harm the business and could subject the Company to regulatory scrutiny.

 

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), the Company is required to perform an evaluation of the effectiveness of its internal controls over financial reporting. The Company is not required to have an independent registered public accounting firm test and evaluate the design and operating effectiveness of such internal controls and publicly attest to such evaluation. Continuing compliance with the requirements of Section 404 is expected to be expensive and time-consuming. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or cause the Company to fail to meet its reporting obligations.

 

Risks Associated with the Company’s Common Stock

 

Star Gold Corp. stock is a penny stock; stockholders will be more limited in their ability to sell their stock.

 

The shares of Star Gold Corp. common stock constitute “penny stocks” under the Exchange Act. The shares will remain classified as a penny stock for the foreseeable future. The classification as a penny stock makes it more difficult for a broker/dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker/dealer engaged by the purchaser for the purpose of selling his or her shares will be subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather than having to comply with these rules, some broker-dealers will refuse to attempt to sell a penny stock.

 

The “penny stock” rules adopted by the SEC under the Exchange Act subjects the sale of the shares of the Company’s common stock to certain regulations which impose sales practice requirements on broker/dealers. For example, brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities.

 

Legal remedies, which may be available to an investor in “penny stocks,” are as follows:

 

a)if “penny stock” is sold to an investor in violation of his or her rights listed above, or other federal or states securities laws, the investor may be able to cancel his or her purchase and get his or her money back.

 

b)if the stocks are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages

 

c)if the investor has signed an arbitration agreement, however, he or she may have to pursue his or her claims through arbitration.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 9 of 54

 

If the person purchasing the securities is someone other than an accredited investor or an established customer of the broker/dealer, the broker/dealer must also approve the potential customer’s account by obtaining information concerning the customer’s financial situation, investment experience and investment objectives. The broker/dealer must also decide whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the SEC’s rules may limit the number of potential purchasers of the shares of Star Gold Corp. common stock.

 

The Company’s stock price has been volatile and stockholder investment in the Company’s common stock could suffer a decline in value.

 

The Company’s common stock is quoted via the OTC Markets. The market price of the Company’s common stock may fluctuate significantly in response to a number of factors, some of which are beyond the Company’s control. These factors include price fluctuations of precious metals, government regulations, disputes regarding mining claims, broad stock market fluctuations and economic conditions in the United States.

 

Although the Company’s common stock is currently quoted via the OTC Markets, there are no assurances any public market for the Company’s common stock will continue. There are also no assurances as to the depth or liquidity of any such market or the prices at which holders may be able to sell the shares. An investment in these shares may be totally illiquid and investors may not be able to liquidate their investment readily or at all when they need or desire to sell.

 

The Company does not intend to pay any dividends on shares of common stock in the near future.

 

The Company does not currently anticipate declaring and paying dividends to its stockholders in the near future, and any future decision as to the payment of dividends will be at the discretion of the board of directors and will depend upon the Company’s earnings, financial position, capital requirements, plans for expansion and such other factors as the board of directors deems relevant. It is the Company’s intention to apply net earnings, if any, in the foreseeable future to finance the growth and development of the business.

 

ITEM 1B.UNRESOLVED STAFF COMMENTS.

 

None

 

ITEM 2.PROPERTIES.

 

The Company headquarters are located at 1875 N. Lakeview Drive, Suite 200, Coeur d’Alene, Idaho, 83814. The Company believes this office space and facilities are sufficient to meet the Company’s present needs, and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to the Company.

 

The Company currently does not own any real property. The Company owns a vehicle for business use in Nevada and other personal property used in the conduct of the Company’s business at its headquarters and at its various holdings in Nevada.

 

The Company is an exploration stage company with no proven or measured mineral reserves. There is no assurance that a commercially viable mineral deposit exists at the Longstreet Property. Further exploration will be required before any final determination as to the economic or legal feasibility may be made as to the Company’s property.

 

THE LONGSTREET PROPERTY

 

In January of 2010 Star Gold signed an agreement (the “Longstreet Agreement”) to lease with an option to acquire from MinQuest, Inc. (“MinQuest”), 60 unpatented mining claims totaling approximately 490 hectares. The Company completed its first phase of drilling in 2011. On July 9, 2010, the Company and MinQuest entered into an amended agreement to add an additional 10 claims and expanded the total to 70 unpatented claims. In addition, Star Gold agreed to reimburse MinQuest for 5 claims leased from a third party, Roy Clifford. The Longstreet Property comprises 125 mineral claims (75 original optioned claims, of which 70 are unpatented staked claims and five claims acquired from local ranchers (Roy Clifford et al)), as well as 50 claims subsequently staked by Star Gold, covering a total area of approximately 2,500 acres (1,012 ha) (Figure 6-1). The claims are located within Sections 9-17, 20, and 21 of T6N, R47E, MDB&M (Mount Diablo Base Line & Meridian), Nye County. The entire 125 claims (the 5 claims covered by the Clifford Lease are not subject to the Longstreet Agreement) comprise the Longstreet Property.

 

On July 25, 2017, MinQuest assigned, conveyed and transferred to Great Basin Resources, Inc. (“Great Basin”) all of the rights, title and interest of Minquest in and to the Longstreet Property and the Longstreet Agreement.

 

Of the 50 claims staked by Star Gold, 38 are adjacent to the eastern boundary of the property and were staked with the objective of providing a site for potential leach pads planned for future development of the Main Zone (the “Leach Pad Claims”). The remaining 12 claims staked by Star Gold lie along a corridor leading from the main Longstreet property to the Leach Pad Claims.

 

 

 

 

 

 

 

 

Page 10 of 54

 

A list of claims, ownership and Bureau of Land Management (BLM) serial numbers is shown below:

 

Claim Name Registered
Owner
NMC
Number
Area
(Acres)
Date Located Good Until Date
 
Original Longstreet Property Claims
Longstreet 1A Great Basin Resources, Inc. 799562 20 22-Jan-1999 September 1, 2020
Longstreet 2A Great Basin Resources, Inc. 799563 20 22-Jan-1999 September 1, 2020
Longstreet 3A Great Basin Resources, Inc. 799564 20 22-Jan-1999 September 1, 2020
Longstreet 6A Great Basin Resources, Inc. 799565 20 22-Jan-1999 September 1, 2020
Longstreet 7A Great Basin Resources, Inc. 799566 20 22-Jan-1999 September 1, 2020
Longstreet 8A Great Basin Resources, Inc. 799567 20 22-Jan-1999 September 1, 2020
Longstreet 9A Great Basin Resources, Inc. 799568 20 22-Jan-1999 September 1, 2020
Longstreet 16A Great Basin Resources, Inc. 799569 20 22-Jan-1999 September 1, 2020
Longstreet 13 Great Basin Resources, Inc. 799570 20 22-Jan-1999 September 1, 2020
Longstreet 32 Great Basin Resources, Inc. 799571 20 22-Jan-1999 September 1, 2020
Longstreet 34 Great Basin Resources, Inc. 799572 20 22-Jan-1999 September 1, 2020
Longstreet 4A Great Basin Resources, Inc. 836168 20 2-Feb-2002 September 1, 2020
Longstreet 5A Great Basin Resources, Inc. 836169 20 2-Feb-2002 September 1, 2020
Longstreet 8 Great Basin Resources, Inc. 836170 20 2-Feb-2002 September 1, 2020
Longstreet 10 Great Basin Resources, Inc. 836171 20 2-Feb-2002 September 1, 2020
Longstreet 10A Great Basin Resources, Inc. 836172 20 2-Feb-2002 September 1, 2020
Longstreet 28 Great Basin Resources, Inc. 836173 20 2-Feb-2002 September 1, 2020
Longstreet 30 Great Basin Resources, Inc. 836174 20 2-Feb-2002 September 1, 2020
Longstreet 36 Great Basin Resources, Inc. 836175 20 2-Feb-2002 September 1, 2020
Longstreet 37 Great Basin Resources, Inc. 836176 20 2-Feb-2002 September 1, 2020
Longstreet 39 Great Basin Resources, Inc. 836177 20 2-Feb-2002 September 1, 2020
Longstreet 41 Great Basin Resources, Inc. 836178 20 2-Feb-2002 September 1, 2020
Longstreet 43 Great Basin Resources, Inc. 836179 20 2-Feb-2002 September 1, 2020
Longstreet 45 Great Basin Resources, Inc. 836180 20 2-Feb-2002 September 1, 2020
Longstreet 47 Great Basin Resources, Inc. 836181 20 2-Feb-2002 September 1, 2020
Longstreet 49 Great Basin Resources, Inc. 836182 20 2-Feb-2002 September 1, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 11 of 54

 

Claim Name Registered
Owner
NMC
Number
Area
(Acres)
Date Located Good Until Date
Longstreet 101 Great Basin Resources, Inc. 836183 20 2-Feb-2002 September 1, 2020
Longstreet 102 Great Basin Resources, Inc. 836184 20 2-Feb-2002 September 1, 2020
Longstreet 103 Great Basin Resources, Inc. 836185 20 2-Feb-2002 September 1, 2020
Longstreet 104 Great Basin Resources, Inc. 836186 20 2-Feb-2002 September 1, 2020
Longstreet 105 Great Basin Resources, Inc. 836187 20 2-Feb-2002 September 1, 2020
Longstreet 106 Great Basin Resources, Inc. 836188 20 2-Feb-2002 September 1, 2020
Longstreet 107 Great Basin Resources, Inc. 836189 20 2-Feb-2002 September 1, 2020
Longstreet 108 Great Basin Resources, Inc. 836190 20 2-Feb-2002 September 1, 2020
Longstreet 12 Great Basin Resources, Inc. 843867 20 25-Feb-2003 September 1, 2020
Longstreet 14 Great Basin Resources, Inc. 843868 20 25-Feb-2003 September 1, 2020
Longstreet 16 Great Basin Resources, Inc. 843869 20 25-Feb-2003 September 1, 2020
Longstreet 18 Great Basin Resources, Inc. 843870 20 25-Feb-2003 September 1, 2020
Longstreet 20 Great Basin Resources, Inc. 843871 20 25-Feb-2003 September 1, 2020
Longstreet 26 Great Basin Resources, Inc. 843872 20 25-Feb-2003 September 1, 2020
Longstreet 42 Great Basin Resources, Inc. 843873 20 25-Feb-2003 September 1, 2020
Longstreet 44 Great Basin Resources, Inc. 843874 20 25-Feb-2003 September 1, 2020
Longstreet 46 Great Basin Resources, Inc. 843875 20 25-Feb-2003 September 1, 2020
Longstreet 48 Great Basin Resources, Inc. 843876 20 25-Feb-2003 September 1, 2020
Longstreet 50 Great Basin Resources, Inc. 843877 20 25-Feb-2003 September 1, 2020
Longstreet 40 Great Basin Resources, Inc. 851568 20 25-Feb-2003 September 1, 2020
Longstreet 118 Great Basin Resources, Inc. 851569 20 29-Sep-2003 September 1, 2020
Longstreet 119 Great Basin Resources, Inc. 851570 20 29-Sep-2003 September 1, 2020
Longstreet 120 Great Basin Resources, Inc. 851571 20 29-Sep-2003 September 1, 2020
Longstreet 121 Great Basin Resources, Inc. 851572 20 29-Sep-2003 September 1, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 12 of 54

 

Claim Name Registered
Owner
NMC
Number
Area
(Acres)
Date Located Good Until Date
Longstreet 122 Great Basin Resources, Inc. 851573 20 29-Sep-2003 September 1, 2020
Longstreet 123 Great Basin Resources, Inc. 851574 20 29-Sep-2003 September 1, 2020
Longstreet 124 Great Basin Resources, Inc. 851575 20 29-Sep-2003 September 1, 2020
Longstreet 109 Great Basin Resources, Inc. 855021 20 25-Feb-2003 September 1, 2020
Longstreet 110 Great Basin Resources, Inc. 855022 20 25-Feb-2003 September 1, 2020
Longstreet 111 Great Basin Resources, Inc. 855023 20 25-Feb-2003 September 1, 2020
Longstreet 112 Great Basin Resources, Inc. 855024 20 25-Feb-2003 September 1, 2020
Longstreet 113 Great Basin Resources, Inc. 855025 20 25-Feb-2003 September 1, 2020
Longstreet 114 Great Basin Resources, Inc. 855026 20 25-Feb-2003 September 1, 2020
Longstreet 115 Great Basin Resources, Inc. 855027 20 25-Feb-2003 September 1, 2020
Longstreet 56 Great Basin Resources, Inc. 1025831 20 9-Jul-2010 September 1, 2020
Longstreet 57 Great Basin Resources, Inc. 1025832 20 9-Jul-2010 September 1, 2020
Longstreet 58 Great Basin Resources, Inc. 1025833 20 9-Jul-2010 September 1, 2020
Longstreet 59 Great Basin Resources, Inc. 1025834 20 9-Jul-2010 September 1, 2020
Longstreet 60 Great Basin Resources, Inc. 1025835 20 9-Jul-2010 September 1, 2020
Longstreet 61 Great Basin Resources, Inc. 1025836 20 9-Jul-2010 September 1, 2020
Longstreet 62 Great Basin Resources, Inc. 1025837 20 9-Jul-2010 September 1, 2020
Longstreet 63 Great Basin Resources, Inc. 1025838 20 9-Jul-2010 September 1, 2020
Longstreet 64 Great Basin Resources, Inc. 1025839 20 9-Jul-2010 September 1, 2020
Longstreet 65 Great Basin Resources, Inc. 1025840 20 9-Jul-2010 September 1, 2020
Longstreet 11 Roy Clifford et al 164002 20 14-Jun-1980 September 1, 2020
Longstreet 12 Roy Clifford et al 164003 20 14-Jun-1980 September 1, 2020
Longstreet 14 Roy Clifford et al 164005 20 14-Jun-1980 September 1, 2020
Longstreet 15 Roy Clifford et al 164006 20 14-Jun-1980 September 1, 2020
Morning Star Roy Clifford et al 96719 20 1-Jul-1957 September 1, 2020
Subtotal Original 75   1,500    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 13 of 54

 

Claim Name Registered
Owner
NMC
Number
Area
(Acres)
Date Located Good Until Date
           
Leach Pad Claims
Longstreet 200 Great Basin Resources, Inc. 1073640 20 22-Jun-2012 September 1, 2020
Longstreet 201 Great Basin Resources, Inc. 1073641 20 22-Jun-2012 September 1, 2020
Longstreet 202 Great Basin Resources, Inc. 1073642 20 22-Jun-2012 September 1, 2020
Longstreet 203 Great Basin Resources, Inc. 1073643 20 22-Jun-2012 September 1, 2020
Longstreet 204 Great Basin Resources, Inc. 1073644 20 22-Jun-2012 September 1, 2020
Longstreet 205 Great Basin Resources, Inc. 1073645 20 22-Jun-2012 September 1, 2020
Longstreet 206 Great Basin Resources, Inc. 1073646 20 22-Jun-2012 September 1, 2020
Longstreet 207 Great Basin Resources, Inc. 1073647 20 22-Jun-2012 September 1, 2020
Longstreet 208 Great Basin Resources, Inc. 1073648 20 22-Jun-2012 September 1, 2020
Longstreet 209 Great Basin Resources, Inc. 1073649 20 22-Jun-2012 September 1, 2020
Longstreet 210 Great Basin Resources, Inc. 1073650 20 22-Jun-2012 September 1, 2020
Longstreet 211 Great Basin Resources, Inc. 1073651 20 22-Jun-2012 September 1, 2020
Longstreet 212 Great Basin Resources, Inc. 1073652 20 22-Jun-2012 September 1, 2020
Longstreet 213 Great Basin Resources, Inc. 1073653 20 22-Jun-2012 September 1, 2020
Longstreet 214 Great Basin Resources, Inc. 1073654 20 22-Jun-2012 September 1, 2020
Longstreet 215 Great Basin Resources, Inc. 1073655 20 22-Jun-2012 September 1, 2020
Longstreet 216 Great Basin Resources, Inc. 1073656 20 22-Jun-2012 September 1, 2020
Longstreet 217 Great Basin Resources, Inc. 1073657 20 22-Jun-2012 September 1, 2020
Longstreet 218 Great Basin Resources, Inc. 1073658 20 22-Jun-2012 September 1, 2020
Longstreet 219 Great Basin Resources, Inc. 1073659 20 22-Jun-2012 September 1, 2020
Longstreet 220 Great Basin Resources, Inc. 1073660 20 22-Jun-2012 September 1, 2020
Longstreet 210 Great Basin Resources, Inc. 1073661 20 22-Jun-2012 September 1, 2020
Longstreet 220 Great Basin Resources, Inc. 1073662 20 22-Jun-2012 September 1, 2020
Longstreet 223 Great Basin Resources, Inc. 1073663 20 22-Jun-2012 September 1, 2020
Longstreet 224 Great Basin Resources, Inc. 1073664 20 22-Jun-2012 September 1, 2020
Longstreet 225 Great Basin Resources, Inc. 1073665 20 22-Jun-2012 September 1, 2020
Longstreet 226 Great Basin Resources, Inc. 1073666 20 22-Jun-2012 September 1, 2020
Longstreet 227 Great Basin Resources, Inc. 1073667 20 22-Jun-2012 September 1, 2020
Longstreet 228 Great Basin Resources, Inc. 1073668 20 22-Jun-2012 September 1, 2020
Longstreet 229 Great Basin Resources, Inc. 1073669 20 22-Jun-2012 September 1, 2020
Longstreet 230 Great Basin Resources, Inc. 1073670 20 22-Jun-2012 September 1, 2020
Longstreet 231 Great Basin Resources, Inc. 1073671 20 22-Jun-2012 September 1, 2020
Longstreet 232 Great Basin Resources, Inc. 1073672 20 22-Jun-2012 September 1, 2020
Longstreet 233 Great Basin Resources, Inc. 1073673 20 22-Jun-2012 September 1, 2020
Longstreet 234 Great Basin Resources, Inc. 1073674 20 22-Jun-2012 September 1, 2020
Longstreet 235 Great Basin Resources, Inc. 1073675 20 22-Jun-2012 September 1, 2020
Longstreet 236 Great Basin Resources, Inc. 1073676 20 22-Jun-2012 September 1, 2020
Longstreet 237 Great Basin Resources, Inc. 1073677 20 22-Jun-2012 September 1, 2020
Subtotal Leach Pad 38   760    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 14 of 54

 

Claim Name Registered
Owner
NMC
Number
Area
(Acres)
Date Located Good Until Date
           
Corridor Claims
Longstreet 66 Great Basin Resources, Inc. 1080730 20 5-Sept-2012 September 1, 2020
Longstreet 238 Great Basin Resources, Inc. 1080731 20 5-Sept-2012 September 1, 2020
Longstreet 239 Great Basin Resources, Inc. 1080732 20 5-Sept-2012 September 1, 2020
Longstreet 240 Great Basin Resources, Inc. 1080733 20 5-Sept-2012 September 1, 2020
Longstreet 241 Great Basin Resources, Inc. 1080734 20 5-Sept-2012 September 1, 2020
Longstreet 242 Great Basin Resources, Inc. 1080735 20 5-Sept-2012 September 1, 2020
Longstreet 243 Great Basin Resources, Inc. 1080736 20 5-Sept-2012 September 1, 2020
Longstreet 244 Great Basin Resources, Inc. 1080737 20 5-Sept-2012 September 1, 2020
Longstreet 245 Great Basin Resources, Inc. 1080738 20 5-Sept-2012 September 1, 2020
Longstreet 246 Great Basin Resources, Inc. 1080739 20 5-Sept-2012 September 1, 2020
Longstreet 247 Great Basin Resources, Inc. 1080740 20 5-Sept-2012 September 1, 2020
Longstreet 248 Great Basin Resources, Inc. 1080741 20 5-Sept-2012 September 1, 2020
Subtotal Corridor 12   240    
Total 125   2,500    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 15 of 54

 

Star Gold must make annual claim filing fees ($155.00 per claim in 2019) with the Bureau of Land Management (BLM), and Nevada/Nye County claim filing fees of $12.00 per claim plus $10.00 for filing with the Nye County office at Tonopah, NV. The fiscal year ended April 30, 2020 annual claim payments totaled $23,824.

 

On December 4, 2018, the Company amended the Longstreet Agreement to change the due date of certain expenditures required by that agreement (the “2018 Amendment”). The 2018 Amendment extended the due date of the 2019 expenditures from January 16, 2019 to August 31, 2019 and also extended the due date of the 2020 expenditures from January 16, 2020 to August 31, 2020. No other provisions of the Longstreet Agreement, as previously amended, were affected by the 2018 Amendment.

 

On August 12, 2019, the Company and Great Basin agreed to amend the Longstreet Agreement (the “2019 Amendment”) to eliminate the required property expenditure structure and to implement new consideration for the transfer of the Longstreet Property pursuant to that agreement. The 2019 Amendment eliminated the remainder of the required property expenditures. The 2019 Amendment sets forth Great Basin to transfer title of the Longstreet Property to the Company upon the Company:

 

a)Adjusting the exercise price to $0.04 on 435,000 existing options to purchase Company common stock from exercise prices ranging from $0.05 to $0.08 per share;

 

b)issuing an additional 500,000 options to purchase Company common stock at the exercise price of $0.04;

 

c)making a cash payment of $50,000 to Great Basin (paid on August 19, 2019) and

 

d)entering into a consulting agreement with Great Basin with a term of eighteen months.

 

On August 12, 2019, the Company repriced 435,000 existing options to purchase the Company’s common stock to an exercise price of $0.04 and issued an additional 500,000 options to purchase the Company’s common stock at an exercise price of $0.04. The fair value of the re-pricing and issuance of additional stock options was $16,044 which was capitalized as “Mining Interest”.

 

On September 1, 2019, the Company executed a consulting agreement with Great Basin for a term of eighteen (18) months (the (“Consulting Agreement”). Under the Consulting Agreement, the Company will pay Great Basin $7,500 per month for the term of the Consulting Agreement.

 

The Longstreet project is located 48 kilometers southeast of the Round Mountain Mine in Nevada. Longstreet is a Round Mountain style volcanic-hosted gold deposit. The first vein mapping program ever done at Longstreet was completed in October 2002. This work disclosed that gold-bearing veins at Main, as well as 6 other targets in the project area are steeply dipping. Most of the previous drilling was vertical. This indicates high potential to increase continuity, tonnage and grade of the resource. Surface geochemical sampling of veins from all the currently defined targets found gold values up to 18.1 g/t. As at Round Mountain the property contains strong potential for both open pit heap-leachable and high-grade millable ore. No party reading this report should conclude the Longstreet property has economic mineralization due to Longstreet’s proximity to Round Mountain. Comparison to this and other historic or producing mines is strictly informational relative to location and similar geologic characteristics.

 

History: The Longstreet Property was discovered in the early 1900’s but had limited development work until 1929. A 1929 report and maps show development of the “Golden Lion Mine” on two levels spaced 75 meters apart vertically. The report indicates development of 300,000 tons of “vein material” averaging 0.20 oz/ton (6.8 g/t) gold and 8 oz/ton (274 g/t) silver. A mill was constructed, the remnants of which are still on the property. However, the small stopes underground indicate very little mining was done and the operation was abandoned.

 

The property lay idle until 1980 when Keradamex Inc. and E & B Exploration formed a joint venture to explore the property. The venture conducted soil and rock chip geochemical surveys, limited underground sampling and drilled seven angle core holes (one was abandoned) into the Main mine workings area. This drilling revealed the presence of fracture related gold mineralization up to 36 meters thick extending into the hanging wall of the vein structure. In 1982 Minerva Exploration optioned the property and initiated an underground sampling program. In 1983 a joint venture was formed with Geomex Canada Resources Ltd. and Derry, Michener, and Booth were commissioned to assess the property and conducted underground sampling, bulk sampling and metallurgical testing.

 

Historic Drilling Summary
Date  Company  Number of Holes  Total Footage
1980  Keradamex  7  NA
1982-1983  Minerva  -  UG Sampling, no drilling
1984-1997  Naneco  Approx. 500  NA, RC and air track
1987  Cyprus  7  3,000
2002-2005  R.E.M.  30  11,000

 

 

 

 

 

 

 

Page 16 of 54

 

(MAP)

Page 17 of 54

 

In 1982 Minerva Exploration optioned the property and initiated an underground sampling program. In 1983 a joint venture was formed with Geomex Canada Resources Ltd. Derry, Michener, and Booth were commissioned to assess the property and conducted underground sampling, bulk sampling and metallurgical testing.

 

In early 1984 Naneco Resources Ltd., an Alberta company, acquired all of the assets of Minerva and an additional 10 percent interest in the property from Geomex. As operator, Naneco immediately initiated drilling. In 1985, with over 200 RC holes drilled the venture announced encouraging results with anomalous grades of gold and silver throughout its drilling samples.

 

During the next few years Naneco increased its interest from 53 percent to 100 percent, conducted additional metallurgy, economic evaluation and drilling. At least 492 RC holes were drilled, most within the Main resource area. Unable to raise money because of falling gold prices and strapped with high land payments to the claim owners, Naneco relinquished the property in 1998. MinQuest acquired it shortly thereafter. The Cyprus target, which was evaluated by Cyprus Minerals Company in 1987 was acquired by MinQuest in early 2002.

 

The property was optioned to Rare Earth Metals Corp. (REM) in May of 2002. REM later changed its name to Harvest Gold. Mapping and geochemical sampling of the 7 targets shown on the attached map was completed in October 2002. From 2003 through 2005 REM drilled 30 holes into Main totaling 3,350 meters. The drill holes were angled toward the intersection of the two primary sheeted vein sets. Results showed a 20% improvement in average grade over vertical drilling.

 

Following the split of REM into Harvest Gold and VMS Ventures, Inc. Harvest performed no further work at Longstreet after late 2005. The property was finally returned to MinQuest in August 2009. By agreement with Minquest, on January 15, 2010 Star Gold Corp. received an option to acquire the portions of the property covered by the option.

 

Star Gold began drilling in the fall of 2011. A 16-hole program at Main showed new intercepts at depth in the central portion of the deposit. Intercept thicknesses of +0.01 oz./ton gold equivalent values are 65 to 120 feet. Of the 16 holes drilled 8 have +100 feet thicknesses of +0.01 oz./ton gold equivalent and 4 have +200 feet thicknesses of +0.01 oz./ton gold equivalent. Drill hole LS-1101 has 305 feet of +0.01 oz./ton gold equivalent. Gold equivalent values were derived from the following formula: AuEq oz./ton = Au oz./ton + (Ag oz./ton)/60. Drilling results are shown in the table below.

 

Drill samples were sent through a rotating, wet sample splitter attached to the drill to reduce the sample volume and maintain a representative sample. Drill helpers, under the supervision of the project geologist, collected and bagged an ‘A’ and ‘B’ sample on 5-foot intervals. Procedurally, an ‘A’ sample is collected and held by the project geologist for security purposes until it can be delivered to an assay facility. The ‘B’ sample then remains on site as a duplicate or backup sample if needed at a later date. A blank and two known ’standard’ pulps are then submitted randomly spaced with each drill hole. Once assays are available, they are examined for unexpected high or low values. If unexpected high or low values are encountered, the ‘B’ splits may be collected and submitted, or the lab may be requested to re-assay the pulp or reject in question. The ‘check’ samples and ’standard’ are examined to insure they agree with the original or know within accepted limits, usually +/- 10%.

 

ALS Chemex of Reno, Nevada did all sample preparation, including crushing, grinding and preparation of the assay pulps. The samples were never left unattended or unsecured by project geologist, drilling or laboratory staff nor are they handled by officers, directors or associates of Star Gold.

 

Sample preparation involves crushing the entire sample to -10 mesh, splitting, then pulverizing 1,000 grams to 75% passing 75-micron mesh. These pulps are then transferred within the ALS Chemex facility for assay. Both gold and silver assays are done by fire assay with an AA finish. The standard Star Gold-Longstreet submittal to ALS Chemex requests a 30-gram charge for gold fire assay. Assays which exceed 10 g/ton are automatically subjected to a gravimetric finish. Select sample intervals, usually those near intervals assaying significant gold, are chosen by the project geologist for re-assay also.

 

The Longstreet Project is affiliated with a paleo-hot springs system in a caldera associated volcanic setting very similar to the Round Mountain mine. Round Mountain is an open pit, heap-leach mine that has produced over 10 million ounces of gold over a 30-year period with the average grade currently being mined of 0.018 oz./ton gold. Cut-off grades for Round Mountain and several other oxide ore heap leach operations in Nevada range from 0.003 to 0.005 oz./ton gold. Star Gold hopes to develop an open pit, bulk minable, heap leachable gold/silver mine at Longstreet.

 

No party reading this report should conclude the Longstreet property has economic mineralization due to Longstreet’s proximity to any historic or producing mines and any information regarding any such historic or producing mines is strictly informational relative to location and similar geologic characteristics.

 

 

 

 

 

 

 

 

 

Page 18 of 54

 

Regional Geology and Mineralization: The Longstreet Property is located in the Nevada portion of the Basin and Range Province. This geological province is characterized by repeated episodes of compressional deformation in Paleozoic and Mesozoic time followed by extensional deformation and extensive magmatism and volcanism in Cenozoic time. Gold deposits are most often described as being associated with ‘mineralization trends’ that reflect deep crustal structures and magmatism, such as the ‘Walker Lane’ and the ‘Carlin Trend’. The Longstreet Project is in the Monitor Range, adjacent to the northwest trending Walker Lane volcanic-hosted gold trend that includes such world-class deposits as the Comstock and Goldfields mining camps

 

2013 Drill Results Longstreet (≥ 5 feet @ ≥ 0.01 oz./ton gold equivalent) 08/26/13
Hole No. From To Interval True Gold Silver True Gold Silver Au Equiv.
  (feet) (feet) (feet) Width (oz./ton) (oz./ton) Width (m) (g/t) (g/t) (oz./ton)
LS-1301 45 50 5.0 5.0 0.008 0.274 1.5 0.263 9.4 0.012
  150 160 10.0 10.0 0.016 0.058 3.0 0.535 2.0 0.017
  190 215 25.0 25.0 0.009 0.141 7.6 0.300 4.8 0.011
LS-1302 0 40 40.0 36.0 0.015 0.894 11.0 0.516 30.6 0.030
  70 165 95.0 85.5 0.009 0.482 26.1 0.307 16.5 0.017
  205 270 65.0 58.5 0.012 0.444 17.8 0.396 15.2 0.019
LS-1303 85 110 25.0 25.0 0.003 0.935 7.6 0.098 32.0 0.018
  145 150 5.0 5.0 0.009 0.105 1.5 0.292 3.6 0.010
  165 170 5.0 5.0 0.007 0.201 1.5 0.238 6.9 0.010
  185 230 45.0 45.0 0.006 0.374 13.7 0.191 12.8 0.012
  255 300 45.0 45.0 0.004 0.326 13.7 0.148 11.2 0.010
LS-1304 35 50 15.0 15.0 0.004 0.388 4.6 0.130 13.3 0.010
  60 85 25.0 25.0 0.008 0.384 7.6 0.258 13.1 0.014
  130 155 25.0 25.0 0.065 0.467 7.6 2.218 16.0 0.073
LS-1305 15 30 15.0 15.0 0.007 0.184 4.6 0.226 6.3 0.010
  45 145 100.0 100.0 0.009 0.306 30.5 0.305 10.5 0.014
  210 220 10.0 10.0 0.006 0.291 3.0 0.220 10.0 0.011
LS-1306 45 50 5.0 5.0 0.004 0.523 1.5 0.120 17.9 0.012
  205 295 90.0 90.0 0.003 0.521 27.4 0.095 17.9 0.011
LS-1307 120 145 25.0 25 0.007 0.783 7.6 0.236 26.8 0.020
LS-1308 85 90 5.0 5 0.009 0.146 1.5 0.314 5.0 0.012
  180 190 10.0 10.0 0.003 0.444 3.0 0.101 15.2 0.010
  280 340 60.0 60.0 0.003 0.833 18.3 0.104 28.5 0.017
LS-1309 0 10 10.0 10.0 0.015 0.304 3.0 0.509 10.4 0.020
  40 265 225.0 225.0 0.022 0.678 68.6 0.750 23.2 0.033
  330 340 10.0 10.0 0.005 0.492 3.0 0.169 16.9 0.013
LS-1310 0 20 20.0 20 0.010 0.349 6.1 0.342 12.0 0.016
LS-1311 0 30 30.0 30 0.004 0.471 9.1 0.140 16.1 0.012
  50 115 65.0 65 0.010 0.798 19.8 0.351 27.3 0.024
  350 360 10.0 10 0.002 0.581 3.0 0.070 19.9 0.012
LS-1312 45 60 15.0 15.0 0.010 0.091 4.6 0.343 3.1 0.012
  120 125 5.0 5.0 0.005 0.321 1.5 0.172 11.0 0.010
  150 255 105.0 105.0 0.012 1.056 32.0 0.423 36.2 0.030
  290 380 90.0 90.0 0.006 0.494 27.4 0.191 16.9 0.014
LS-1313 0 15 15.0 15.0 0.009 0.288 4.6 0.308 9.9 0.014
  50 105 55.0 55.0 0.019 0.735 16.8 0.641 25.2 0.031
  120 130 10.0 10.0 0.004 0.720 3.0 0.138 24.7 0.016
  160 200 40.0 40.0 0.038 0.810 12.2 1.300 27.7 0.051
  245 250 5.0 5.0 0.013 0.277 1.5 0.439 9.5 0.017
LS-1314 0 65 65.0 65.0 0.017 0.787 19.8 0.572 27.0 0.030
  245 340 95.0 95.0 0.004 1.424 29.0 0.134 48.8 0.028
  355 380 25.0 25.0 0.003 0.423 7.6 0.102 14.5 0.010
LS-1315 0 15 15.0 15.0 0.005 0.318 4.6 0.176 10.9 0.010
  50 55 5.0 5.0 0.012 0.520 1.5 0.406 17.8 0.021
  95 100 5.0 5.0 0.003 0.742 1.5 0.093 25.4 0.015
  145 150 5.0 5.0 0.002 1.323 1.5 0.056 45.3 0.024
  205 210 5.0 5.0 0.003 0.689 1.5 0.092 23.6 0.014
LS-1316 0 30 30.0 30 0.014 0.215 9.1 0.482 7.4 0.018
  175 185 10.0 10 0.010 0.254 3.0 0.334 8.7 0.014
  220 225 5.0 5 0.012 0.239 1.5 0.408 8.2 0.016
  240 280 40.0 40 0.019 0.596 12.2 0.651 20.4 0.029
LS-1317 50 55 5.0 5 0.004 0.493 1.5 0.153 16.9 0.013
  95 100 5.0 5 0.003 0.432 1.5 0.096 14.8 0.010
LS-1318 0 15 15.0 15 0.009 0.450 4.6 0.323 15.4 0.017
  25 75 50.0 50 0.005 0.281 15.2 0.186 9.6 0.010
LS-1319 0 20 20.0 20 0.015 0.190 6.1 0.503 6.5 0.018
  175 205 30.0 30 0.032 10.340 9.1 1.087 354.1 0.204
including 180 185 5.0 5 0.166 54.312 1.5 5.690 1860.0 1.071
LS-1320       Hole abandoned at 100 feet. No +0.01 Au Equiv. results
         
Note: Au Equiv. calculation uses Au/Ag ratio of 60/1

Page 19 of 54

 

The Monitor Range is a westward-tilted fault block that has been elevated by normal faults along its eastern front and is typical of the uplifted mountains of the Basin and Range Province. The ranges are topographic highs rising above alluvium-filled valleys generated by Tertiary extensional tectonics. Central Nevada was an area of intense Oligocene – Miocene ash-flow volcanism that created numerous calderas and their outflow products. At least 13 calderas that range in age between 32 and 22 Ma have been mapped or interpreted in the area extending from the Shoshone Mountains eastward to the Monitor Range. The southern Monitor Range consists Mainly of Tertiary age volcanic and hypabyssal rocks related to the eruption of the Big Ten Peak volcano and a nearby unnamed 29 Ma caldera (Kleinhampl and Ziony, 1985) intruding and overlying Paleozoic sedimentary and metamorphic rocks.

 

The Paleozoic rocks are thrust-faulted marine sedimentary rocks comprised of quartzite, argillite and limestone of Cambrian, Ordovician and Silurian age. Minor amounts of Permian marine sediments are also present in the Georges Canyon area.

 

In the southern Monitor Range Tertiary age volcanic rocks comprise more than 90% of the exposed bedrock. These rocks are more than 1 km thick and are predominantly flat lying. Early Oligocene to early Miocene rhyolitic to dacitic ash-flow tuffs, with rhyolitic welded tuff are the thickest and most extensive units. Most of the Tertiary intrusions in the region are rhyolitic, but several small dacitic to andesitic dikes are present in the Georges Canyon area.

 

Mineral deposits in this part of the Basin and Range Province are varied and widespread and some of them have (had) substantial metal production. The producing Round Mountain gold deposit is about 25 miles northwest, and the past-producing Manhattan Mining Camp (gold/silver) is about 20 miles west-northwest of the Longstreet Property.

 

The Round Mountain Mine is a giant among epithermal precious metal deposits hosted by volcanic rocks, and the mineralization is a classic example of low sulphidation epithermal gold mineralization (White and Hedenquist, 1995). Gold deposits were discovered at Round Mountain in 1906 (Shawe, 1982) and by 1959 about 410 thousand ounces (troy ounces) of gold had been produced from placer and narrow vein lode deposits. Current production by open-pit mining methods commenced in 1977. Kinross (2010) reported an annual production for 2010 at 184,554 ounces of AuEq, with over 66 million tons of proven and probable reserves.

 

The oxidized ore is described as a closely spaced set of steeply dipping veins and veinlets following northwest-trending faults and associated joints over broad areas. Significant gold mineralization is not found in northeast-trending faults and fractures. The vein/veinlet system contains quartz, adularia, limonite (oxidized from pyrite), manganese oxide and associated native free gold. Flat veins are similar to the steep veins in character and mineral content, but with more brecciation of the wall rocks. Gold contents also appear to be higher in the flat veins. The adularia in the ore related veins is dated at 25.9 to 26.6 Ma, which is indistinguishable from the age of the enclosing ‘Tuffs of Round Mountain’ welded ash flow tuffs. These tuffs were erupted from the Round Mountain caldera and were deposited within the caldera (Henry, Castor and Elson, 1996).

 

No party reading this report should conclude the Longstreet Property has economic mineralization due to Longstreet’s proximity to any historic or producing mines and any information regarding any such historic or producing mines is strictly informational relative to location and similar geologic characteristics.

 

Hydrothermal alteration associated with the bulk mineable ore is evidenced by silicification and the replacement of magmatic feldspar by hydrothermal feldspar engendered by a potassium-rich hydrothermal fluid (Sander, 1988).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 20 of 54

 

The Manhattan gold / silver camp is located approximately 20 miles west-northwest of the Longstreet Project and is an example of Tertiary epithermal mineralization superimposed on Paleozoic sedimentary rocks. Gold / silver deposits were discovered at Manhattan in 1905 (Shawe, 1982) and by 1959 about 10,500 kg of gold and 4,400 kg of silver had been produced from placer and lode deposits. The lode deposits in the Manhattan district are of a variety of types, although they occur together in a coherent belt about 1 km wide, which follows the south side of the Manhattan caldera for about 10 km. The most productive deposits formed in strongly faulted argillite and quartzite of the Cambrian age Gold Hill Formation. The generally north-trending zones of mineralized fractures are stockworks containing quartz, adularia, pyrite (oxidized to limonite) and native gold similar to the sheeted zones at Round Mountain. The silver production recorded for this camp is related to electrum and various silver-bearing sulphosalts.

 

The Clipper Mine located approximately 5 miles southwest of the Longstreet Mine near Murphy Camp was discovered in 1903 and was worked intermittently until 1943. The mine was initially developed during World War I and included a 175-foot shaft and a 370-foot adit. Recorded production is about $12,000 (in 1951dollars) from mineralization having a gold to silver ratio of 1:1 and assaying from $34-124 per ton (1951 dollars). Host rocks are welded rhyolite ash-flow tuffs similar to the Longstreet mine. The Little Joe Claim located 6 miles south-southwest of the Longstreet Mine was developed by a 75-foot inclined shaft. Gold-bearing veins in ‘rhyolitic tuff’ were mined but production details are lacking.

 

At an un-named mine, located 1.5 miles west of the mouth of Georges Canyon irregular gold / silver quartz veins and veinlets containing minor pyrite were exploited from a 25-foot inclined shaft. The vein system occurs in possible Paleozoic light gray chert and silicified argillite along a fault. No production details are available.

 

Mineralization on the Last Chance claims located 11 miles west-northwest of the Longstreet Project and southwest of Big Ten Peak was discovered in the 1920s. Mineralization consists of argentiferous galena, minor sphalerite and pyrite occurring in irregular pipes and chimneys generally at the intersection of cross faults within a northwest-trending shear zone in pre-Tertiary rocks. This property was developed by a 30 m two compartment shaft and a 61 m adit. Production in the late 1920s is recorded as 13.6 tons containing an average of 720 g/t Ag, 21% Pb and 2% Zn. A further 18.1 tons produced in 1938 contained 240-275 g/t Ag and 8% Pb.

 

Metallurgy: 2013 Metallurgical Test Program

 

The 2013 metallurgical test work program was conducted by McLelland Laboratories under the direction of a QP metallurgical engineer contracted by Star Gold. The program included bottle roll tests, column tests and comminution tests and mineralogical examination.

 

Section Sample Assays

 

A total of 65 underground adit samples weighing 816 pounds (370kg) and three surface samples weighing 904 pounds (410kg) were collected for metallurgical testing. Each of these samples were crushed to 100% -2 inches (50mm) and assayed for gold and silver in duplicate. Assay results are listed in Table 8.2. Samples were combined to generate surface and underground composites, as well as a blended master composite. Triplicate direct assays were conducted on each composite. Standard deviations between triplicate head assays were high, particularly for the surface master composite. The agreement between the triplicate splits was not good, however the average of the triplicate assays is close to what was expected, based on the section assays. It was noted that the quality control samples all checked out as well, which indicates that the assays are good and the gold occurrence in the potentially economic mineralization is just a little “spotty”.

 

.1 Gold Head Assays and Head Grade Comparisons

Longstreet Composites
   SMC, g/mt  UMC, g/mt  BMC, g/mt
Determination  Au  Ag  Au  Ag  Au  Ag
Direct Assay, Init.  0.21  17  0.70  67  0.57  40
Direct Assay, Dup.  0.67  34  0.82  63  0.66  41
Direct Assay, Trip.  0.37  21  1.09  53  0.77  50
Average  0.42  24  0.87  61  0.67  44
Std. Deviation  0.23  9  0.20  7  0.10  6

 

A total of twenty pieces of rock from both underground and surface were selected for comminution testing. The remainder of the samples were separately stage crushed to 100% -2-inches (-50mm). Each of the underground and surface samples were then blended to form a master composite representing both the underground and surface samples. The blended sample was then split to generate a third master composite. Samples were collected for bottle roll tests. All composites were then further crushed to 80% -3/4 inch (19mm), blended, then split into 75kg lots for column testing. Selection sample assay results and detailed blending procedures are provided in the Appendix to this report.

 

Bottle Roll Testing

 

A bottle roll test was conducted on each of the three composites at an 80% -10 Mesh (1.7mm) feed size to determine lime requirements for column leach testing. Gold and silver recoveries were similar for all three composites. Gold recoveries ranged from 80.6% to 81.9% and silver recoveries ranged from 17.5% to 20.0%.

 

Additional bottle roll tests, at a cyanide concentration of 1.0g NaCN/L were conducted on the blended master composite at feed sizes of 100% -2 inches (50mm), 80% -3/4 inches (19mm) and 80% -1/4 inch (6.3mm) to determine sensitivity to feed size. The blended master composite showed a moderate sensitivity to feed size with respect to gold and silver recovery. Recovery was 18.4% higher for gold, and 13.9% higher for silver, at a feed size of 80% -1/16 inches (1.7mm) than at a feed size of 100% -2 inches (50mm).

Page 21 of 54

 

Silver recovery, for each bottle roll test conducted, was low. In order to investigate the cause of the low silver recovery, three additional bottle roll tests were conducted on the blended master composite to determine response to increased cyanide concentration (5.0g NaCN/L) at typical heap leach (80% -3/4 inches, 80% -1/4 inches) and milled (80% -200 Mesh (75µm)) feed sizes.

 

Results showed that increasing the cyanide concentration did not significantly increase silver recovery at heap leach feed sizes, however, silver recovery increased substantially when feed was finely ground. Silver recovery was 60.6% from the bottle roll test conducted on 80% -200 mesh material. Gold recovery was also moderately higher when fine grinding was employed. Mineralogical analysis of head and tail samples of the blended master composite confirm that the primary reason for low silver recovery is due to the very fine-grained nature of the silver sulfide, which when exposed, is readily leachable. The silver leach rate at 200 mesh was extremely fast. Silver recovery was complete within the first two hours, which suggests that the silver mineralization is very fast leaching once liberated. In contrast, silver-bearing jarosites tend to be refractory and are usually unaffected by leaching regardless of the grind size.

 

Summary results from bottle roll testing are given in Table 8.3. Detailed bottle roll test data including leach rate figures, are provided in the attached spreadsheet.

 

2 Bottle Roll Test Results, 2013

 
Table 1. - Summary Metallurgical Results, Bottle Roll Tests, Longstreet Mine Composites
      NaCN  Au  gAu/mt ore  Ag  gAg/mt ore  Reagent Requirements
   Feed  Conc.  Recovery,        Calculated  Head  Recovery,        Calculated  Head  kg/mt ore
Composite  Size  g/L  %  Extracted  Tail  Head  Assay  %  Extracted  Tail  Head  Assay  NaCN Cons. Lime Added
SMC  80%-1.7mm  1.0  80.6  0.25  0.06  0.31  0.42  20.0  5  20  25  24  0.08  2.1
UMC  80%-1.7mm  1.0  81.9  0.68  0.15  0.83  0.87  18.9  10  43  53  61  0.13  3.4
                                           
BMC  100%-50mm  1.0  62.9  0.44  0.26  0.70  0.67  3.6  2  54  56  44  0.07  1.3
BMC  80%-19mm  1.0  67.1  0.51  0.25  0.76  0.67  12.8  5  34  39  44  0.07  2.1
BMC  80%-6.3mm  1.0  77.9  0.53  0.15  0.68  0.67  13.6  6  38  44  44  <0.07  3.0
BMC  80%-1.7mm  1.0  81.3  0.52  0.12  0.64  0.67  17.5  7  33  40  44  0.13  2.5
                                           
BMC  80%-19mm  5.0  76.4  0.55  0.17  0.72  0.67  14.6  6  35  41  44  0.48  1.0
BMC  80%-6.3mm  5.0  77.6  0.45  0.13  0.58  0.67  14.0  6  37  43  44  0.67  1.0
BMC  80%-75µm  5.0  88.7  0.47  0.06  0.53  0.67  60.6  20  13  33  44  0.91  1.3
                                           

 

Both gold and silver recoveries are slightly improved with increased crush size, the increase in recovery is more pronounced in the silver as compared to gold when a fine grind is applied. Figure 8.3 illustrates this. It is important to keep in mind that in order to reduce the particle size to 80 % passing 75 microns a conventional comminution circuit employing crushing and grinding would be required.

 

(LINE GRAPH)

 

 

 

 

 

 

 

 

Page 22 of 54

 

Column Leach Testing

 

Column leach test were conducted on each of the master composites, utilizing a feed size of 80% -3/4 inch (19 mm) in order to determine gold and silver recoveries, recovery rates and reagent requirements under simulated heap leach conditions. Lime additions were based on bottle roll tests. Test columns were sized at 15 cm diameter by 3 meters high using PVC piping with material stacked in the leaching columns in a manner in which to minimize particle segregation and compaction. Leaching was conducted by applying a cyanide solution of 1.0g NACN/L over the charge at a feed rate of 12 Lph/m2 of column cross sectional area. After leaching, freshwater rinsing was conducted to remove residual cyanide and to recover dissolved gold and silver values.

 

Detail column leach tests data, including screen analysis of the feed and tails and drain down rates can be found in the Appendix, identified as McLelland Report No. 3829 titled Heap Leach Cyanidation Testing Longstreet Project, dated April 6, 2014.

 

All three composites were leached for 190 days. Gold and silver extractions for the surface master composite (SMC) reached 88.9 % and 20.0 %, respectively. Gold and silver extraction for the underground master composites (UMC) was 84.6 % for gold and 15.4 % for silver. The master blend composite (MBC) achieved gold and silver recoveries of 86.3 and 16.7 respectively. Summary results from column leach testing are provided in Table 8.4. Detailed results, including leach rate figures are provided in the Appendix.

 

3 Summary Metallurgical Test Results

Summary Metallurgical Results, Column Percolation Leach Tests, Longstreet Mine Composites, 80%-19mm Feed Size

Sample

I.D.

 

Test

No.

 

Leach/rinse

Time, days

  mt/mt ore 

g Au/mt ore

Extracted

 

Average

Head

 

g Ag/mt ore

Extracted

 

Average

Head

 

NaCN

consumed

kg/mt ore

 

Lime added

kg/mt ore

SMC  P-1  153  4.8  0.32  0.38  5  24  1.45  1.7
UMC  P-2  158  5.3  0.59  0.85  7  60  1.90  2.7
BMC  P-3  158  5.2  0.63  0.68  8  45  1.78  2.0

 

Recovery results by size fraction for all three master composites indicates that finer crushing would not substantially improve gold recovery. Gold recovery was similar throughout the various size fractions with only a slightly elevated recovery in the finest size fraction (-75 microns). Silver recovery on the other hand would benefit from a finer particle size and would require fine grinding in order to maximize recovery.

 

Overall metallurgical results indicate that the Longstreet master composites are readily amenable to simulated heap leach treatment at 80 % -19 mm feed size. Gold recoveries for all three composites were similar and ranged from 84.6 % to 88.9 % in 190 days of leaching and rinsing. Silver recoveries were similar for all three samples, with recoveries ranging from 15.4 % to 20.0%.

 

It is important to note that although the column tests were conducted over a period of 190 days, gold extraction was essentially completed in the first 30 days of leaching. Silver leach rates, on the other hand, were very slow and it is not expected that they would improve beyond the 190-day cycle.

 

Cyanide consumption rates were high and ranged from 1.56 to 1.93 kg NaCN/t of ore. This was due in part to the long leach times. Cyanide consumption rates in a commercial operation are typically much lower.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 23 of 54

 

Figures 8.4, 8.5 and 8.6 diagrammatically illustrate the leach rates and results for gold and silver.

 

(LINE GRAPH)

 

Figure 8.4 Surface Master composite leach kinetics

 

(LINE GRAPH)

 

Figure 8.5 Underground master composite leach kinetics

 

 

 

 

 

Page 24 of 54

 

(LINE GRAPH)

 

Figure 8.6 Master blend composite leach kinetics

 

Property Geology: Geologic mapping by MinQuest since 2002 indicates that the majority of the Longstreet Project is underlain by moderately to poorly welded rhyolite ash-flow tuff (‘Tat’) containing conspicuous exotic lithic fragments and pumice (Figures 5, 7, 8 and 9). The ash-flow tuff unit is buff to gray, and contains <10% quartz phenocrysts, 15% feldspar phenocrysts, 5-15% pumice and 5-20% other exotic fragments in an aphanitic groundmass (Liedtke, 1984). Hydrothermal alteration is prevalent and consists of argillic (bleaching and clay mineral development), silicic (pervasive silica flooding, or extremely high veinlet density) and potassic (adularia in quartz veinlets). Limonite and geothite development are considered to be weathering phenomena. These felsic ash-flow tuffs of Oligocene age are similar in age and character to the ‘tuffs of Round Mountain’, which host the Round Mountain Mine.

 

The Tat tuff unit (see Figures 7, 8 and 9) displays horizontal bedding and may be in the order of 3,000 feet thick. The ash-flow tuff is intruded by rhyolite porphyry dykes (‘Trp’) exhibiting various orientations and may represent feeder conduits to now-eroded rhyolitic lithologies higher in the stratigraphy.

 

A thin discontinuous unit of volcaniclastic and siliceous sediments (‘Ts’), including sinter is deposited upon the ash-flow tuff unit. The unit is white, yellowish and light gray, bedded in part and probably represents a hiatus in volcanism. Siliceous alteration resulting in the development of sheeted quartz vein systems affects the Tat, Ts and Trp rock units.

 

Overlying the Tat tuff and the Ts sediments is a black to brown strongly welded ash-flow tuff (‘Trt’) that forms bluffs and caps ridges. This unit has a distinctive thin (about 10 feet) vitrophyre zone near its base. This unit is estimated to be 300 to 450 feet thick and possibly a correlative of the Saulsbury Wash Formation (21.6 +/- 0.6 Ma).

 

The tectonic fabric on the Longstreet Project includes two Main directions of faulting/fracturing that have an influence on the mineralization. An east-trending steeply north-dipping system of fractures and faults has been noted at five of the seven gold / silver zones on the Property (see Figure 6). Quartz –adularia – limonite veins / veinlets and ‘rusty fractures’ following this trend contain gold mineralization. The other important gold / silver-bearing fault/fracture direction is 300-330° with steep north dips and is characterized by sheeted quartz veins / veinlets and ‘rusty fractures. The vein / veinlets also contain adularia and iron oxide minerals derived from the oxidation of sulfide minerals. This mineralized trend occurs at all seven of the gold / silver zones known on the Longstreet Project. Major displacement is not a feature of these structures.

 

The Longstreet project is an example of gold / silver mineralization related to east-trending structures. An east-tending fault dipping 40-55° is associated with the highest-grade gold / silver mineralization known to date. The bulk of the gold / silver mineralization in the Longstreet Mine is contained in steeply dipping multiple vein sets in the hanging wall of the fault.

 

Liedtke (1984) indicates that similar fault directions are known 4,600 feet south and 2,800 feet north of the Longstreet Project, which may host similar high-grade gold / silver mineralization.

 

Targets: A short description of the 7 currently identified drilling targets at Longstreet follows:

 

Main- The target consists of intersecting high-angle NW and E-W sheeted vein systems. Completion of an angle drilling program to the southwest perpendicular to the intersection of the two vein sets will continue to produce improved continuity and higher tonnage and grade. Un-drilled extensions of this mineralization are indicated to the southeast and west.

Page 25 of 54

 

NE Main: Approximately 450m N-NE of the Main resource there is a poorly exposed, un-drilled target that looks identical to Main. Sampling of surface veins at NE Main reveal anomalous gold values.

 

Opal Ridge: This is an erosional remnant of a sinter apron that once covered a much larger area. Extensions of the Main resource are down-dropped approximately 60m with an apparent displacement to the north of less than 10m. E-W and NW high level opal-rich veins are exposed in the lower portion of the apron with anomalous gold values. Although there may be a higher stripping ratio here, more of the deposit may be preserved.

 

North: This is a sheeted vein system with identical vein attitudes to Main. Values up to 18.1 ppm Au indicate a strong system, although vein density appears to be less than at Main. The western end of the target has the strongest exposed mineralization.

 

Cyprus Ridge Zone: Quartz veins up to 5 m thick occur in this 1.1 km long northwest trending sheeted vein system. Cyprus Minerals Company completed a 920 m drill program in 1987. All of the Cyprus holes were vertical or high angle and none tested the large primary vein set. No high-grade gold was intersected in their drilling. MinQuest mapped the intricate vein system in 2002 and collected 41 surface samples that contained anomalous to highly anomalous (several times background to hundreds of times background) veins. Due to the abundance of low temperature silica, MinQuest concluded that the gold values are leakage anomalies from a deeper boiling zone. The boiling zone is a high priority drill target.

 

Red Knob Zone: Mineralization outcrops as northwest trending sheeted quartz-adularia veins over an area 150m wide by 300m long. Surface sampling found anomalous gold values. In addition, a boulder field on the north side of the target contains quartz-adularia veins up to 1m in thickness in an area of no outcrop. Drill intercepts from two holes testing a small portion of the target revealed anomalous gold values.

 

Spire: This is an E-W vertical to steeply north dipping sheeted vein system. Intersecting NW trending veins are present but are much less abundant than at Main. Surface sampling at Spire had detected anomalous gold values.

 

Star Gold’s geologists believe sampling and drilling results to date warrant optimism of one or more economic, near surface, bulk-mineable, heap leach-recoverable gold-silver deposits at the Longstreet Project targets described above. In addition, sampling at surface near the Cyprus target suggests the presence of higher-grade veins, which may be suitable to underground mining methods. Situated on a high ridge-top, it could be easily mined from a canyon elevation adit.

 

Environmental, plan of operation and reclamation: To the Company’s knowledge, there is no known surface disturbance or groundwater contamination from previous mining activities. Remediation activities are performed immediately after completion of exploratory drilling. With respect to historical mining activities, there is no indication of reclamation at this time and, therefore, the Company has no plans to remediate. The Longstreet Property is within Forest Service lands and Star Gold has applied for and received a Plan of Operation from the Forest Service allowing exploration drilling. A surface disturbance bond of $89,400 has been paid and is held by the Forest Service until reclamation is completed. There are no other significant environmental requirements.

 

ITEM 3.LEGAL PROCEEDINGS.

 

Star Gold Corp. is not a party to any material legal proceedings and, to management’s knowledge, no such proceedings are threatened or contemplated.

 

ITEM 4.MINE SAFETY DISCLOSURES.

 

Star Gold Corp. considers health, safety and environmental stewardship to be a core value for the Company.

 

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities with respect to mining operations and properties in the United States that are subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). During the year ended April 30, 2020, the Company’s exploration properties were not subject to regulation by the MSHA under the Mine Act.

 

PART II

 

ITEM 5.MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

General

 

Star Gold Corp. authorized capital stock consists of 300,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of July 27, 2020, there were 78,210,841 shares of Star Gold Corp. common stock issued and outstanding. The Company has not issued any shares of preferred stock.

 

Market Information

 

The Company’s shares are quoted via the OTC:QB under the symbol “SRGZ.”

 

At July 27, 2020, the price per share quoted on the OTCQB was $0.066.

Page 26 of 54

 

Transfer Agent:

 

The independent stock transfer agent for Star Gold Corp. is Equiniti Trust Company located at 3200 Cherry Creek Drive South, Suite 430, Denver, CO 80209.

 

Dividends

 

The Company has not declared any dividends on its common stock since inception. There are no dividend restrictions that limit the Company’s ability to pay dividends on common stock in its Articles of Incorporation or Bylaws. The Corporation’s governing statute, Chapter 78 – “Private Corporations” of the Nevada Revised Statutes (the “NRS”), does provide limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

 

a)the Company would not be able to pay its debts as they become due in the usual course of business; or

 

b)the Company’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the company were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution (except as otherwise specifically allowed by the Company’s Articles of Incorporation).

 

Securities Authorized for Issuance under Stock Option Plan

 

On May 25, 2011, the Board of Directors approved a Stock Option Plan. The Stock Option Plan is administered by the Board of Directors and provides for the grant of stock options to eligible individuals including directors, executive officers and advisors that that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction.

 

The Stock Option Plan has a maximum percentage of 10% of the Company’s outstanding shares that are eligible for the plan pool whereby the number of shares under the Stock Option Plan increase automatically with increases in the total number of outstanding common shares. This “Evergreen” provision permits the reloading of shares that make up the available pool for the Stock Option Plan, once the options granted have been exercised. The number of shares available for issuance under the Stock Option Plan automatically increases as the total number of shares outstanding increase, including those shares issued upon exercise of options granted under the Stock Option Plan, which become re-available for grant subsequent to exercise of option grants. The number of shares subject to the Stock Option Plan and any outstanding awards under the Stock Option Plan will be adjusted appropriately by the Board of Directors if the Company’s common stock is affected through a reorganization, merger, consolidation, recapitalization, restructuring, reclassification, dividend (other than quarterly cash dividends) or other distribution, stock split, spin-off or sale of substantially all the Company’s assets.

 

The Stock Option Plan also has terms and limitations including without limitation that the exercise price for stock options granted under the Stock Option Plan must equal the stock’s fair market value, based on the closing price per share of common stock, at the time the stock option is granted.

 

On April 30, 2018, the Board of Directors authorized the grant of 1,400,000 options to purchase shares of common stock of the Company to various directors, officers and consultants.

 

Recent Sales of Unregistered Securities

 

On October 26, 2018, the Company issued 960,417 shares of its common stock in lieu of cash payment for accounts payable. The value of the shares issued was $57,625, based on a price of $0.06 per share which was the fair value on the date of issuance. No shares of common stock have been issued during the year ended April 30, 2020.

 

On June 8, 2020, Star Gold Corp. (“Star Gold” or the “Company”) notified all of its Warrant holders that the Company was re-pricing, for a limited time, all issued and outstanding Common Stock Warrants, of the Company, to an Exercise Price of $.045 per share.

 

During the period beginning on June 8, 2020 and ending at 5:00 pm PDT on August 31, 2020, each outstanding Warrant to purchase Star Gold Common Stock may be exercised, in whole or in part, at the per share price of $.045 per share regardless of the Exercise Price set forth in the Warrant being exercised.

 

After 5:00 pm PDT on August 31, 2020 each remaining outstanding and unexercised Common Stock Warrant will then revert back to its original Exercise Price as set forth in each respective Warrant.

 

On July 6, 2020, the Company issued 816,000 shares of its common stock upon exercise of warrants at $0.045 per share by an accredited investor for cash proceeds of $36,720.

 

All unregistered sales of equity securities during the period covered by this Annual Report were previously disclosed in the Company’s current reports on Form 8-K and its Quarterly Reports on Form 10-Q.

 

During the fiscal year ended April 30, 2020, neither the Company nor any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our common stock, the only class of the Company’s equity securities registered pursuant to section 12 of the Exchange Act at the date of this filing.

Page 27 of 54

 

ITEM 6.SELECTED FINANCIAL DATA.

 

Statement of Operations Information:

 

   For the years ended
   April 30, 2020  April 30, 2019
Revenues  $-   $- 
Total operating expenses   454,288    337,184 
Loss from operations   (454,288)   (337,184)
Other income (expense)   (562)   1,480 
NET LOSS  $(454,850)  $(335,704)
           
Weighted average shares of common stock (basic and diluted)   77,394,841    76,923,842 
           
Income (loss) per share (basic and diluted)  $(0.01)  $(0.00)

 

Balance Sheet Information:

 

   April 30, 2020   April 30, 2019 
Working capital  $(66,512)  $443,915 
Total assets   679,833    954,425 
Accumulated deficit   11,157,593    10,702,743 
Stockholders’ equity   496,373    935,179 

 

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

PLAN OF OPERATION

 

The Company maintains a corporate office in Coeur d’Alene, Idaho.  This is the primary administrative office for the Company and is utilized by Board Chairman Lindsay Gorrill and Chief Financial Officer Kelly Stopher.

 

During 2019, the Company re-examined the costing assumptions of potentially building a leach pad near the Main nob and what the resultant economics would emerge from such a plan. That re-examination showed that moving the leach pad to 300 feet from the main knob of the Longstreet Project would limit land disturbance and result in reduced construction and hauling costs.

 

In September 2019, the Company received a positive decision on its application for a Drill permit from the BLM. This allows the Company to commence drilling mainly for the Hydrology study but also enabling drilling on other holes on the Main nob for geochemical analysis. A bond has been lodged and there are no impediments to drilling other than capital constraints. This decision is valid for two years and may be extended.

 

For the upcoming fiscal year ending April 30, 2021, the Company plans to commence the following activities as it prepares the EIS on the Longstreet Project:

 

Hydrology Drilling – 2 to 4 holes expected to be sufficient

Geochemical analysis – design of program for submission to State of Nevada involves some core drilling;

Plan of Operations Development (Mine Plan, Civil Engineering Designs)

 

Assuming the results of the above-referenced studies are favorable, the Company intends to proceed to the preparation of an EIS and plan of operation for the Longstreet project (the “Longstreet Plan”). The eventual objective of the EIS and Longstreet Plan is the issuance, by each governing agency, of the necessary mine permits to authorize the construction of, and ongoing operations at, an open pit/heap leach mine at the Longstreet Property.  

 

Approval of the Longstreet Plan is subject to governmental agency review and may require additional remediation activities.

 

Management believes it can source additional capital in the investment markets in the coming months and years.  The Company may also consider other sources of funding, including potential mergers, sale of property, joint ventures and/or farm-out a portion of its exploration properties.

 

Future liquidity and capital requirements depend on many factors including timing, cost and progress of the Company’s exploration efforts.  The Company will consider additional public offerings, private placement, mergers or debt instruments.

 

Additional financing will be required in the future to complete all necessary steps to apply for a final permit. Although the Company believes it will be able to source additional financing there are no guarantees any needed financing will be available at the time needed or on acceptable terms, if at all.  If the Company is unable to raise additional financing when necessary, it may have to delay exploration efforts or property acquisitions or be forced to cease operations.  Collaborative arrangements may require the Company to relinquish rights to certain of its mining claims.

 

Management believes it can source additional capital in the investment markets in the coming months and years. The Company may also consider other sources of funding, including potential mergers, joint ventures and/or farm-out a portion of its exploration properties.

Page 28 of 54

 

Future liquidity and capital requirements depend on many factors including timing, cost and progress of the Company’s exploration efforts. The Company will consider additional public offerings, private placement, mergers or debt instruments.

 

Additional financing will be required in the future to complete all necessary steps to apply for a final permit. Although the Company believes it will be able to source additional financing there are no guarantees any needed financing will be available at the time needed or on acceptable terms, if at all. If the Company is unable to raise additional financing when necessary, it may have to delay exploration efforts or property acquisitions or be forced to cease operations. Collaborative arrangements may require the Company to relinquish rights to certain of its mining claims.

 

RESULTS OF OPERATIONS

   For the years ended April 30,         
   2020   2019   $ Change   % Change 
Mineral exploration expense  $25,244   $21,297   $3,947    18.5%
Pre-development expense   155,716    119,975    35,741    29.8%
Legal and professional fees   77,855    73,267    4,588    6.3%
Management and administrative   193,807    120,980    72,827    60.2%
Depreciation   1,666    1,665    1    N/A 
Other expense (income)   562    (1,480)   2,042    (138.0%)
   NET LOSS  $454,850   $335,704   $119,146    35.5%

 

The Company earned no operating revenue in 2020 or 2019 and does not anticipate earning any operating revenues in the foreseeable future. Star Gold Corp. is an exploration stage company and presently is seeking other natural resources related business opportunities.

 

The Company will continue to focus its capital and resources toward exploration and permitting activities at its Longstreet Property.

 

Total net loss for 2020 of $434,850 increased by $119,146 from 2019 total net loss of $335,704.

 

Mineral exploration expense

   For the years ended April 30,         
   2020   2019   $ Change   % Change 
Drilling and field work  $-   $(2,527)  $2,527    (100.0%)
Claims   25,244    23,824    1,420    6.0%
   Total mineral exploration expense  $25,244   $21,297   $3,947    18.5%

 

Mineral exploration expense for the year end April 30, 2020 was $25,244, an increase of $3,947 from 2019 exploration and consultants’ expense of $21,297. The Company’s emphasis has shifted from exploratory drilling to activities related to pre-development expense including environmental and anthropological studies associated with building a Plan of Operations and obtaining a permit for construct a mine at the Longstreet site.

 

Pre-development expense

   For the years ended April 30,         
   2020   2019   $ Change   % Change 
Flora and fauna contractor  $3,231   $8,837   $(5,606)   (63.4%)
Cultural resources and anthropological   8,060    6,392    1,668    26.1%
Environmental and permitting services   -    -    -    N/A 
Environmental impact and plan of operations   29,181    44,096    (14,915)   (33.8%)
Project management   12,625    45,650    (33,025)   (72.3%)
Water rights costs   19,808    15,000    4,808    32.1%
Field expense   1,386    -    1,386    N/A 
Technical consultants   81,425    -    81,425    N/A 
   Total pre-development expense  $155,716   $119,975   $35,741    29.8%

 

Pre-development expense for the year ended April 30, 2020 was $155,716, an increase of $35,741 from 2019 pre-development expense of $119,975.

 

Technical consultant expense increased in 2020 due to a consulting contract executed with Great Basin Resources, Inc. as consideration for amending the Longstreet Property Agreement. Under the terms of the agreement, Great Basin will provide consulting and geologic expertise for a period of 18 months at a monthly rate of $7,500 per month until February 2021.

 

On November 4, 2019, the United States Department of Agriculture-Forest Service approved the Company’s Longstreet Exploration Project which includes drilling of two test holes for water and a monitoring well to determine sufficient water supply for a potential mine at the Longstreet site.

 

The Company is currently assembling bids from engineering firms for development of a full Plan of Operations and Mine Schedule for development and eventual submission of an application to permit construction of a heap leach mining operation on the Longstreet property. The Company is also soliciting bids for drilling of monitor and water-course wells on the Longstreet property site to determine suitability for future mining and leach pad operations.

Page 29 of 54

 

Legal and professional fees

   For the years ended April 30,         
   2020   2019   $ Change   % Change 
Audit and accounting  $28,288   $26,255   $2,033    7.7%
Legal fees   14,613    9,488    5,125    54.0%
Public company expense   21,666    17,462    4,204    24.1%
Investor relations   13,288    20,062    (6,774)   (33.8%)
   Total legal and professional fees  $77,855   $73,267   $4,588    6.3%

 

Audit and accounting fees increased $2,033 from $26,255 for the year end April 30, 2019 compared to $28,288 for the year ended April 30, 2020. Management expects audit and accounting fees to remain relatively constant in the upcoming fiscal year.

 

The primary component of public company expense is the annual fee associated with OTC Markets for the Company’s OTCQB status. Public company expense increased $4,204 for the year ended April 30, 2020. The Company engaged an outside consultant for advisory services during the year ended April 30, 2020 which accounted for the bulk of the increase in public company expense for the year.

 

Investor relation expense of $13,288 for the year ended April 30, 2020 decreased $6,774 compared to $20,062 for the year ended April 30, 2019 as the Company engaged an investor relations consultant to build awareness in 2019.

 

Legal fees increased from $9,488 in 2019 to $14,613 in 2020. The increase in legal fees for year ended April 30, 2020 is primarily as the result of non-recurring expenses related to preparation of contracts and documentation for the Longstreet Property Option Agreement Amendment (Note 4 to the Financial Statements contained in Item 8). There are no pending legal issues or contingencies as of April 30, 2020.

 

General and administrative expense

   For the years ended April 30,         
   2020   2019   $ Change   % Change 
Auto and travel  $11,776   $24,924   $(13,148)   (52.8%)
General administrative and insurance   40,327    36,420    3,907    10.7%
Management fees and payroll   136,760    52,423    84,337    160.9%
Office and computer expense   4,236    4,768    (532)   (11.2%)
Rent and lease expense   -    1,500    (1,500)   (100.0%)
Telephone and utilities   708    945    (237)   (25.0%)
   Total general and administrative  $193,807   $120,980   $72,827    60.2%

 

Total general and administrative expense increased $72,828 to $193,808 compared to 2019 expense of $120,980.

 

The primary difference was attributable to the increase in management fees and payroll of $84,337 for the year ended April 30, 2020. In September 2019, the Company’s Board of Directors determined certain officers and directors should be compensated for their time and expertise. The Company accrued $109,000 of management fees for certain officers and directors as compensation for services as of April 30, 2020. During the year ended April 30, 2019, certain officers and directors were not compensated for their work.

 

Auto and travel expense decreased for the fiscal year ending April 30, 2020 by $13,148. Travel is generally related to meetings associated with capital raises and visits to the exploration site by Company management and potential financiers.

 

COVID-19

 

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout the world. The World outbreak of COVID-19 has not, to date, had any material negative effects on the Company and/or its operations.

 

LIQUIDITY AND FINANCIAL CONDITION

 

WORKING CAPITAL  April 30, 2020   April 30, 2019 
Current assets  $46,948   $463,161 
Current liabilities   113,460    19,246 
Working capital (deficit)  $(66,512)  $443,915 
           
   For the years ended 
CASH FLOWS  April 30, 2020   April 30, 2019 
Cash flow used by operating activities  $(333,899)  $(340,110)
Cash flow used by investing activities   (129,800)   (52,000)
Cash flow provided by financing activities   50,000    - 
Net increase (decrease) in cash during year  $(413,699)  $(392,110)

Page 30 of 54

 

Working capital will be utilized for the Company’s ongoing environmental studies at its Longstreet Project scheduled for the summer of 2019 and general corporate purposes.

 

The Company utilized $62,000 in cash from Investing Activities to exercise its option on claims agreements and utilized for certain capitalized mineral assets at its Longstreet Project. The Company intends to continue exploration activities at Longstreet upon completion of environmental studies and permitting.

 

As of April 30, 2020, the Company had cash on hand of $26,617. Since inception, the sole source of financing has been sales of the Company’s debt and equity securities. Star Gold Corp. has not attained profitable operations and its ability to pursue any future plan of operation is dependent upon our ability to obtain financing.

 

Star Gold Corp. anticipates continuing to rely on sales of its debt and/or equity securities in order to continue to fund ongoing operations. Issuances of additional shares of common stock may result in dilution to the Company’s existing stockholders. There is no assurance that the Company will be able to complete any additional sales of equity securities or that it will be able arrange for other financing to fund its planned business activities.

 

The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, or ultimately to attain profitability. Potential sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of the Company’s stock or alternative methods such as mergers or sale of the Company’s assets. No assurances can be given, however, that the Company will be able to obtain any of these potential sources of cash. The Company currently requires additional cash funding from outside sources to sustain existing operations and to meet current obligations and ongoing capital requirements.

 

The Company plans for the long-term continuation as a going concern include financing future operations through sales of our equity and/or debt securities and the anticipated profitable exploitation of the Company’s mining properties. These plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.

 

CRITICAL ACCOUNTING POLICIES

 

The Company has identified certain accounting policies, described below, that are most important to the portrayal of its current financial condition and results of operations. The Company’s significant accounting policies are disclosed in the notes to the audited financial statements included in this Annual Report.

 

Asset Impairments

 

Significant property acquisition payments for active exploration properties are capitalized. The evaluation of the Company’s mineral properties for impairment is based on market conditions for minerals, underlying mineralized material associated with the properties, and future costs that may be required for ultimate realization through mining operations or by sale. If no mineable ore body is discovered, or market conditions for minerals deteriorate, there is the potential for a material adjustment to the value assigned to mineral properties.

 

Mineral Interests

 

Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mineral properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method based on periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.

 

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

The Company does not hold any derivative instruments and does not engage in any hedging activities.

 

 

 

 

 

 

 

 

Page 31 of 54

 

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

Index to Financial Statements:

 

Audited financial statements as of April 30, 2020, including:

 

1. Report of Independent Registered Public Accounting Firm; 33
2. Balance Sheets as of April 30, 2020 and 2019; 34
3. Statements of Operations for the years ended April 30, 2020 and 2019; 35
4. Statement of Changes in Stockholders’ Equity for the years ended April 30, 2020 and 2019; 36
5. Statements of Cash Flows for the years ended April 30, 2020 and 2019; 37
6. Notes to Financial Statements. 38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 32 of 54

 

(IMAGE)

 

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of Star Gold Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Star Gold Corp. (the “Company”) as of April 30, 2020 and 2019, the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The Company’s Ability to Continue as a Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has negative working capital and accumulated deficit. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/DeCoria, Maichel & Teague, P.S./

 

DeCoria, Maichel & Teague, P.S.

 

We have served as the Company’s independent auditor since 2011.

Spokane, Washington

July 27, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 33 of 54

 

STAR GOLD CORP.
BALANCE SHEETS

 

   April 30, 2020  April 30, 2019
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $26,617   $440,316 
Other current assets (NOTE 5)   20,331    22,845 
TOTAL CURRENT ASSETS   46,948    463,161 
EQUIPMENT AND MINING INTEREST, net (NOTE 4)   543,485    467,107 
OTHER ASSETS – NON-CURRENT (NOTE 5)   -    2,557 
RECLAMATION BOND   89,400    21,600 
TOTAL ASSETS  $679,833   $954,425 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Accounts payable and accrued liabilities  $24,460   $19,246 
Deferred compensation to officers and directors   89,000    - 
TOTAL CURRENT LIABILITIES   113,460    19,246 
OTHER LIABILITIES   20,000    - 
NOTE PAYABLE, RELATED PARTY   50,000    - 
           
TOTAL LIABILITIES   183,460    19,246 
           
COMMITMENTS AND CONTINGENCIES (NOTE 4)          
           
STOCKHOLDERS’ EQUITY          
Preferred Stock, $.001 par value; 10,000,000 shares authorized,   none issued and outstanding   -    - 
Common Stock, $.001 par value; 300,000,000 shares authorized; 77,394,841 shares issued and outstanding, respectively   77,395    77,395 
Additional paid-in capital   11,576,571    11,560,527 
Accumulated deficit   (11,157,593)   (10,702,743)
           
TOTAL STOCKHOLDERS’ EQUITY   496,373    935,179 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $679,833   $954,425 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

Page 34 of 54

 

STAR GOLD CORP.
STATEMENTS OF OPERATIONS

 

   For the years ended
   April 30, 2020  April 30, 2019
OPERATING EXPENSE          
Mineral exploration expense  $25,244   $21,297 
Pre-development expense   155,716    119,975 
Legal and professional fees   77,855    73,267 
Management and administrative   193,807    120,980 
Depreciation   1,666    1,665 
           
TOTAL OPERATING EXPENSES   454,288    337,184 
           
LOSS FROM OPERATIONS   (454,288)   (337,184)
           
OTHER INCOME (EXPENSE)          
Interest income   760    2,313 
Interest expense   (903)   (833)
Interest expense, related party   (419)   - 
           
TOTAL OTHER INCOME (EXPENSE)   (562)   1,480 
           
NET LOSS BEFORE INCOME TAXES   (454,850)   (335,704)
           
Provision (benefit) for income tax   -    - 
           
NET LOSS  $(454,850)  $(335,704)
           
Basic and diluted loss per share  $(0.01)  $(0.00)
           
Basic and diluted weighted average number shares outstanding   77,394,841    76,923,842 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

Page 35 of 54

 

STAR GOLD CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the years ended April 30, 2020 and 2019

 

   Common Stock         
   Shares
Issued
  Par Value
$.001 per share
  Additional
Paid in Capital
  Accumulated
Deficit
  Total
Stockholders’
Equity
BALANCE, April 30, 2018   76,434,424   $76,434   $11,501,613   $(10,367,039)  $1,211,008 
Common stock issued at $0.06 per share for accounts payable   960,417    961    56,664    -    57,625 
Options issued for mining interest   -    -    2,250    -    2,250 
Net loss   -    -    -    (335,704)   (335,704)
                          
BALANCE, April 30, 2019   77,394,841   $77,395   $11,560,527   $(10,702,743)  $935,179 
Options issued for mining interest   -    -    16,044    -    16,044 
Net loss   -    -    -    (454,850)   (454,850)
BALANCE, April 30, 2020   77,394,841   $77,395   $11,576,571   $(11,157,593)  $496,373 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

Page 36 of 54

 

STAR GOLD CORP.
STATEMENTS OF CASH FLOWS

 

   For the years ended
   April 30, 2020  April 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(454,850)  $(335,704)
Adjustments to reconcile net loss to net cash used by operating activities          
Depreciation                    1,666     1,665 
Changes in operating assets and liabilities:          
Other current assets   2,514    (209)
Other assets   2,557    13,178 
Accounts payable and accrued liabilities   5,214    (19,040)
Deferred compensation to officers and directors   89,000    - 
Other liabilities   20,000    - 
Net cash used by operating activities   (333,899)   (340,110)
CASH FLOWS FROM INVESTING ACTIVITIES:          
Payments for equipment and mining interest   (62,000)   (52,000)
Payments for collateral on reclamation bonds   (67,800)   - 
 Net cash used by investing activities   (129,800)   (52,000)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from note payable, related party   50,000    - 
Net cash provided by financing activities   50,000    - 
Net decrease in cash and cash equivalents   (413,699)   (392,110)
           
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR   440,316    832,426 
           
CASH AND CASH EQUIVALENTS AT END OF YEAR  $26,617   $440,316 
           
SUPPLEMENTAL CASH FLOW INFORMATION:          
Interest paid in cash  $903   $833 
           
NON-CASH FINANCING AND INVESTING ACTIVITIES:          
Common stock issued for accounts payable  $-   $57,625 
Options issued for mining interest   16,044    2,250 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

Page 37 of 54

 

STAR GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2020

 

NOTE 1 – NATURE OF OPERATIONS

 

Star Gold Corp. (the “Company”) was initially incorporated as Elan Development, Inc., in the State of Nevada on December 8, 2006. The Company was originally organized to explore mineral properties in British Columbia, Canada but the Company is currently focusing on gold, silver and other base metal-bearing properties in Nevada.

 

The Company’s core business consists of assembling and/or acquiring land packages and mining claims the Company believes have potential mining reserves, and expending capital to explore these claims by drilling, and performing geophysical work or other exploration work deemed necessary. The business is a high-risk business as there is no guarantee that the Company’s exploration work will ultimately discover or produce any economically viable minerals.

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States.

 

Going Concern

 

As shown in the accompanying financial statements, the Company has incurred operating losses since inception.  As of April 30, 2020, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows.  As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $11,157,593 and, at April 30, 2020, the Company’s working capital deficit was $66,512.  These factors raise substantial doubt about its ability to continue as a going concern. Individuals to whom deferred compensation has accrued have agreed to forego payment until sufficient cash is available for payment of the liability (Note 7). On March 10 and June 25, 2020, respectively, the Company’s Chairman of the Board of Directors loaned the Company $50,000 and $30,000, respectively, which provides the Company liquidity to meet short-term financial obligations (Note 7).   Achievement of the Company’s objectives will be dependent upon the ability to obtain additional financing, to locate profitable mining properties and generate revenue from current and planned business operations, and control costs.  The Company plans to fund its future operations by joint venturing or obtaining additional financing from investors and/or lenders.

 

Use of Estimates

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to long-lived asset impairments and stock-based compensation valuation. Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations.

 

Risks and Uncertainties

 

The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging exploration mining business, including the potential risk of business failure.

 

Cash and Cash Equivalents

 

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents.

 

 

 

 

 

 

 

 

 

 

 

 

Page 38 of 54

 

STAR GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2020

 

Reclamation bond

 

The Reclamation bond constitutes cash held as collateral for the faithful performance of the bond securing exploration permits and are accounted for on a cost basis.

 

Financial Instruments

 

The Company’s financial instruments include cash and cash equivalents and reclamation bond. All instruments are accounted for on a cost basis, which, due to the short maturity of these financial instruments, approximates fair value at April 30, 2020.

 

Fair Value Measures

 

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.

 

At April 30, 2020 and April 30, 2019, the Company had no assets or liabilities accounted for at fair value on a recurring or nonrecurring basis.

 

Mining Interests and Mineral Exploration Expenditures

 

Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mining properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mining interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.

 

Pre-development Expenditures

 

Pre-development activities involve costs incurred in the exploration stage that may ultimately benefit production which are expensed due to the lack of evidence of economic development which is necessary to demonstrate future recoverability of these costs.

 

Equipment

 

Equipment is stated at cost. Significant improvements are capitalized and depreciated. Depreciation of equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Maintenance and repairs are charged to operations as incurred. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses.

 

Reclamation and Remediation

 

The Company’s operations are subject to standards for mine reclamation that have been established by various governmental agencies. In the period in which the Company incurs a contractual obligation for the retirement of tangible long-lived assets, the Company will record the fair value of an asset retirement obligation as a liability. A corresponding asset will also be recorded and depreciated over the life of the asset. After the initial measurement of an asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation. To date, the Company has not incurred any contractual obligation requiring recording either a liability or associated asset.

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 39 of 54

 

STAR GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2020

 

Impairment of Long-lived Assets

 

The Company periodically reviews its long-lived assets to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted net future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value.

 

Stock-based Compensation

 

The Company estimates the fair value of options to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying vesting periods as determined by the Board of Directors. The value of shares of common stock awards is determined based on the closing price of the Company’s stock on the date of the award.

 

Income Taxes

 

The Company accounts for income taxes using the liability method. The liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets and liabilities and their basis for tax purposes and (ii) operating loss and tax credit carryforwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred tax assets will not be realized in a future period.

 

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements.

 

Reclassifications

 

Certain reclassifications have been made to the 2019 financial statements in order to conform to the 2020 presentation. These reclassifications have no effect on net loss, total assets or accumulated deficit as previously reported.

 

New Accounting Pronouncements

 

In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-07, Compensation-Stock Compensation, Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 expands the scope of the standard for stock-based compensation to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018-07 became effective for the Company on May 1, 2019. Adoption of this update on May 1, 2019 had no impact on the Company’s financial statement.

 

In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of this update on fair value measurement disclosures.

 

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 40 of 54

 

STAR GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2020

 

NOTE 3 – EARNINGS PER SHARE

 

Basic Earnings Per Share (“EPS”) is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and warrants.

 

The outstanding securities at April 30, 2020 and 2019, that could have a dilutive effect are as follows:

 

   April 30, 2020  April 30, 2019
Stock options   7,145,000    6,645,000 
Warrants   29,039,849    30,654,249 
TOTAL POSSIBLE DILUTIVE SHARES   36,184,849    37,299,249 

 

For the years ended April 30, 2020 and 2019, respectively, the effect of the Company’s outstanding stock options and warrants would have been anti-dilutive and so are excluded in the diluted EPS.

 

NOTE 4 – EQUIPMENT AND MINING INTEREST

 

The following is a summary of the Company’s equipment and mining interest at April 30, 2020 and 2019.

 

   April 30, 2020  April 30, 2019
Equipment  $4,995   $32,002 
Less accumulated depreciation   (3,677)   (29,019)
Equipment, net of accumulated depreciation   1,318    2,983 
Mining interest - Longstreet   542,167    464,124 
TOTAL EQUIPMENT AND MINING INTEREST  $543,485   $467,107 

 

Pursuant to the Longstreet Property Option Agreement with Great Basin Resources, Inc. (“Great Basin”), as amended, which was originally entered into by the Company on or about January 15, 2010 (the “Longstreet Agreement”), the Company leases, with an option to acquire, unpatented mining claims located in the State of Nevada known as the Longstreet Property. Through August 12, 2019, the Company was required to make minimal lease payments in the form of cash and options to purchase shares of the Company’s common stock.

 

On December 4, 2018, the Company amended the Longstreet Agreement to change the due date of certain expenditures required by that agreement (the “2018 Amendment”). The 2018 Amendment extended the due date of the 2019 expenditures from January 16, 2019 to August 31, 2019 and also extended the due date of the 2020 expenditures from January 16, 2020 to August 31, 2020. No other provisions of the Longstreet Agreement, as previously amended, were affected by the 2018 Amendment.

 

On August 12, 2019, the Company and Great Basin agreed to amend the Longstreet Agreement (the “2019 Amendment”) to eliminate the required property expenditure structure and to implement new consideration for the transfer of the Longstreet Property pursuant to that agreement. The 2019 Amendment eliminated the remainder of the required property expenditures. The 2019 Amendment sets forth Great Basin to transfer title of the Longstreet Property to the Company upon the Company:

 

a)Adjusting the exercise price to $0.04 on 435,000 existing options to purchase Company common stock from exercise prices ranging from $0.05 to $0.08 per share;

 

b)issuing an additional 500,000 options to purchase Company common stock at the exercise price of $0.04;

 

c)making a cash payment of $50,000 to Great Basin (paid on August 19, 2019) and

 

d)entering into a consulting agreement with Great Basin with a term of eighteen months.

 

 

 

 

 

 

 

 

 

 

 

Page 41 of 54