|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
STAR
GOLD CORP.
|
BALANCE
SHEETS (UNAUDITED)
|
|
|
October 31, 2019
|
|
|
April 30, 2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
100,567
|
|
|
$
|
440,316
|
|
Other current assets (NOTE 5)
|
|
|
16,988
|
|
|
|
22,845
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
117,555
|
|
|
|
463,161
|
|
EQUIPMENT AND MINING INTEREST, net (NOTE 4)
|
|
|
544,318
|
|
|
|
467,107
|
|
OTHER ASSETS – NON-CURRENT (NOTE 5)
|
|
|
-
|
|
|
|
2,557
|
|
RECLAMATION BOND (NOTE 4)
|
|
|
89,400
|
|
|
|
21,600
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
751,273
|
|
|
$
|
954,425
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
34,590
|
|
|
$
|
19,246
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
34,590
|
|
|
|
19,246
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
34,590
|
|
|
|
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
|
|
|
77,395
|
|
|
|
77,395
|
|
Additional paid-in capital
|
|
|
11,576,571
|
|
|
|
11,560,527
|
|
Accumulated deficit
|
|
|
(10,937,283
|
)
|
|
|
(10,702,743
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS EQUITY
|
|
|
716,683
|
|
|
|
935,179
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
751,273
|
|
|
$
|
954,425
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
STATEMENTS
OF OPERATIONS (UNAUDITED)
|
|
|
Three months ended October 31,
|
|
|
Six months ended October 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
OPERATING EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral exploration expense
|
|
$
|
-
|
|
|
$
|
(4,714
|
)
|
|
$
|
26,630
|
|
|
$
|
19,914
|
|
Pre-development expense
|
|
|
28,690
|
|
|
|
45,766
|
|
|
|
57,763
|
|
|
|
90,812
|
|
Legal and professional fees
|
|
|
19,462
|
|
|
|
5,357
|
|
|
|
59,722
|
|
|
|
35,252
|
|
Management and administrative
|
|
|
61,518
|
|
|
|
38,490
|
|
|
|
89,860
|
|
|
|
69,942
|
|
Depreciation
|
|
|
416
|
|
|
|
416
|
|
|
|
833
|
|
|
|
832
|
|
TOTAL OPERATING EXPENSES
|
|
|
110,086
|
|
|
|
85,315
|
|
|
|
234,808
|
|
|
|
216,752
|
|
LOSS FROM OPERATIONS
|
|
|
(110,086
|
)
|
|
|
(85,315
|
)
|
|
|
(234,808
|
)
|
|
|
(216,752
|
)
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(233
|
)
|
|
|
(200
|
)
|
|
|
(448
|
)
|
|
|
(400
|
)
|
Interest income
|
|
|
230
|
|
|
|
591
|
|
|
|
716
|
|
|
|
1,149
|
|
TOTAL OTHER INCOME (EXPENSE)
|
|
|
(3
|
)
|
|
|
391
|
|
|
|
268
|
|
|
|
749
|
|
NET LOSS
|
|
$
|
(110,089
|
)
|
|
$
|
(84,924
|
)
|
|
|
(234,540
|
)
|
|
|
(216,003
|
)
|
Basic and diluted loss per share
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
Basic and diluted weighted average number shares outstanding
|
|
|
77,394,841
|
|
|
|
76,483,930
|
|
|
|
77,394,841
|
|
|
|
76,459,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
STATEMENTS
OF CHANGES IN STOCKHOLDERS EQUITY
|
For
the three and six months ended October 31, 2019 and 2018 (UNAUDITED)
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Additional
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Issued
|
|
|
$.001 per share
|
|
|
Paid in Capital
|
|
|
Deficit
|
|
|
Stockholders Equity
|
|
BALANCE, April 30, 2018
|
|
|
76,434,424
|
|
|
$
|
76,434
|
|
|
$
|
11,501,613
|
|
|
$
|
(10,367,039
|
)
|
|
$
|
1,211,008
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(131,079
|
)
|
|
|
(131,079
|
)
|
BALANCE, July 31,2018
|
|
|
76,434,424
|
|
|
|
76,434
|
|
|
|
11,501,613
|
|
|
|
(10,498,118
|
)
|
|
|
1,079,929
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(84,924
|
)
|
|
|
(84,924
|
)
|
Common stock issued at $0.06 per share in lieu of cash for vendor payable
|
|
|
960,417
|
|
|
|
961
|
|
|
|
56,664
|
|
|
|
-
|
|
|
|
57,625
|
|
BALANCE, October 31,2018
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,558,277
|
|
|
$
|
(10,583,042
|
)
|
|
$
|
1,052,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, April 30, 2019
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,560,527
|
|
|
$
|
(10,702,743
|
)
|
|
$
|
935,179
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(124,451
|
)
|
|
|
(124,451
|
)
|
BALANCE, July 31, 2019
|
|
|
77,394,841
|
|
|
|
77,395
|
|
|
|
11,560,527
|
|
|
|
(10,827,194
|
)
|
|
|
810,728
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(110,089
|
)
|
|
|
(110,089
|
)
|
Options issued for mining interest
|
|
|
-
|
|
|
|
-
|
|
|
|
16,044
|
|
|
|
-
|
|
|
|
16,044
|
|
BALANCE, October 31,2019
|
|
|
77,394,841
|
|
|
$
|
77,395
|
|
|
$
|
11,576,571
|
|
|
$
|
(10,937,283
|
)
|
|
$
|
716,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
STATEMENTS
OF CASH FLOWS (UNAUDITED)
|
|
|
For the six months ended
|
|
|
|
October 31, 2019
|
|
|
October 31, 2018
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(234,540
|
)
|
|
$
|
(216,003
|
)
|
Adjustments to reconcile net loss to net cash used by operating activities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
833
|
|
|
|
832
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
3,79
|
|
Other current assets
|
|
|
5,857
|
|
|
|
5
|
|
Other assets
|
|
|
2,557
|
|
|
|
3,781
|
|
Accounts payable
|
|
|
15,344
|
|
|
|
(10,768
|
)
|
Net cash used by operating activities
|
|
|
(209,949
|
)
|
|
|
(218,363
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Payments for mining interest
|
|
|
(62,000
|
)
|
|
|
(12,000
|
)
|
Payments for collateral on reclamation bond
|
|
|
(67,800
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(129,800
|
)
|
|
|
(12,000
|
)
|
Net change in cash and cash equivalents
|
|
|
(339,749
|
)
|
|
|
(230,363
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
440,316
|
|
|
|
832,426
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
100,567
|
|
|
$
|
602,063
|
|
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options issued for mining interest
|
|
$
|
16,044
|
|
|
$
|
-
|
|
Common stock issued for account payable
|
|
|
-
|
|
|
|
57,625
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial statements.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
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
focused on gold, silver and other base metal-bearing properties in Nevada. On April 25, 2008, the name of the company was changed
to Star Gold Corp.
The
Companys 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 to move such claims towards development and production. The business is a high-risk business
as there is no guarantee that the Companys 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 Companys management, which is responsible for their integrity and objectivity. The
accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally
accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly,
the financial statements do not include all of the information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements.
In
the opinion of the Companys management, all adjustments, consisting of only normal recurring adjustments, considered necessary
for a fair statement of the interim financial statements have been included. The balance sheet at April 30, 2019 was derived from
audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.
All amounts presented are in U.S. dollars. Operating results for the three- and six-month period ended October 31, 2019 are not
necessarily indicative of the results that may be expected for the full fiscal year ending April 30, 2020.
For
further information, refer to the financial statements and footnotes thereto in the Companys Annual Report on Form 10-K
for the year ended April 30, 2019.
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 Companys reported financial
position and results of operations.
Risks
and Uncertainties
The
Companys 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.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
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
Companys 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 October 31, 2019
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
October 31, 2019 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, such as underground ramp development,
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
Companys 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.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
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 Companys 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 Companys 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.
Reclassifications
Certain
reclassifications have been made to the 2018 financial statements in order to conform to the 2019 presentation. These reclassifications
have no effect on net loss, total assets or accumulated deficit as previously reported.
New
Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and
liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018,
with early adoption permitted. Adoption of this update on May 1, 2019 had no impact on the Companys financial statement.
In
June 2018, the FASB issued 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 Companys financial statement.
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.
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.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
The
outstanding securities at October 31, 2019 and 2018 that could have a dilutive effect are as follows:
|
|
October 31, 2019
|
|
|
October 31, 2018
|
|
Stock options
|
|
|
7,145,000
|
|
|
|
6,650,000
|
|
Warrants
|
|
|
29,039,849
|
|
|
|
30,654,249
|
|
TOTAL POSSIBLE DILUTIVE SHARES
|
|
|
36,184,849
|
|
|
|
37,304,249
|
|
|
|
|
|
|
|
|
|
|
For
the three and six months ended October 31, 2019 and 2018, respectively, the effect of the Companys 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 Companys equipment and mining interest at October 31, 2019 and April 30, 2019:
|
|
October 31, 2019
|
|
|
April 30, 2019
|
|
Equipment
|
|
$
|
4,995
|
|
|
$
|
32,002
|
|
Less accumulated depreciation
|
|
|
(2,845
|
)
|
|
|
(29,019
|
)
|
Equipment, net of accumulated depreciation
|
|
|
2,150
|
|
|
|
2,983
|
|
Mining interest - Longstreet
|
|
|
542,168
|
|
|
|
464,124
|
|
TOTAL EQUIPMENT AND MINING INTEREST
|
|
$
|
544,318
|
|
|
$
|
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 Companys
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 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, to the Company,
of the mining interest 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-$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 (18) months.
|
On
August 12, 2019, the Company repriced 435,000 existing options to purchase the Companys common stock to an exercise price
of $0.04 and issued an additional 500,000 options to purchase the Companys 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.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
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
2019 Amendment also grants the Company the option, to be exercised no later than six (6) months following the first receipt of
proceeds from the sale of ore from the mining interest, to purchase one-half of Great Basins 3.0% Net Smelter Royalty,
on the Longstreet Project, for a payment of $1,750,000.
No
other provisions of the Longstreet Agreement, as previously amended, were affected by the 2019 Amendment.
In
addition, the Company is obligated, pursuant to the Longstreet Agreement, to pay an annual advance royalty payment of $12,000
related to the Clifford claims. For the six months ended October 31, 2019 and 2018, respectively, the Company paid the annual
$12,000 advance royalty for additional mining interest on the Longstreet Property.
On
September 20, 2019, the Company paid $67,800 to the United States Forest Service to increase the Reclamation Bond as collateral
on the Longstreet Property. The bond is collateral on reclamation of planned drilling activities on the Longstreet Property and
is refundable subject to the Company completing defined reclamation actions upon completion of drilling.
NOTE
5 – OTHER ASSETS
On
January 19, 2017, the Company entered into an Option and Lease of Water Rights with Stone Cabin Company, LLC (the Stone
Cabin Water Rights Agreement). In exchange for a one-time payment of $20,000, the Stone Cabin Water Rights Agreement granted
the Company a three-year option to commence a ten-year lease of certain water rights in Nevada. The water rights are for use in
conjunction with the Companys Longstreet Project. Lease payments for the water rights do not commence unless the Company
exercises the option to lease. The Stone Cabin Water Rights Agreement also granted the Company the ability to extend, upon additional
option payments, the option to lease for up to an additional three years and the ability to extend the water rights lease (if
exercised) for an additional ten-year period. The $20,000 payment was deferred as Other Assets and is being amortized on a straight-line
basis over the three-year option period.
On
August 21, 2017, the Company entered into an Option and Lease of Water Rights, with High Test Hay, LLC (the High Test Water
Rights Agreement). In exchange for a one-time payment of $25,000, the High Test Water Rights Agreement grants the Company
a three-year option to commence a ten-year lease on certain water rights in Nevada. The water rights are for use in conjunction
with the Companys Longstreet Project. Lease payments for the water rights do not commence unless and until the Company
exercises the option to lease. The High Test Water Rights Agreement also grants the Company the ability to extend, upon additional
option payments, the option to lease for up to an additional three years and the ability to extend the water rights lease (if
exercised) for up to an additional twenty years. The $25,000 payment has been deferred and is being amortized on a straight-line
basis over the three-year option period.
The
following is a summary of the Companys Other Assets at October 31, 2019 and April 30, 2019.
|
|
October 31, 2019
|
|
|
April 30, 2019
|
|
Option on water rights lease agreements, net
|
|
$
|
8,174
|
|
|
$
|
15,735
|
|
Prepaid insurance and other expenses
|
|
|
8,814
|
|
|
|
9,667
|
|
Total
|
|
|
16,988
|
|
|
|
25,402
|
|
Less Other Assets - Current
|
|
|
(16,988
|
)
|
|
|
(22,845
|
)
|
TOTAL OTHER ASSETS - NON-CURRENT
|
|
$
|
-
|
|
|
$
|
2,557
|
|
|
|
|
|
|
|
|
|
|
NOTE
6 – RELATED PARTY TRANSACTIONS
The
Company rented office space from Marlin Property Management, LLC (Marlin) an entity owned by the spouse of the Companys
former President and current Chairman of the Board of Directors. The lease was on a month-to-month basis as financial resources
were available. The Company terminated the lease effective November 1, 2018. For the three and six months ended October 31, 2018,
office rent was $750 and $1,500, respectively. No rent was incurred under this agreement in the three and six months ended October
31, 2019.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
During
the three and six months ended October 31, 2019, the Company paid a member of the Companys Board of Directors (the Board)
for consulting and investor relation services in the amount of $4,000 and $8,000, respectively. There was no payment for services
during the three and six months ended October 31, 2018.
Effective
September 1, 2019, the Board authorized the Company to enter into separate consulting agreements with the Chairman of the Board,
two respective members of the Board and the Companys Chief Financial Officer to reward, compensate and incentivize. The
Company will accrue an aggregate $18,000 per month in consulting and management fees and, in the event of a change of control
or sale of substantially all of the Companys assets, these members of Company management shall collectively be granted
bonuses equal to an aggregate two per cent (2%) of the value of the change of control or sale.
During
the three and six months ended October 31, 2019, the Company incurred management fees of $4,000 and $26,000, respectively, for
certain members of the Companys board of directors. The balance of $26,000 is included in Accounts payable and accrued
liabilities at October 31, 2019. There was no payment for such services during the three and six months ended October 31,
2018.
NOTE
7 – STOCKHOLDERS EQUITY
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 six months ended October 31, 2019.
NOTE
8 – WARRANTS
The
following is a summary of activity for warrants to purchase shares of the Companys stock through October 31, 2019.
|
|
|
|
|
Weighted average exercise
|
|
|
|
Warrants
|
|
|
price
|
|
Balance outstanding at April 30, 2018 and April 30, 2019
|
|
|
30,654,249
|
|
|
$
|
0.16
|
|
Expired
|
|
|
(1,614,400
|
)
|
|
|
(0.23
|
)
|
Balance outstanding at October 31, 2019
|
|
|
29,039,849
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
There
were no warrants to purchase shares of the Companys common stock issued or exercised during the three months ended October
31, 2019 and 2018, respectively.
The
composition of the Companys warrants outstanding at October 31, 2019 is as follows:
Issue Date
|
|
Expiration Date
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Remaining life (years)
|
|
October 12, 2015
|
|
October 12, 2020
|
|
|
4,241,000
|
|
|
$
|
0.20
|
|
|
|
0.95
|
|
October 12, 2016
|
|
October 12, 2021
|
|
|
14,000,000
|
|
|
|
0.15
|
|
|
|
1.95
|
|
October 31, 2017
|
|
October 31, 2020
|
|
|
10,798,849
|
|
|
|
0.15
|
|
|
|
1.00
|
|
|
|
|
|
|
29,039,849
|
|
|
$
|
0.16
|
|
|
|
1.45
|
|
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
NOTE
9 – STOCK OPTIONS
Options
issued for mining interest
In
consideration for its mining interest (see Note 4), the Company was obligated to issue stock options to purchase shares of the
Companys common stock based on fair market price which for financial statement purposes is considered to be
the closing price of the Companys common stock on the issue dates. Those costs are capitalized as Mining Interest (Note 4).
For
the three and six months ended October 31, 2019, there were 500,000 options issued for mining interest at the exercise price of
$0.04 per share. During the three and six months ended October 31, 2019, the Company repriced 435,000 existing options to purchase
Company common stock, to the exercise price of $0.04 per share, from exercise prices ranging from $0.05 to $0.80. The fair value
of the issuance and repricing was $16,044.
For
the three and six months ended October 31, 2018, there were no options issued for mining interest.
Options
outstanding for mining interest totaled 435,000 at April 30, 2019 and 935,000 options at October 31, 2019 and are fully vested.
As of October 31, 2019, the remaining weighted average term of the option grants for mining interest was 4.84 years. As of October
31, 2019, the weighted average exercise price of the option grants for mining interest was $0.04 per share.
Options
issued under the 2011 Stock Option/Restricted Stock Plan
The
Company established the 2011 Stock Option/Restricted Stock Plan. The Stock Option Plan is administered by the Board of Directors
and provides for the grant of stock options to eligible individual including directors, executive officers and advisors 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 fixed maximum percentage of 10% of the Companys outstanding shares that are eligible for the plan
pool, whereby the number of Shares under the plan increases automatically increases as the total number of shares outstanding
increase. The number of shares subject to the Stock Option Plan and any outstanding awards will be adjusted appropriately by the
Board of Directors if the Companys 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 of the Companys assets.
The
Stock Option plan also has terms and conditions, including without limitations that the exercise price for stock options granted
under the Stock Option Plan must equal the stocks fair value, based on the closing price per share of common stock, at
the time the stock option is granted. The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes
model and commonly utilized assumptions associated with the Black-Scholes methodology. Options granted under the Plan have a ten-year
maximum term and varying vesting periods as determined by the Board.
The
total value of stock option awards is expensed ratably over the vesting period of the employees receiving the awards. As of October
31, 2019 and 2018, respectively, there was no unrecognized compensation cost related to stock-based options and awards. No options
were issued under the 2011 Plan during the three and six months ended October 31, 2019 and 2018, respectively.
STAR
GOLD CORP.
|
NOTES
TO FINANCIAL STATEMENTS
|
OCTOBER
31, 2019
|
|
The
following table summarizes additional information about the options under the Companys Stock Option Plan as of October
31, 2019:
|
|
Options outstanding and exercisable
|
|
Date of Grant
|
|
Shares
|
|
|
Price
|
|
|
Remaining Term
|
|
October 18, 2016
|
|
|
4,810,000
|
|
|
$
|
0.06
|
|
|
|
1.97
|
|
April 30, 2018
|
|
|
1,400,000
|
|
|
|
0.065
|
|
|
|
3.50
|
|
Total options
|
|
|
6,210,000
|
|
|
$
|
0.06
|
|
|
|
2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
total value of stock option awards is expensed ratably over the vesting period of the employees receiving the awards. As of October
31, 2019, there was no unrecognized compensation cost related to stock-based options and awards.
Summary:
The
following is a summary of the Companys stock options outstanding and exercisable:
|
|
|
|
|
|
|
Weighted Average
|
|
Options issued for:
|
|
Expiration Date
|
|
Options
|
|
|
Exercise Price
|
|
Mining interests
|
|
April 11, 2020 to January 15, 2029
|
|
|
935,000
|
|
|
$
|
0.04
|
|
Stock option plan
|
|
October 18, 2021 to April 30, 2023
|
|
|
6,210,000
|
|
|
|
0.06
|
|
Outstanding and exercisable at October 31, 2019
|
|
|
|
|
7,145,000
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
The
aggregate intrinsic value of all options vested and exercisable at October 31, 2019, was $Nil based on the Companys closing
price of $0.03 per common share at October 31, 2019. The Companys current policy is to issue new shares to satisfy option
exercises.
|
ITEM
2.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
|
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
quarterly report 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 Companys anticipated
results and developments in the Companys 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 expresses or involves 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 expects or does
not expect, is expected, anticipates or does not anticipate, plans,
estimates, or intends, or states 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 Companys properties being in the exploration stage;
|
|
●
|
Risks
related to the mineral operations being subject to government regulation;
|
|
●
|
Risks
related to environmental concerns;
|
|
●
|
Risks
related to the Companys ability to obtain additional capital to develop the Companys resources, if any;
|
|
●
|
Risks
related to mineral exploration and development activities;
|
|
●
|
Risks
related to mineral estimates;
|
|
●
|
Risks
related to the Companys 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 Companys mineral properties;
|
|
●
|
Risks
related to the possible dilution of the Companys common stock from additional financing activities;
|
|
●
|
Risks
related to potential conflicts of interest with the Companys management;
|
|
●
|
Risks
related to the Companys shares of common stock;
|
This
list is not exhaustive of the factors that may affect the Companys 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 Managements Discussion and Analysis of
this Quarterly 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 Companys Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K.
Star
Gold Corp qualifies all forward-looking statements contained in this Quarterly Report by the foregoing cautionary statement.
Certain
statements contained in this Quarterly Report on Form 10-Q constitute forward-looking statements. These statements,
identified by words such as plan, anticipate, believe, estimate, should,
expect, and similar expressions include the Companys expectations and objectives regarding its future financial
position, operating results and business strategy. These statements reflect the current views of management with respect to future
events and are subject to risks, uncertainties and other factors that may cause actual results, performance or achievements, or
industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties
include those set forth under the caption Managements Discussion and Analysis or Plan of Operation and elsewhere
in this Quarterly Report.
As
used in this Quarterly Report, the terms we, us, our, Star Gold, and the
Company, mean Star Gold Corp., unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed
in U.S. dollars, unless otherwise indicated. Managements Discussion and Analysis is intended to be read in conjunction
with the Companys financial statements and the integral notes (Notes) thereto included in the Companys
Annual Report on Form 10-K for the fiscal year ending April 30, 2019. The following statements may be forward-looking in nature
and actual results may differ materially.
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 an exploration 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 142 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 67 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 Companys 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 containing mineral deposits
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 prior exploration history and/or will have strong similarity
to a recognized geologic ore deposit model. Geographic emphasis will be place on the western United States.
The
geologic potential and ore deposit models have been defined and specific drill targets identified the Companys sole remaining
property. The Companys 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.
Portions
of the Companys mining properties are owned by third parties and leased to Star Gold as outlined in the following table:
Property name
|
|
Longstreet
|
|
|
Great Basin Resources, Inc. and
|
Third parties
|
|
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 Companys
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).
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 Companys 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 Companys 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 Lakewood Drive, Suite 200, Coeur dAlene, 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 Quarterly Report on Form 10-Q. 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, all of which are available on the Companys website at www.stargoldcorp.com. Electronically
filed reports may also be accessed at www.sec.gov. Information may be obtained on the operation of the Public Reference
Room by calling the SEC at (800) SEC-0330.
PLAN
OF OPERATION
The
Company maintains a corporate office in Coeur dAlene, 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
the year ended April 30, 2019, the Company completed the following:
Wildlife
and Biological Baseline Study (WBS)
Cultural and Archeology Study
Plan of Operation submitted to US Forestry Service.
For
the upcoming fiscal year ending April 30, 2020, the Company plans to commence the following activities as it prepares the EIS
on the Longstreet Project:
Hydrology
Study (in progress – dependent on Plan of Operations being approved)
Geochemical analysis – design of program for
submission to State of Nevada (in progress)
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 Plan of Operations). The eventual objectives of the EIS and the Plan
of Operations are the issuance, by each responsible agency, of the necessary permits to authorize the construction of, and ongoing
operations at, an open pit/heap leach mine at the Longstreet Property.
The
Company anticipates the aforementioned tasks to be completed in early 2020, with the EIS prepared in late 2020 and early 2021.
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, 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 Companys 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 three months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral exploration expense
|
|
$
|
-
|
|
|
$
|
(4,714
|
)
|
|
$
|
4,714
|
|
|
|
(100.0
|
%)
|
Pre-development expense
|
|
|
28,690
|
|
|
|
45,766
|
|
|
|
(17,076
|
)
|
|
|
(37.3
|
%)
|
Legal and professional fees
|
|
|
19,462
|
|
|
|
5,357
|
|
|
|
14,105
|
|
|
|
263.3
|
%
|
Management and administrative
|
|
|
61,518
|
|
|
|
38,490
|
|
|
|
23,028
|
|
|
|
59.8
|
%
|
Depreciation
|
|
|
416
|
|
|
|
416
|
|
|
|
-
|
|
|
|
0.0
|
%
|
Interest expense
|
|
|
233
|
|
|
|
200
|
|
|
|
33
|
|
|
|
16.5
|
%
|
Interest (income)
|
|
|
(230
|
)
|
|
|
(591
|
)
|
|
|
361
|
|
|
|
(61.1
|
%)
|
NET LOSS
|
|
$
|
110,089
|
|
|
$
|
84,924
|
|
|
$
|
25,165
|
|
|
|
29.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral exploration expense
|
|
$
|
26,630
|
|
|
$
|
19,914
|
|
|
$
|
6,716
|
|
|
|
33.7
|
%
|
Pre-development expense
|
|
|
57,763
|
|
|
|
90,812
|
|
|
|
(33,049
|
)
|
|
|
(36.4
|
%)
|
Legal and professional fees
|
|
|
59,722
|
|
|
|
35,252
|
|
|
|
24,470
|
|
|
|
69.4
|
%
|
Management and administrative
|
|
|
89,861
|
|
|
|
69,942
|
|
|
|
19,919
|
|
|
|
28.5
|
%
|
Depreciation
|
|
|
832
|
|
|
|
832
|
|
|
|
-
|
|
|
|
N/A
|
|
Interest expense
|
|
|
448
|
|
|
|
400
|
|
|
|
48
|
|
|
|
12.0
|
%
|
Interest (income)
|
|
|
(716
|
)
|
|
|
(1,149
|
)
|
|
|
433
|
|
|
|
(37.7
|
%)
|
NET LOSS
|
|
$
|
234,540
|
|
|
$
|
216,003
|
|
|
$
|
18,537
|
|
|
|
8.6
|
%
|
The
Company earned no operating revenue in 2019 or 2018 and does not anticipate earning any operating revenues in the near 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 permitting activities at its Longstreet Property.
Total
net loss for the three months ended October 31, 2019 of $110,089 increased by $25,165 from 2018 total net loss of $84,924.
Total
net loss for the six months ended October 31, 2019 of $234,540 increased by $18,537 from 2018 total net loss of $216,003.
Mineral
exploration and consultants expense
|
|
For the three months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
Drilling and field work
|
|
$
|
-
|
|
|
$
|
(4,714
|
)
|
|
$
|
4,714
|
|
|
|
(100.0
|
%)
|
Claims
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
N/A
|
|
Total mineral exploration and consultants expense
|
|
$
|
-
|
|
|
$
|
(4,714
|
)
|
|
$
|
4,714
|
|
|
|
(100.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
Drilling and field work
|
|
$
|
1,386
|
|
|
$
|
(3,910
|
)
|
|
$
|
5,296
|
|
|
|
(135.4
|
%)
|
Claims
|
|
|
25,244
|
|
|
|
23,824
|
|
|
|
1,420
|
|
|
|
6.0
|
%
|
Total mineral exploration and consultants expense
|
|
$
|
26,630
|
|
|
$
|
19,914
|
|
|
$
|
6,716
|
|
|
|
33.7
|
%
|
Exploration
and consultants’ expense for the three months ended October 31, 2019 was $Nil compared to a credit of $4,714 in 2018. During the
three months ended October 31, 2018, the Company received a refund of a reclamation bond for $5,479 which had previously been
expensed resulting in the net credit amount.
For
the six months ended October 31, 2019, exploration and consultants expense was $26,630, an increase of $6,716 from the
prior period ended October 31, 2018 of ($19,914).
The
Companys 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 three months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
Cultural resources and anthropological
|
|
$
|
-
|
|
|
$
|
1,096
|
|
|
$
|
(1,096
|
)
|
|
|
(100.0
|
%)
|
Environmental impact and plan of operations
|
|
|
9,909
|
|
|
|
21,057
|
|
|
|
(11,148
|
)
|
|
|
-52.9
|
%
|
Project management
|
|
|
-
|
|
|
|
19,832
|
|
|
|
(19,832
|
)
|
|
|
(100.0
|
%)
|
Water rights costs
|
|
|
3,781
|
|
|
|
3,781
|
|
|
|
-
|
|
|
|
0.0
|
%
|
Technical consultants
|
|
|
15,000
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
|
|
Total pre-development expense
|
|
$
|
28,690
|
|
|
$
|
45,766
|
|
|
$
|
(17,076
|
)
|
|
|
(37.3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flora and fauna contractor
|
|
$
|
8,060
|
|
|
$
|
8,837
|
|
|
$
|
(777
|
)
|
|
|
(8.8
|
%)
|
Cultural resources and anthropological
|
|
|
-
|
|
|
|
1,096
|
|
|
|
(1,096
|
)
|
|
|
(100.0
|
%)
|
Environmental impact and plan of operations
|
|
|
21,766
|
|
|
|
33,070
|
|
|
|
(11,304
|
)
|
|
|
-34.2
|
%
|
Project management
|
|
|
5,375
|
|
|
|
40,247
|
|
|
|
(34,872
|
)
|
|
|
(86.6
|
%)
|
Water rights costs
|
|
|
7,562
|
|
|
|
7,562
|
|
|
|
-
|
|
|
|
0.0
|
%
|
Technical consultants
|
|
|
15,000
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
N/A
|
|
Total pre-development expense
|
|
$
|
57,763
|
|
|
$
|
90,812
|
|
|
$
|
(33,049
|
)
|
|
|
(36.4
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-development
expense for the three months ended October 31, 2019 was $28,690, a decrease of $17,076 from 2018 pre-development expense of $45,766.
Technical
consultant expense increased in 2019 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 March 2021.
Pre-development
expense for the six months ended October 31, 2019 was $57,763, a decrease of $33,049 from 2018 pre-development expense of $90,812.
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.
On
November 4, 2019, the United States Department of Agriculture-Forest Service approved the Companys 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.
Legal
and professional fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
Audit and accounting
|
|
$
|
3,000
|
|
|
$
|
3,000
|
|
|
$
|
-
|
|
|
|
0.0
|
%
|
Legal fees
|
|
|
7,975
|
|
|
|
1,925
|
|
|
|
6,050
|
|
|
|
314.3
|
%
|
Public company expense
|
|
|
2,895
|
|
|
|
432
|
|
|
|
2,463
|
|
|
|
570.1
|
%
|
Investor relations
|
|
|
5,592
|
|
|
|
-
|
|
|
|
5,592
|
|
|
|
N/A
|
|
Total legal and professional fees
|
|
$
|
19,462
|
|
|
$
|
5,357
|
|
|
$
|
14,105
|
|
|
|
263.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit and accounting
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
$
|
-
|
|
|
|
0.0
|
%
|
Legal fees
|
|
|
10,175
|
|
|
|
4,263
|
|
|
|
5,912
|
|
|
|
138.7
|
%
|
Public company expense
|
|
|
18,259
|
|
|
|
12,989
|
|
|
|
5,270
|
|
|
|
40.6
|
%
|
Investor relations
|
|
|
13,288
|
|
|
|
-
|
|
|
|
13,288
|
|
|
|
N/A
|
|
Total legal and professional fees
|
|
$
|
59,722
|
|
|
$
|
35,252
|
|
|
$
|
24,470
|
|
|
|
69.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
and accounting fees for the three months ended October 31, 2019 remained unchanged compared to the three- and six- months ended
October 31, 2018.
Legal
fees increased $6,050 and $5,912 from the three and six months ended October 31, 2018, respectively, to $7,975 and $10,175 for
the three and six months ended October 31, 2019, respectively. The increase in legal fees 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). There are no pending legal issues or contingencies as of October 31, 2019.
The
primary component of public company expense is the annual fee associated with OTC Markets for the Companys OTCQB status.
Public company expense increased $2,463 and $5,270, respectively for the three and six months ended October 31,2019 compared to
October 31, 2018.
General
and administrative expense
|
|
For the three months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and travel
|
|
$
|
7,081
|
|
|
$
|
13,091
|
|
|
$
|
(6,010
|
)
|
|
|
(45.9
|
%)
|
General administrative and insurance
|
|
|
9,641
|
|
|
|
8,819
|
|
|
|
822
|
|
|
|
9.3
|
%
|
Management fees and payroll
|
|
|
43,660
|
|
|
|
13,253
|
|
|
|
30,407
|
|
|
|
229.4
|
%
|
Office and computer expense
|
|
|
957
|
|
|
|
2,320
|
|
|
|
(1,363
|
)
|
|
|
(58.8
|
%)
|
Rent and lease expense
|
|
|
-
|
|
|
|
750
|
|
|
|
(750
|
)
|
|
|
(100.0
|
%)
|
Telephone and utilities
|
|
|
179
|
|
|
|
257
|
|
|
|
(78
|
)
|
|
|
(30.4
|
%)
|
Total general and administrative
|
|
$
|
61,518
|
|
|
$
|
38,490
|
|
|
$
|
23,028
|
|
|
|
59.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended October 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and travel
|
|
$
|
11,928
|
|
|
$
|
20,750
|
|
|
$
|
(8,822
|
)
|
|
|
(42.5
|
%)
|
General administrative and insurance
|
|
|
19,282
|
|
|
|
17,640
|
|
|
|
1,642
|
|
|
|
9.3
|
%
|
Management fees and payroll
|
|
|
56,320
|
|
|
|
26,506
|
|
|
|
29,814
|
|
|
|
112.5
|
%
|
Office and computer expense
|
|
|
1,976
|
|
|
|
2,951
|
|
|
|
(975
|
)
|
|
|
(33.0
|
%)
|
Rent and lease expense
|
|
|
-
|
|
|
|
1,500
|
|
|
|
(1,500
|
)
|
|
|
(100.0
|
%)
|
Telephone and utilities
|
|
|
354
|
|
|
|
595
|
|
|
|
(241
|
)
|
|
|
(40.3
|
%)
|
Total general and administrative
|
|
$
|
89,860
|
|
|
$
|
69,942
|
|
|
$
|
19,918
|
|
|
|
28.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
general and administrative expense increased $23,028 for the three months ended October 31, 2019 to $61,518 compared to $38,490
for the three months ended October 31, 2018. The Company determined members of management should be compensated for their time
and expertise and accrued management fees for certain officers and directors to be paid at some future date.
Total
general and administrative expense increased $19,918 to $89,860 for the six months ended October 31, 2019 compared to $69,942
for the six months ended October 31, 2018.
LIQUIDITY
AND FINANCIAL CONDITION
|
|
|
|
|
|
|
WORKING CAPITAL
|
|
October 31, 2019
|
|
|
April 30, 2019
|
|
Current assets
|
|
$
|
117,555
|
|
|
$
|
463,161
|
|
Current liabilities
|
|
|
34,590
|
|
|
|
19,246
|
|
Working capital
|
|
$
|
82,965
|
|
|
$
|
443,915
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended
|
|
CASH FLOWS
|
|
October 31, 2019
|
|
|
October 31, 2018
|
|
Cash flow used by operating activities
|
|
$
|
(209,949
|
)
|
|
$
|
(218,363
|
)
|
Cash flow used by investing activities
|
|
|
(129,800
|
)
|
|
|
(12,000
|
)
|
Cash flow provided by financing activities
|
|
|
-
|
|
|
|
-
|
|
Net decrease in cash during period
|
|
$
|
(339,749
|
)
|
|
$
|
(230,363
|
)
|
As
of October 31, 2019, the Company had cash on hand of $100,567. Since inception, the sole source of financing has been sales of
the Companys 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 Companys 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
Companys 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 Companys stock or alternative
methods such as mergers or sale of the Companys 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 has sufficient capital to meet its obligations for the next twelve months but will require additional financing to complete
its planned permitting tasks.
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 Companys 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.