AHNRF 10-K
Athena Gold Corp (AHNRF)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $
The number of shares outstanding of the registrant’s common stock, as of March 15, 2023, is .
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes:
None.
Forward-looking Statements
In General
This Report contains statements that plan for or anticipate the future. In this Report, forward-looking statements are generally identified by the words "anticipate," "plan," "believe," "expect," "estimate," and the like.
The factors that could cause actual results to differ materially from those projected in the forward-looking statements include:
| · | the risk factors set forth below under “Risk Factors”; | |
| · | our ability to raise additional financing necessary to conduct our business; | |
| · | our future business plans and strategies; | |
| · | changes that could result from future acquisition of new mining properties or businesses; | |
| · | our ability to commercially develop our mining interests.; | |
| · | risks and hazards inherent in the mining business, including environmental hazards, industrial accidents, weather or geologically related conditions; | |
| · | uncertainties inherent in our exploratory and developmental activities, including risks relating to permitting and regulatory delays; | |
| · | changes in the market prices of gold or silver; | |
| · | uncertainties inherent in the estimation of gold or silver ore reserves; | |
| · | effects of environmental and other governmental regulations; and | |
| · | the worldwide economic downturn and difficult conditions in the global capital and credit markets. |
In addition to the foregoing, the ongoing COVID-19 pandemic poses significant risks and uncertainties in numerous areas, including the availability of labor and materials to explore our mineral interests, risks impacting the cost and availability of insurance and the markets for precious metals. We cannot predict with any certainty the nature and extent of the impact that the pandemic will have on our business plan and operations.
Readers are cautioned not to put undue reliance on forward-looking statements. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
In light of the significant uncertainties inherent in the forward-looking statements made in this Report, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.
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PART I
ITEM 1 – DESCRIPTION OF BUSINESS.
Overview
We were incorporated on December 23, 2003, in Delaware and our principal business is the acquisition and exploration of mineral resources.
In January 2021, the company’s Board of Directors approved a name change from Athena Silver Corporation, to Athena Gold Corporation. Athena Gold Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We began our mining operations in 2010.
We entered into a Mining Lease and Option Agreement which granted us mining rights to the Langtry silver prospect located in San Bernardino County California. Due to the depressed commodities prices over the ensuing decade, we were never able to engage in meaningful exploration efforts. On April 28, 2020, Athena Silver Corporation entered into Agreement to Terminate Lease with Option to Buy dated March 10, 2016 with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007, including any and all amendments thereto dated April 28, 2020 with respect to the Langtry Mine in California. As a result of this termination agreement, all scheduled lease option payments due in 2020 and beyond were considered terminated and void upon signing of the Agreement.
In December 2009, we formed and organized a new wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owned and operated our mining interests and properties in California. On December 31, 2020 we sold the subsidiary to John Gibbs and/or his affiliate, a related party, in a non-cash exchange to satisfy our more than $2.0 million debt to Mr. Gibbs which is discussed further below and in the Notes to the Consolidated Financial Statements included in this report.
Effective December 27, 2021 (“Effective Date”), the Company simultaneously executed and consummated a definitive Share Purchase Agreement (the “SPA”) with Nubian Resources, Ltd. (“Nubian Resources”). The SPA was the result of a previously disclosed Option Agreement with Nubian Resources dated as of December 11, 2020, as amended by First Amendment to Option Agreement dated November 10, 2021 (the “Option”). While the Option granted the Company the right to acquire up to a 100% interest in the mining claims comprising the Excelsior Springs Prospect (the “Property”) located in Esmerelda County, Nevada, the Company and Nubian Resources agreed to restructure the transaction so that the Company purchased 100% of the issued and outstanding shares of common stock of Nubian Resources (USA) Ltd (“Nubian USA”), a wholly-owned subsidiary of Nubian Resources which held the Property. By purchasing 100% of Nubian US, the Company effectively acquired the remaining 90% interest in the Property, the Company having previously acquired a 10% interest in the Property in December 2020 under the terms of the Option.
The following is a summary of the terms of the SPA, which summary is qualified in its entirety by reference to the SPA:
| · | The consideration paid to Nubian for 100% of the issued and outstanding shares of Nubian US consisted of: | ||
| ○ | An aggregate of 50 million shares of Athena Gold Corp. common stock, which number includes the 5 million shares of common stock previously issued to Nubian Resources under the Option; and | ||
| ○ | A 1% Net Smelter Royalty on all production from the Excelsior Springs Property. | ||
| · | The 50 million shares issued to Nubian Resources were issued as “restricted securities” under the Securities Act of 1933, as amended (“Securities Act”). The Company filed a registration statement on Form S-1 registering the distribution by Nubian of all 50 million shares to its shareholders, pro rata. Nubian Resources had undertaken to complete the distribution of all the shares once the S-1 registration statement has been declared effective. Notwithstanding the fact that the S-1 registration statement was declared effective by the SEC, Nubian Resources elected not to distribute the shares as originally agreed. | |
| · | For a period of 12 months following the Effective Date of the SPA, or until Nubian owns less than 4.9% of the Athena issued and outstanding shares, Nubian Resources has agreed to exercise its voting rights with respect to such shares in a manner to support the recommendations of the Athena Board of Directors except for (i) voting on any proposed change in control transaction or (ii) voting on any proposed sale of all or substantially all of the Excelsior Property, including a property included known as Palmetto. | |
| · | Nubian is be entitled to nominate one representative to serve on the Athena Board of Directors. |
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Athena’s agreement with Nubian Resources includes 100% of the 140 unpatented claims at Excelsior Springs with two additional patented claims held under a lease option that are subject to a 2% net smelter returns royalty on gold production. Athena subsequently expanded the Excelsior Springs project by staking 51 additional claims with the BLM and purchasing the two patented claims previously under a lease option agreement.
Excelsior Springs is our flagship project and completed a N.I. 43-101 Technical Report to support our secondary listing on the Canadian Stock Exchange that details past work and drill programs and highlight future exploration plans to advance the Property.
We have not presently determined whether our mineral properties contain mineral reserves that are economically recoverable.
Our primary focus going forward will be to continue evaluating our properties, as well as possible acquisitions of additional mineral rights and exploration, all of which will require additional capital.
Conflicts of Interests
Magellan Gold Corporation (“Magellan”) is a publicly-held company under common control. Mr. Power is our President, CEO and a director and is a former officer and director of Magellan. John Gibbs is a significant shareholder of both Athena and Magellan.
Silver Saddle Resources, LLC (“Silver Saddle”) is a private company under common control. Mr. Power and Mr. Gibbs are significant investors and managing members of Silver Saddle.
Athena, Magellan and Silver Saddle are exploration stage companies, and each is involved in the business of acquisition and exploration of mineral resources.
The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Athena, Magellan and Silver Saddle been autonomous. In addition, the common ownership could result in significant conflicts of interest both in terms of the allocation of working capital as well as under the doctrine of corporate opportunity, since all three entities are engaged in mineral exploration in the United States. Messrs. Power and Gibbs have not adopted any policy or guidelines to mitigate the potential adverse effects of their conflicting interests between and among, Athena, Magellan and Silver Saddle.
Investors in Athena should be cognizant that the interests of Athena may, in the future, be in conflict with the other activities of Athena’s control persons.
EXCELSIOR SPRINGS PROJECT
Excelsior Springs is Athena Gold’s flagship property, which is located in the southern portion of the Walker Lane. The Excelsior Springs project has been explored by a number of companies over the past 30 years. The target is a large tonnage, moderate grade gold deposit amenable to open pit mining. The Company was granted a drilling and exploration permit (the “Drill Permit”) by the BLM at the Excelsior Springs project in Esmeralda County, Nevada (the “Excelsior Springs Project”). A drilling contractor was engaged and a Phase One RC drill program consisting of 5,575 feet (11 holes) Reverse Circulation (“RC”) drilling program was completed in early April 2022. A Phase Two RC drill program consisting of 2,700 feet (9 holes) was completed in October 2022. A Phase 3 drill program is planned for 2023 subject to sufficient capital being raised in 2023 to complete the next drill program.
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Location and Access:
The Excelsior Springs Property is located in the southeast part of unsurveyed Township 5 south, Range 39 and 40 east, MDBM, Esmeralda County, Nevada, approximately 45 miles southwest of Goldfield, Nevada. The Property is accessed by traveling 14.5 miles (23.2 km) south of Goldfield on US highway 95 and then turning west onto Nevada State Route 266 at Lida Junction and proceeding west for approximately 28.7 miles (45.9 km). Just past mile marker 12, a county-maintained gravel road turns north and leads five miles (8 km) to the Property. There is a locked gate at the southern edge of the patented claims. The Property lies on the moderately hilly south flank of the Palmetto Mountains at an elevation of 6,000 to 8,000 feet (1,829 – 2,439 m) with moderate to heavy juniper/pinion pine cover.
The Excelsior Springs Property comprises 191 unpatented mining claims and two patented mining claims. All of the claims are held by Nubian Resources USA (“Nubian”) and located on Federal Government land administered by the Department of Interior's Bureau of Land Management ("BLM"). Athena staked 51 new BLM claims in Q4-2022 and the remaining 140 BLM claims were acquired as part of the original purchase of the project in December 2021. The two patented claims were leased to Nubian by the owner, Christian Bramwell, of Pahrump, Nevada until purchased in June 2022 as further described below. The patented claims, the Prout and Fortunatus (MS 4106), were located in 1873 and 1892, respectively, and were patented in 1912. The patented claims have both surface and mineral rights. Ownership of the unpatented claims gives the right to explore for and develop mineral resources but no surface rights.
The Property consisted of 42 "EX" and 88 "ES" contiguous, unpatented lode mining claims covering approximately 2,884 acres (1,167 hct) and two patented claims covering 40 acres (16.1 hct). A separate block of ten "ES" claims covering 202 acres (84 hct) is located approximately one mile (1.6 km) northwest of the main block of claims.
In September and October 2022, the Company expanded the Excelsior Springs claim block by staking 51 new BLM claims ES 2R – ES 38R and BL 1 – BL 32 were staked by Nubian Resources USA Ltd. (our wholly-owned subsidiary) and filed with the BLM in December 2022 and were assigned serial numbers NV 105804872 – NV 105804922.
The Excelsior Springs project now consists of 191 BLM unpatented claims and 2 patented claims or approximately 3,900 acres.
Legal Ownership
On June 9, 2022, the Company entered into an Acquisition Agreement (the “Agreement”) to purchase an undivided 100% interest in the Fortunatus and Prout patented lode mining claims in Esmeralda County, Nevada $185,000. The Agreement was completed in July 2022 with the following terms:
| · | $25,000 will be settled in cash (Paid July 2022) | |
| · | $35,000 of the purchase price settled by the issuance of 500,000 shares of the Company’s common stock (Issued); and | |
| · | $125,000 will be settled by a loan, repayable by the Company in quarterly installments of $25,000, beginning November 13, 2022 (paid), and continuing until October 13, 2023, at which time the entire remaining unpaid principal balance will be payable. The balance on the loan as of the date of this filing is $75,000. |
Nubian Resources Ltd (The “seller”) retained a 1% Net Smelter Returns Royalty (the "NSR Royalty") on the claims it sold to Athena. One-half (0.5%) of the NSR Royalty may be purchased by Athena for CAD $500,000 payable to Nubian Resources. An additional one-half (0.5%) of the NSR Royalty may be purchased by Athena at fair market value.
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History:
The Buster Mine claim block was discovered in 1872 and has been through several periods of small-scale mining and exploration efforts. During the late 1800s and perhaps the early 1900s there was unconfirmed production from the Buster Mine of an estimated 18,000 tons at 1.2 oz Au/ton (37.3 g/T). Little else is known about work on the mine until Fernand Lemieux re-timbered the Buster shaft in 1964 at a reported cost of $50,000 (Grant, 1986). A visual inspection of the shaft indicated the ladders were still in good condition. Since 1964, the Property has been explored by a number of companies as described below:
| · | 1960s & 1970s – Efforts to re-timber the shafts and attempts at small scale mining | |
| · | 1986 – Great Pacific Resources (11 RC holes) | |
| · | 1988 – Lucky Hardrock JV (12 RC holes) | |
| · | 2005-2007 – Walker Lane Gold (22 RC holes) | |
| · | 2008 – Evolving Gold (8 RC holes) | |
| · | 2011-2014 – Global Geoscience and partner Osisko Mining (31 RC holes & Geophysics) |
Geology and Mineralization:
The project comprises 140 unpatented and two patented lode claims covering 2,884 acres (1,167 hct). The project has had some historic, high-grade gold production from silicified zones on the patented claims. These zones are contained in several, large, intensely altered, E-W-trending shear zones in Paleozoic siltstones and limestones. These shear zones host structurally and lithologically controlled gold mineralization within a 3 X 1 km area of intense clay alteration. The shear zones have been collectively named the Excelsior Springs Shear Zone, ESSZ, and form the core of the exploration targets on the property.
Geology and Mineralization. The Property lies within the Walker Lane, a regional-scale zone of northwest-trending, strike-slip faulting. The Walker Lane hosts a significant number of precious metal deposits including the Comstock Lode at Virginia City, Borealis, Aurora, Mineral Ridge, Paradise Peak, Rawhide, Tonopah, Goldfield and the Bullfrog District. These deposits are Tertiary in age, and all have a very strong structural control for the mineralization. However, the author has not verified information with respect to the abovementioned deposits, and information in this Report with respect to these deposits is not necessarily indicative of the mineralization on the Excelsior Springs Property. The Excelsior Springs Property area contains a thick section of basal Precambrian-Cambrian sedimentary rocks that are complexly interlayered by thrust faults with the Ordovician Palmetto Formation. On the Property, there are a large number of prospect pits, small trenches and drill roads concentrated along the Excelsior Springs Property structural zone ("ESSZ"), a 1,000 foot-wide and 10,000 foot-long (304 m x 3,048 m), east-west-trending zone of shearing and alteration. Underground workings on the two patented claims have been the source of the Property's unverified, historic production, reported to be 19,200 oz Au (18,000 tons containing 1.2 oz Au/ton (37.3 g Au/T)). Assay results for the 84 RC holes that have been drilled on the Property show that 51 of the holes (61 %) contain a 20-foot interval averaging 0.25 g Au/T, typical cut-off grade for Nevada open-pit gold mines. Forty of the holes (48 %) contain a 20-foot interval averaging 0.5 g Au/T, and 24 of the holes (29 %) contain a 20-foot interval averaging 1.0 g Au/T.
Property Geology. The Excelsior Springs Property area contains basal Precambrian-Cambrian sedimentary rocks complexly interlayered by thrust faults with the Ordovician Palmetto Formation, as seen in Figure 17 (McKee, 1985). Lithologic units shown on the map are listed below.
Qa - Alluvium, (Quaternary) - sand and gravel.
Tq - Quartz porphyry and alaskite dikes, (Miocene) - Light-colored, quartz-rich fine- grained intrusive rocks.
Opa - Palmetto Formation, (Ordovician) - Heterogeneous mixture of dark, thin-bedded chert, shale, limestone and quartzites, usually in thrust fault contact with older rocks.
Ce - Emigrant Formation, (Cambrian) - Gray- green limey siltstone with sandstone interbeds. Grades upward into platy, gray, aphanitic limestone with chert nodules, chert beds and intraformational limestone conglomerates.
Ch - Harkless Formation, (Cambrian) - Interbedded fine-grained sandstone, siliceous siltstone and thin limestone.
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Miocene rhyolite and hornblende diorite dikes (Tq) occur throughout the Property and are particularly abundant in the area east of the Excelsior Springs Property. Most of the dikes are aligned parallel to the east-west to east-northeast trends of the mineralization in the ESSZ. The quartz-rich rhyolite dikes appear to be more closely associated with alteration and gold mineralization than do the hornblende diorite dikes.
The 3,500 foot-thick (1,067 m), Cambrian-age (Ch) Harkless Formation seems to be the predominant host for the alteration and mineralization and is divided into a lower, greenish-gray quartz-rich siltstone member and an upper olive-gray siltstone member. Limestone layers, up to 100 feet-thick (30 m), occur in the lower member. The Cambrian-age (Ce) Emigrant Formation overlying the Harkless consists of a lower, multi-colored limestone-siltstone member, a middle, greenish-gray shale member and an upper, gray, cherty limestone member. The Emigrant Formation is about 1,300 feet-thick (396 m).
Mineralized Zones. The east-west trending ESSZ shows strong hydrothermal alteration over an area 1,000-1,800 feet-wide (305 – 549 m) and 10,000 feet-long (3,050 m) and appears to extend under Quaternary gravels to the west of the Buster and pit areas. In addition to the area around the Buster shaft, there are many other scattered zones of anomalous gold and base metal mineralization within the ESSZ. There are large, well developed, east-west-trending drainages to the north and south of the ESSZ. These drainages also contain outcrops of strongly altered rocks that have not been closely examined. Mineralization on the claims is hosted mostly in the Harkless Formation and the Emigrant Formation. Mineralization occurs almost entirely in shear zones which are characterized by brecciation, silicification and local mylonitization. The ESSZ contains well developed fractures striking east-west and well mineralized sets of north-, northeast- and northwest-striking fractures. There are several gold-bearing quartz veins containing galena and tetrahedrite in the shear zones that represent a post-deformation period of mineralization. Most of the mineralized zones do not contain visible sulfides.
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Gold mineralization is localized by the structures and occurs as veinlets and veins. Gold also appears to occur in a disseminated form in favorable stratigraphic units. Brecciated quartz veins are common in the mineralized zones but frequently exhibit no direct correlation with higher gold values. Quartz-copper veins and pods of white quartz are also brecciated and locally re-cemented with fine-grained crystalline to chalcedonic silica. A strong correlation between visible copper and/ or zinc oxides and carbonates and higher-grade gold values has been noted. Cadmium and antimony values are anomalous but somewhat randomly distributed, and arsenic is strongly correlated with gold values greater than 8 ppm.
EXPLORATION ACTIVITIES:
Summary
Athena has begun an initial work program for the Excelsior Springs Property comprising the following:
| · | Data compilation and review; | |
| · | Geologic mapping and sampling of selected areas of the project; | |
| · | Acquisition and evaluation of hyperspectral satellite imagery for alteration studies; | |
| · | Refining the project's structural model for mineralization; | |
| · | Developing a 3-D, computer generated model of the Buster area mineralization; | |
| · | Creating a new set of 1:1200 scale cross sections to include all drill holes. |
(a) Data Compilation. There is a large amount of historic data generated by previous exploration programs on the Property. Much of the earlier data is incomplete and weakly documented but still useful. A new compilation of all the drilling results including collar location, hole azimuth, dip, total depth and gold values has been completed and used to construct the three-dimensional model and new cross sections.
(b) Geologic Mapping and Sampling. Approximately 20 man-days have been spent mapping in selected areas of the project. Mapping was done on detailed color photos at a scale of 1:2,400 with a particular focus on alteration zones and structural features. This new work is being integrated into the existing geologic map and will be fully digital. The new geologic map has not been completed, but it will serve as a base layer for showing alteration, mineralization, structures, geophysical data and drill hole projections. In conjunction with the mapping of selected areas, the Company has collected and processed 100 surface rock chip samples. Custody of these samples was maintained by the geologists and then delivered to American Assay Labs in Sparks, Nevada. All samples were fire assayed for gold, and an ICP process was used for other elements. The assay process is described in Section 11.1 of this Report and duplicate, standard and blank samples were used.
(c) Hyperspectral Data. SpecTir Imagery of Reno, Nevada provided a suite of hyperspectral images covering the area around the project. The study shows the alteration mineralogy image generated by the SpecTIR data. The Buster zone clearly shows strong kaolinite and sodium-rich illite (paragonite) alteration. The strong clay alteration zone continues eastward to the Ridge zone (447300 E) and further east into the Excelsior Springs Property area (448000 E). Further east and west from the Buster zone the clay mineralogy becomes potassium-rich phengite along with muscovite.
(d) Refining the Structural Model. Ore deposits found within the Walker Lane and particularly mineralized zones in the ESSZ are both structurally and lithologically controlled.
(e) Three-Dimensional Model. Geo Vector Consultants and Mountain Goat Consulting has utilized the updated drill hole data base for the Property and has generated the 3-D model for the mineralized zones. There are multiple intercepts of potentially well mineralized material in many of the holes, but further infill drilling is needed to better confirm continuity of the zones between the holes.
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(f) Cross Sections. Mine Development Associates ("MDA"), a division of RESPEC Inc., consultants in Reno, generated a complete set of 1:600 scale cross sections along with a topographic map showing all of the drill holes and mineralized intervals.
The Company was granted a drilling and exploration permit (the “Drill Permit”) by the BLM in December 2021 for its Excelsior Springs Project in Esmeralda County, Nevada. The permit was amended in 2022. Athena has posted the required reclamation bond with the BLM to secure the Drill Permit.
Athena entered into a contract with New Frontier Drilling and in April 2022 completed its maiden drill program with 11 RC holes on both the patented and unpatented claims totaling approximately 5,500 feet.
The Company updated its permit with the BLM with additional locations and completed a Phase 2 drill program with 9 RC holes on both the patanted and unpatented claims totalling approximately 2,800 feet.
Athena submitted the samples from the drill program to an independent assay lab in Reno, Nevada for analysis.
| Phase 1 RC Drilling Data and Results | ||||||||
| Hole | Intervals, Feet 2 | Azimuth | Decline | Gold 1 | Silver | Total | ||
| ID | From | To | Length | Degrees | Degrees | G/T | G/T | Depth, Ft |
| DB-24 | nsm | 0 | 50 | 400 | ||||
| DB-23 | 140 | 250 | 110 | 180 | 50 | 5.15 | 8.9 | 400 |
| includes | 140 | 195 | 55 | 10.03 | 17.3 | |||
| includes | 140 | 175 | 35 | 15.35 | 26.5 | |||
| DB-22 | 220 | 240 | 20 | 0 | 90 | 0.61 | 3.1 | 400 |
| " | 265 | 285 | 20 | 1.48 | 2.8 | |||
| " | 340 | 360 | 20 | 1.01 | 5.6 | |||
| DB-3 | 215 | 275 | 60 | 135 | 50 | 1.10 | 4.0 | 350 |
| BT-16 | * | 218 | 50 | 695 | ||||
| BT-15 | nsm | 38 | 50 | 825 | ||||
| BT-13 | nsm | 0 | 90 | 375 | ||||
| BT-12 | nsm | 180 | 50 | 350 | ||||
| BT-11 | * | 180 | 50 | 500 | ||||
| BT-7 | 110 | 130 | 20 | 135 | 50 | 1.11 | 4.0 | 380 |
| BT-6 | 510 | 530 | 20 | 120 | 50 | 0.22 | 16.9 | 900 |
| Total Drilling | 5,575 | |||||||
| nsm: no significant mineral | ||||||||
| * assays not yet received | ||||||||
| 1 Nominal gold cut off: 0.20 g/t. | ||||||||
| 2 Minimum mineral interval of 20 feet. Minimum 20 feet waste between mineral intervals. | ||||||||
|
Maximum 20 feet waste within mineral intervals. As most spatial data is not yet available, drill intervals are not true mineral thicknesses. | ||||||||
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| Phase 2 Drilling Data and Results | |||||||||||||||||||
| Hole | Intervals, Feet 2 | Intervals, Meters 2 | Azimuth | Decline | Au | Ag | Au Eq | Cu 4 | Pb4 | Zn4 | Hole Depth | Zone | |||||||
| ID | From | To | Length | From | To | Length | Degrees | Degrees | G/T | G/T | G/T 3 | % | % | % | Ft | M | 5 | ||
| 22-01 | 130 | 220 | 90 | 39.6 | 67.1 | 27.4 | 162 | 60 | 6.045 | 17.4 | 6.274 | 0.071 | 0.294 | 0.476 | 300 | 91.4 | WS | ||
| Includes | 130 | 165 | 35 | 39.6 | 50.3 | 10.7 | 10.200 | 30.8 | 10.605 | 0.170 | 0.644 | 1.140 | |||||||
| 255 | 300 | 45 | 77.7 | 91.4 | 13.7 | 4.970 | 14.40 | 5.159 | 0.070 | 0.821 | 1.003 | ||||||||
| 22-02 | 135 | 185 | 50 | 41.1 | 56.4 | 15.2 | 197 | 55 | 4.492 | 27.3 | 4.851 | 0.056 | 0.382 | 0.546 | 300 | 91.4 | WS | ||
| Includes | 145 | 175 | 30 | 44.2 | 53.3 | 9.1 | 7.293 | 44.2 | 7.874 | 0.091 | 0.621 | 0.873 | |||||||
| 225 | 250 | 25 | 68.6 | 76.2 | 7.6 | 1.195 | 7.7 | 1.296 | 0.023 | 0.227 | 0.220 | ||||||||
| 22-03 | NSM | 160 | 45 | 300 | 91.4 | WS | |||||||||||||
| 22-04 | 55 | 75 | 20 | 16.8 | 22.9 | 6.1 | 135 | 50 | 0.252 | 6.0 | 0.331 | 0.004 | 0.016 | 0.015 | 400 | 121.9 | MB | ||
| 22-05 | 0 | 50 | 50 | 0.0 | 15.2 | 15.2 | 135 | 60 | 0.395 | 3.30 | 0.438 | 0.009 | 0.117 | 0.179 | 200 | 61.0 | MB | ||
| 145 | 170 | 25 | 44.2 | 51.8 | 7.6 | 0.646 | 2.96 | 0.000 | 0.006 | 0.049 | 0.048 | ||||||||
| 22-06 | NSM | 135 | 50 | 300 | 91.4 | MB | |||||||||||||
| 22-07 | NSM | 135 | 60 | 300 | 91.4 | WS | |||||||||||||
| 22-08 | NSM | 135 | 59 | 300 | 91.4 | WS | |||||||||||||
| 22-12 | NSM | 135 | 55 | 300 | 91.4 | WS | |||||||||||||
| Total Drilling | 2,700 | 823.0 | |||||||||||||||||
| 'NSM: no significant mineral | |||||||||||||||||||
| 1 Nominal gold cut off: 0.20 g/t. | |||||||||||||||||||
| 2 Minimum mineral interval of 20 feet. Minimum 20 feet waste between mineral intervals. | |||||||||||||||||||
| 3 Based on prices of $1775/oz Au and $23/oz Ag | |||||||||||||||||||
| 4 Geochemical analysis of anomalous base metals | |||||||||||||||||||
| 5 WS: West Slope Zone MB: Main Buster Zone | |||||||||||||||||||
| Maximum 20 feet waste within mineral intervals. As most spatial data is not yet available, drill intervals are not true mineral thicknesses. | |||||||||||||||||||
Future exploration phases would be needed to precisely define depth, width, length, tonnage and value per ton of any deposit that has been identified and would involve:
| · |
RC and CORE drilling. A permit is in place with the BLM and a bond has been posted to allow for additional RC drilling.
Conduct a new gradient array IP survey that will provide data to a depth of approximately 900 feet (274 m) and better define the southwestern chargeability zone. | |
| · | conducting metallurgical testing; and | |
| · | obtaining other pertinent technical information required to define an ore reserve and complete a feasibility study. |
Depending upon the nature of the particular deposit, future exploration phases on the property could take one to five years or more and cost well in excess of $1 million.
| 10 |
OTHER NON-MATERIAL PROJECTS
| (a) | PALMETTO PROSPECT |
Nubian Resources USA, Ltd. also holds nine (9) unpatented mining claims covering a prospect known as Palmetto located in the Railroad Springs Mining District in Esmeralda County, Nevada. The Company has no current plans to explore the prospect and the claims are held for investment.
| (b) | CROW SPRINGS PROSPECT |
Athena leased from an independent geologist seven unpatented mining claims and then staked four additional unpatented mining claims for a total of eleven (11) claims in the Crow Springs Mining District located in Esmeralda County, Nevada.
The Company has no current plans to explore the prospect and the claims are held for investment.
No Proven or Probable Mineral Reserves/Exploration Stage Company
We are considered an exploration stage company under SEC criteria since we have not demonstrated the existence of proven or probable mineral reserves at any of our properties.
The SEC’s Final Rule 13-10570, Modernization of Property Disclosures for Mining Registrants, became effective March 30, 2019, and rescinds SEC Industry Guide 7 following a two-year transition period.
Under the former Industry Guide 7, the SEC defined a “reserve” as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Proven or probable mineral reserves were those reserves for which (a) quantity is computed and (b) the sites for inspection, sampling, and measurement are spaced so closely that the geologic character is defined and size, shape and depth of mineral content can be established (proven) or the sites are farther apart or are otherwise less adequately spaced but high enough to assume continuity between observation points (probable). Mineral Reserves could not be considered proven or probable unless and until they are supported by a feasibility study, indicating that the mineral reserves have had the requisite geologic, technical and economic work performed and are economically and legally extractable.
The final rule’s amendments require disclosure of both mineral reserves and mineral resources. Under the final rule, a mineral reserve is defined as “an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project.” A mineral resource is defined as “a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction.” Under the SEC’s former disclosure requirements under Industry Guide 7, , an assessment of the economic viability of mineral reserves must be supported by a final feasibility study. By contrast, the final rule’s amendments provide that a prefeasibility study, which is more limited in scope than a final feasibility study, will also be sufficient to support such an assessment. As for mineral resources, their disclosure is prohibited under former SEC guidance unless it is required under the regulations of another jurisdiction, such as Canada. Under the final rule’s amendments, however, mineral resources must be disclosed and categorized as “measured” (if the geological sampling is “conclusive”), “indicated” (if the geological sampling is “adequate”), or “inferred” (if the geological sampling is “limited”). Effectively, the categorization is based on the company’s confidence in its ability to develop the mineral resources, which depends on the sampling and testing that have been performed. The final rule’s amendments also require companies to disclose exploration results when such information would be material to investors. Further, the disclosures required under the final rule must be supported by the work of a qualified person, such as a mine engineer. When a company first reports mineral reserves or resources, or makes a material change to such disclosures, it must file a technical report summary supporting the disclosure. Developing this detailed disclosure information (e.g., by using an expert) and maintaining appropriate disclosure controls and procedures over it requires significant time, resources, and effort.
| 11 |
MARKETING
All of our mining operations, if successful, will produce gold in doré form or a concentrate that contains gold.
We plan to market our refined metal and doré to credit worthy bullion trading houses, market makers and members of the London Bullion Market Association, industrial companies and sound financial institutions. The refined metals will be sold to end users for use in electronic circuitry, jewelry, silverware, and the pharmaceutical and technology industries. Generally, the loss of a single bullion trading counterparty would not adversely affect us due to the liquidity of the markets and the availability of alternative trading counterparties.
We plan to refine and market its precious metals doré and concentrates using a geographically diverse group of third party smelters and refiners. The loss of any one smelting and refining client may have a material adverse effect if alternate smelters and refiners are not available. We believe there is sufficient global capacity available to address the loss of any one smelter.
GOVERNMENT REGULATION
General
Our activities are and will be subject to extensive federal, state and local laws governing the protection of the environment, prospecting, mine development, production, taxes, labor standards, occupational health, mine safety, toxic substances and other matters. The costs associated with compliance with such regulatory requirements are substantial and possible future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the development and continued operation of our properties, the extent of which cannot be predicted. In the context of environmental permitting, including the approval of reclamation plans, we must comply with known standards and regulations which may entail significant costs and delays. Although we are committed to environmental responsibility and believe we are in substantial compliance with applicable laws and regulations, amendments to current laws and regulations, more stringent implementation of these laws and regulations through judicial review or administrative action or the adoption of new laws could have a materially adverse effect upon our results of operations.
Federal Environmental Laws
Certain mining wastes from extraction and beneficiation of ores are currently exempt from the extensive set of Environmental Protection Agency (“EPA”) regulations governing hazardous waste, although such wastes may be subject to regulation under state law as a solid or hazardous waste. The EPA has worked on a program to regulate these mining wastes pursuant to its solid waste management authority under the Resource Conservation and Recovery Act (“RCRA”). Certain ore processing and other wastes are currently regulated as hazardous wastes by the EPA under RCRA. If our future mine wastes, if any, were treated as hazardous waste or such wastes resulted in operations being designated as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) for cleanup, material expenditures would be required for the construction of additional waste disposal facilities or for other remediation expenditures. Under CERCLA, any present owner or operator of a Superfund site or an owner or operator at the time of its contamination generally may be held liable and may be forced to undertake remedial cleanup action or to pay for the government’s cleanup efforts. Such owner or operator may also be liable to governmental entities for the cost of damages to natural resources, which may be substantial. Additional regulations or requirements may also be imposed upon our future tailings and waste disposal, if any, in Nevada under the Federal Clean Water Act (“CWA”) and state law counterparts. We have reviewed and considered current federal legislation relating to climate change and we do not believe it to have a material effect on our operations. Additional regulation or requirements under any of these laws and regulations could have a materially adverse effect upon our results of operations.
| 12 |
EXCELSIOR SPRINGS PROJECT CLAIMS
The following map shows the location of the patented and unpatented mining claims that comprise the Excelsior Springs Project as of December 31, 2022:
| 13 |
Excelsior Springs Project - List of ES Claims
| Claim Name | NMC # | Claimant | Valid Until | |
| 1 | ES 1 | 1045871 | Nubian Resources USA Ltd. | 9/1/2023 |
| 2 | ES 3 | 1045873 | Nubian Resources USA Ltd. | 9/1/2023 |
| 3 | ES 5 | 1045875 | Nubian Resources USA Ltd. | 9/1/2023 |
| 4 | ES 7 | 1045877 | Nubian Resources USA Ltd. | 9/1/2023 |
| 5 | ES 9 | 1045879 | Nubian Resources USA Ltd. | 9/1/2023 |
| 6 | ES 11 | 1045881 | Nubian Resources USA Ltd. | 9/1/2023 |
| 7 | ES 13 | 1045883 | Nubian Resources USA Ltd. | 9/1/2023 |
| 8 | ES 15 | 1045885 | Nubian Resources USA Ltd. | 9/1/2023 |
| 9 | ES 17 | 1045887 | Nubian Resources USA Ltd. | 9/1/2023 |
| 10 | ES 19 | 1045889 | Nubian Resources USA Ltd. | 9/1/2023 |
| 11 | ES 21 | 1045891 | Nubian Resources USA Ltd. | 9/1/2023 |
| 12 | ES 23 | 1045893 | Nubian Resources USA Ltd. | 9/1/2023 |
| 13 | ES 25 | 1045895 | Nubian Resources USA Ltd. | 9/1/2023 |
| 14 | ES 27 | 1045897 | Nubian Resources USA Ltd. | 9/1/2023 |
| 15 | ES 29 | 1045899 | Nubian Resources USA Ltd. | 9/1/2023 |
| 16 | ES 31 | 1045901 | Nubian Resources USA Ltd. | 9/1/2023 |
| 17 | ES 33 | 1045903 | Nubian Resources USA Ltd. | 9/1/2023 |
| 18 | ES 35 | 1045905 | Nubian Resources USA Ltd. | 9/1/2023 |
| 19 | ES 37 | 1045907 | Nubian Resources USA Ltd. | 9/1/2023 |
| 20 | ES 39 | 1045909 | Nubian Resources USA Ltd. | 9/1/2023 |
| 21 | ES 40 | 1045910 | Nubian Resources USA Ltd. | 9/1/2023 |
| 22 | ES 41 | 1045911 | Nubian Resources USA Ltd. | 9/1/2023 |
| 23 | ES 42 | 1045912 | Nubian Resources USA Ltd. | 9/1/2023 |
| 24 | ES 43 | 1045913 | Nubian Resources USA Ltd. | 9/1/2023 |
| 25 | ES 44 | 1045914 | Nubian Resources USA Ltd. | 9/1/2023 |
| 26 | ES 45 | 1045915 | Nubian Resources USA Ltd. | 9/1/2023 |
| 27 | ES 46 | 1045916 | Nubian Resources USA Ltd. | 9/1/2023 |
| 28 | ES 47 | 1045917 | Nubian Resources USA Ltd. | 9/1/2023 |
| 29 | ES 48 | 1045918 | Nubian Resources USA Ltd. | 9/1/2023 |
| 30 | ES 49 | 1045919 | Nubian Resources USA Ltd. | 9/1/2023 |
| 31 | ES 50 | 1045920 | Nubian Resources USA Ltd. | 9/1/2023 |
| 32 | ES 51 | 1045921 | Nubian Resources USA Ltd. | 9/1/2023 |
| 33 | ES 52 | 1045922 | Nubian Resources USA Ltd. | 9/1/2023 |
| 34 | ES 53 | 1045923 | Nubian Resources USA Ltd. | 9/1/2023 |
| 35 | ES 54 | 1045924 | Nubian Resources USA Ltd. | 9/1/2023 |
| 36 | ES 55 | 1045925 | Nubian Resources USA Ltd. | 9/1/2023 |
| 37 | ES 56 | 1045926 | Nubian Resources USA Ltd. | 9/1/2023 |
| 38 | ES 57 | 1045927 | Nubian Resources USA Ltd. | 9/1/2023 |
| 39 | ES 58 | 1045928 | Nubian Resources USA Ltd. | 9/1/2023 |
| 40 | ES 59 | 1045929 | Nubian Resources USA Ltd. | 9/1/2023 |
| 41 | ES 60 | 1045930 | Nubian Resources USA Ltd. | 9/1/2023 |
| 42 | ES 61 | 1045931 | Nubian Resources USA Ltd. | 9/1/2023 |
| 14 |
| Claim Name | NMC# | Claimant | Valid Until | |
| 43 | ES 62 | 1045932 | Nubian Resources USA Ltd. | 9/1/2023 |
| 44 | ES 63 | 1045933 | Nubian Resources USA Ltd. | 9/1/2023 |
| 45 | ES 64 | 1045934 | Nubian Resources USA Ltd. | 9/1/2023 |
| 46 | ES 65 | 1045935 | Nubian Resources USA Ltd. | 9/1/2023 |
| 47 | ES 66 | 1045936 | Nubian Resources USA Ltd. | 9/1/2023 |
| 48 | ES 67 | 1045937 | Nubian Resources USA Ltd. | 9/1/2023 |
| 49 | ES 68 | 1045938 | Nubian Resources USA Ltd. | 9/1/2023 |
| 50 | ES 69 | 1045939 | Nubian Resources USA Ltd. | 9/1/2023 |
| 51 | ES 70 | 1045940 | Nubian Resources USA Ltd. | 9/1/2023 |
| 52 | ES 71 | 1045941 | Nubian Resources USA Ltd. | 9/1/2023 |
| 53 | ES 72 | 1045942 | Nubian Resources USA Ltd. | 9/1/2023 |
| 54 | ES 73 | 1045943 | Nubian Resources USA Ltd. | 9/1/2023 |
| 55 | ES 74 | 1045944 | Nubian Resources USA Ltd. | 9/1/2023 |
| 56 | ES 75 | 1045945 | Nubian Resources USA Ltd. | 9/1/2023 |
| 57 | ES 76 | 1045946 | Nubian Resources USA Ltd. | 9/1/2023 |
| 58 | ES 77 | 1045947 | Nubian Resources USA Ltd. | 9/1/2023 |
| 59 | ES 78 | 1045948 | Nubian Resources USA Ltd. | 9/1/2023 |
| 60 | ES 79 | 1045949 | Nubian Resources USA Ltd. | 9/1/2023 |
| 61 | ES 80 | 1045950 | Nubian Resources USA Ltd. | 9/1/2023 |
| 62 | ES 81 | 1045951 | Nubian Resources USA Ltd. | 9/1/2023 |
| 63 | ES 82 | 1045952 | Nubian Resources USA Ltd. | 9/1/2023 |
| 64 | ES 83 | 1045953 | Nubian Resources USA Ltd. | 9/1/2023 |
| 65 | ES 84 | 1045954 | Nubian Resources USA Ltd. | 9/1/2023 |
| 66 | ES 85 | 1045955 | Nubian Resources USA Ltd. | 9/1/2023 |
| 67 | ES 86 | 1045956 | Nubian Resources USA Ltd. | 9/1/2023 |
| 68 | ES 87 | 1045957 | Nubian Resources USA Ltd. | 9/1/2023 |
| 69 | ES 88 | 1045958 | Nubian Resources USA Ltd. | 9/1/2023 |
| 70 | ES 89 | 1045959 | Nubian Resources USA Ltd. | 9/1/2023 |
| 71 | ES 90 | 1045960 | Nubian Resources USA Ltd. | 9/1/2023 |
| 72 | ES 91 | 1045961 | Nubian Resources USA Ltd. | 9/1/2023 |
| 73 | ES 92 | 1045962 | Nubian Resources USA Ltd. | 9/1/2023 |
| 74 | ES 93 | 1045963 | Nubian Resources USA Ltd. | 9/1/2023 |
| 75 | ES 94 | 1045964 | Nubian Resources USA Ltd. | 9/1/2023 |
| 76 | ES 95 | 1045965 | Nubian Resources USA Ltd. | 9/1/2023 |
| 77 | ES 96 | 1045966 | Nubian Resources USA Ltd. | 9/1/2023 |
| 78 | ES 97 | 1045967 | Nubian Resources USA Ltd. | 9/1/2023 |
| 79 | ES 98 | 1045968 | Nubian Resources USA Ltd. | 9/1/2023 |
| 80 | ES 99 | 1045969 | Nubian Resources USA Ltd. | 9/1/2023 |
| 81 | ES 100 | 1045970 | Nubian Resources USA Ltd. | 9/1/2023 |
| 82 | ES103 | 1057362 | Nubian Resources USA Ltd. | 9/1/2023 |
| 83 | ES105 | 1057364 | Nubian Resources USA Ltd. | 9/1/2023 |
| 84 | ES107 | 1057366 | Nubian Resources USA Ltd. | 9/1/2023 |
| 15 |
| Claim Name | NMC# | Claimant | Valid Until | |
| 85 | ES109 | 1057368 | Nubian Resources USA Ltd. | 9/1/2023 |
| 86 | ES176 | 1057394 | Nubian Resources USA Ltd. | 9/1/2023 |
| 87 | ES179 | 1057395 | Nubian Resources USA Ltd. | 9/1/2023 |
| 88 | ES180 | 1057396 | Nubian Resources USA Ltd. | 9/1/2023 |
| 89 | ES245 | 1057460 | Nubian Resources USA Ltd. | 9/1/2023 |
| 90 | ES246 | 1057461 | Nubian Resources USA Ltd. | 9/1/2023 |
| 91 | ES247 | 1057462 | Nubian Resources USA Ltd. | 9/1/2023 |
| 92 | ES248 | 1057463 | Nubian Resources USA Ltd. | 9/1/2023 |
| 93 | ES249 | 1057464 | Nubian Resources USA Ltd. | 9/1/2023 |
| 94 | ES250 | 1057465 | Nubian Resources USA Ltd. | 9/1/2023 |
| 95 | ES251 | 1057466 | Nubian Resources USA Ltd. | 9/1/2023 |
| 96 | ES252 | 1057467 | Nubian Resources USA Ltd. | 9/1/2023 |
| 97 | ES253 | 1057468 | Nubian Resources USA Ltd. | 9/1/2023 |
| 98 | ES254 | 1057469 | Nubian Resources USA Ltd. | 9/1/2023 |
Excelsior Springs Project - List of EX Claims
| Claim Name | NMC # | Claimant | Valid Until | |
| 1 | EX 1 | 887756 | Nubian Resources USA Ltd. | 9/1/2023 |
| 2 | EX 2 | 887757 | Nubian Resources USA Ltd. | 9/1/2023 |
| 3 | EX 3 | 887758 | Nubian Resources USA Ltd. | 9/1/2023 |
| 4 | EX 4 | 887759 | Nubian Resources USA Ltd. | 9/1/2023 |
| 5 | EX 5 | 887760 | Nubian Resources USA Ltd. | 9/1/2023 |
| 6 | EX 6 | 887761 | Nubian Resources USA Ltd. | 9/1/2023 |
| 7 | EX 7 | 887762 | Nubian Resources USA Ltd. | 9/1/2023 |
| 8 | EX 8 | 887763 | Nubian Resources USA Ltd. | 9/1/2023 |
| 9 | EX 9 | 887764 | Nubian Resources USA Ltd. | 9/1/2023 |
| 10 | EX 10 | 887765 | Nubian Resources USA Ltd. | 9/1/2023 |
| 11 | EX 11 | 887766 | Nubian Resources USA Ltd. | 9/1/2023 |
| 12 | EX 12 | 887767 | Nubian Resources USA Ltd. | 9/1/2023 |
| 13 | EX 13 | 887768 | Nubian Resources USA Ltd. | 9/1/2023 |
| 14 | EX 14 | 887769 | Nubian Resources USA Ltd. | 9/1/2023 |
| 15 | EX 20 | 897986 | Nubian Resources USA Ltd. | 9/1/2023 |
| 16 | EX 21 | 897987 | Nubian Resources USA Ltd. | 9/1/2023 |
| 17 | EX 22 | 897988 | Nubian Resources USA Ltd. | 9/1/2023 |
| 18 | EX 23 | 897989 | Nubian Resources USA Ltd. | 9/1/2023 |
| 16 |
| Claim Name | NMC # | Claimant | Valid Until | |
| 19 | EX 24 | 897990 | Nubian Resources USA Ltd. | 9/1/2023 |
| 20 | EX 25 | 897991 | Nubian Resources USA Ltd. | 9/1/2023 |
| 21 | EX 26 | 897992 | Nubian Resources USA Ltd. | 9/1/2023 |
| 22 | EX 27 | 897993 | Nubian Resources USA Ltd. | 9/1/2023 |
| 23 | EX 28 | 897994 | Nubian Resources USA Ltd. | 9/1/2023 |
| 24 | EX 29 | 897995 | Nubian Resources USA Ltd. | 9/1/2023 |
| 25 | EX 30 | 897996 | Nubian Resources USA Ltd. | 9/1/2023 |
| 26 | EX 31 | 897997 | Nubian Resources USA Ltd. | 9/1/2023 |
| 27 | EX 32 | 897998 | Nubian Resources USA Ltd. | 9/1/2023 |
| 28 | EX 33 | 897999 | Nubian Resources USA Ltd. | 9/1/2023 |
| 29 | EX 34 | 898000 | Nubian Resources USA Ltd. | 9/1/2023 |
| 30 | EX 35 | 898001 | Nubian Resources USA Ltd. | 9/1/2023 |
| 31 | EX 36 | 898002 | Nubian Resources USA Ltd. | 9/1/2023 |
| 32 | EX 37 | 898003 | Nubian Resources USA Ltd. | 9/1/2023 |
| 33 | EX 38 | 898004 | Nubian Resources USA Ltd. | 9/1/2023 |
| 34 | EX 39 | 898005 | Nubian Resources USA Ltd. | 9/1/2023 |
| 35 | EX 40 | 898006 | Nubian Resources USA Ltd. | 9/1/2023 |
| 36 | EX 41 | 898007 | Nubian Resources USA Ltd. | 9/1/2023 |
| 37 | EX 42 | 898008 | Nubian Resources USA Ltd. | 9/1/2023 |
| 38 | EX 43 | 898009 | Nubian Resources USA Ltd. | 9/1/2023 |
| 39 | EX 44 | 898010 | Nubian Resources USA Ltd. | 9/1/2023 |
| 40 | EX 45 | 898011 | Nubian Resources USA Ltd. | 9/1/2023 |
| 41 | EX 46 | 898012 | Nubian Resources USA Ltd. | 9/1/2023 |
| 42 | EX 47 | 898013 | Nubian Resources USA Ltd. | 9/1/2023 |
Additional Claim blocks ES 2R – ES 38R and BL 1 – BL 32 were staked by Nubian Resources USA Ltd. in September and October 2022 and filed with the BLM in December 2022 and were assigned serial numbers NV 105804872 – NV 105804922.
Unpatented Mining Claims: The Mining Law of 1872
Except for the Langtry Property, our mineral rights consist of leases covering "unpatented" mining claims created and maintained in accordance with the U.S. General Mining Law of 1872, or the “General Mining Law.” Unpatented mining claims are unique U.S. property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. The validity of an unpatented mining claim, in terms of both its location and its maintenance, is dependent on strict compliance with a complex body of federal and state statutory and decisional law that supplement the General Mining Law. Also, unpatented mining claims and related rights, including rights to use the surface, are subject to possible challenges by third parties or contests by the federal government. In addition, there are few public records that definitively control the issues of validity and ownership of unpatented mining claims. We have not filed a patent application for any of our unpatented mining claims that are located on federal public lands in the United States and, under possible future legislation to change the General Mining Law, patents may be difficult to obtain.
| 17 |
Location of mining claims under the General Mining Law, is a self-initiation system under which a person physically stakes an unpatented mining claim on public land that is open to location, posts a location notice and monuments the boundaries of the claim in compliance with federal laws and regulations and with state location laws, and files notice of that location in the county records and with the BLM. Mining claims can be located on land as to which the surface was patented into private ownership under the Stockraising Homestead Act of 1916, 43 U.S.C. §299, but the mining claimant cannot injure, damage or destroy the surface owner's permanent improvements and must pay for damage to crops caused by prospecting. Discovery of a valuable mineral deposit, as defined under federal law, is essential to the validity of an unpatented mining claim and is required on each mining claim individually. The location is made as a lode claim for mineral deposits found as veins or rock in place, or as a placer claim for other deposits. While the maximum size and shape of lode claims and placer claims are established by statute, there are no limits on the number of claims one person may locate or own. The General Mining Law also contains provision for acquiring five-acre claims of non-mineral land for millsite purposes. A mining operation typically is comprised of many mining claims.
The holder of a valid unpatented mining claim has possessory title to the land covered thereby, which gives the claimant exclusive possession of the surface for mining purposes and the right to mine and remove minerals from the claim. Legal title to land encompassed by an unpatented mining claim remains in the United States, and the government can contest the validity of a mining claim. The General Mining Law requires the performance of annual assessment work for each claim, and subsequent to enactment of the Federal Land Policy and Management Act of 1976, 43 U.S.C. §1201 et seq., mining claims are invalidated if evidence of assessment work is not timely filed with BLM. However, in 1993 Congress enacted a provision requiring payment of $140 per year claim maintenance fee in lieu of performing assessment work, subject to an exception for small miners having less than 10 claims. No royalty is paid to the United States with respect to minerals mined and sold from a mining claim. The current annual maintenance fee is $165 per unpatented claim payable to the Bureau of Land Management.
The General Mining Law provides a procedure for a qualified claimant to obtain a mineral patent (i.e., fee simple title to the mining claim) under certain conditions. It has become much more difficult in recent years to obtain a patent. Beginning in 1994, Congress imposed a funding moratorium on the processing of mineral patent applications which had not reached a designated stage in the patent process at the time the moratorium went into effect. Additionally, Congress has considered several bills in recent years to repeal the General Mining Law or to amend it to provide for the payment of royalties to the United States and to eliminate or substantially limit the patent provisions of the law.
Mining claims are conveyed by deed, or leased by the claimant to the party seeking to develop the property. Such a deed or lease (or memorandum of it) needs to be recorded in the real property records of the county where the property is located, and evidence of such transfer needs to be filed with BLM. It is not unusual for the grantor or lessor to reserve a royalty, which as to precious metals often is expressed as a percentage of net smelter returns.
Patented Mining Claims
Patented mining claims, such as the two patented claims included in the Excelsior Springs project, are mining claims on federal lands that are held in fee simple by the owner. No maintenance fees or royalties are payable to the BLM; however, lease payments and royalties are payable under the operative leases.
| 18 |
GOLD PRICES
Our operating results are substantially dependent upon the world market prices of silver. We have no control over gold prices, which can fluctuate widely. The volatility of such prices is illustrated by the following table, which sets forth the high and low London Fix prices of gold (as reported by www.kitco.com) per ounce during the periods indicated:
| Year | High | Low | ||||||
| 2017 | $ | 1,346 | $ | 1,151 | ||||
| 2018 | $ | 1,355 | $ | 1,178 | ||||
| 2019 | $ | 1,546 | $ | 1,270 | ||||
| 2020 | $ | 2,067 | $ | 1,474 | ||||
| 2021 | $ | 1,943 | $ | 1,684 | ||||
| 2022 | $ | 2,039 | $ | 1,628 | ||||
These historical prices are not indicative of future gold prices.
EMPLOYEES AND CONSULTANTS
We have only one part-time employee, Mr. Power, who devotes approximately 25% of his time and attention to our business. We have agreed to pay Mr. Power $2,500 per month for his services.
We rely heavily on the services of consulting engineers and geologists.
ITEM 1A – RISK FACTORS.
An investment in our securities is speculative and involves a high degree of risk. Please carefully consider the following risk factors, as well as the possibility of the loss of your entire investment, before deciding to invest in our securities.
Risks Related to our Business
Due to our history of operating losses our auditors have expressed substantial doubt about our ability to continue as a going concern.
Our financial statements have been prepared assuming that we will continue as a going concern. Due to our continuing operating losses and negative cash flows from our operations, the report of our auditors issued in connection with our financial statements for the years ended December 31, 2022, and 2021 contain explanatory paragraphs indicating that the foregoing matters raised substantial doubt about our ability to continue as a going concern. We cannot provide any assurance that we will be able to continue as a going concern.
Uncontrollable events like the COVID-19 pandemic may negatively impact our operations.
The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.
| 19 |
We have no history of or experience in mineral production.
We have no history of or experience in producing gold or other metals. The development of our Excelsior Springs Project would require the construction and operation of mines, processing plants, and related infrastructure. As a result, we would be subject to all of the risks associated with establishing a new mining operation and business enterprise. We may never successfully establish mining operations, and any such operations may not achieve profitability.
Our principal shareholders and control persons are also principal shareholders and control persons of Athena, Magellan Gold and Silver Saddle, which could result in conflicts with the interests of minority stockholders.
Magellan Gold Corporation (“Magellan”) is a publicly-held company under common control. Mr. Power is our President, CEO and a director and is a former officer and director of Magellan. John Gibbs is a significant shareholder of both Athena and Magellan.
Messrs. Gibbs and Power are control persons and principal shareholders of Athena and Silver Saddle. Athena, Magellan and Silver Saddle are engaged in mineral exploration activities, although in different geographical regions. While the geographical focus of the companies is different, numerous conflicts could arise in the future. For example, Messrs. Gibbs and Power have provided the majority of working capital for all three companies to date, and in the likely event that these companies require additional capital in the future, their resources may be inadequate to finance the activities of all. In addition, if new prospects become available, a conflict may exist with respect to which company to offer those opportunities. Messrs. Gibbs and Power have not developed a conflict of interest policy to mitigate the potential adverse effects of these conflicts and as a result these conflicts represent a significant risk to the shareholders of the Company. Conflicts for access to limited resources and opportunities cannot be eliminated completely, and investors should be aware of their potential.
Our principal executive officer intends to devote only a limited amount of his time and attention to our business.
Mr. Power is the only executive officer of Athena. He anticipates that he will only devote approximately 25% of his time and attention to our business. This limited focus could result in significant delays in our exploration and development activities and ability to generate revenues and profits, if any, in the future.
We have no proven or probable reserves and our properties are in the exploration stage
We have not established that our properties contain any mineral reserve according to recognized reserve guidelines, nor can there be any assurance that we will be able to do so. A mineral reserve is defined by the SEC in Regulation SK 1300 as that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that meets the requirements of Regulation SK 1300 is extremely remote; in all probability our mineral properties do not contain any “reserves” and any funds that we spend on exploration could be lost. Even if we do eventually discover a mineral reserve on our properties, there can be no assurance that they can be developed into producing mines and extract those minerals. Both mineral exploration and development involve a high degree of risk and few mineral properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the mineral deposit to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral deposit unprofitable.
In order to demonstrate the existence of proven or probable reserves under SEC guidelines, it would be necessary for us to advance the exploration of our Excelsior Springs Project by significant additional delineation drilling to demonstrate the existence of sufficient mineralized material with satisfactory continuity which would provide the basis for a feasibility study which would demonstrate with reasonable certainty that the mineralized material can be economically extracted and produced. We do not have sufficient data to support a feasibility study with regard to the Excelsior Springs Project, and in order to perform the drill work to support such feasibility study, we must obtain the necessary permits and funds to continue our exploration efforts. It is possible that, even after we have obtained sufficient geologic data to support a feasibility study on the Excelsior Springs Project, such study will conclude that none of the identified mineral deposits can be economically and legally extracted or produced. If we cannot adequately confirm or discover any mineral reserves of precious metals on the Excelsior Springs Property, we may not be able to generate any revenues. Even if we discover mineral reserves on the Excelsior Springs Property in the future that can be economically developed, the initial capital costs associated with development and production of any reserves found is such that we might not be profitable for a significant time after the initiation of any development or production. The commercial viability of a mineral deposit once discovered is dependent on a number of factors beyond our control, including particular attributes of the deposit such as size, grade and proximity to infrastructure, as well as metal prices. In addition, development of a project as significant as Excelsior Springs will likely require significant debt financing, the terms of which could contribute to a delay of profitability.
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The exploration of mineral properties is highly speculative in nature, involves substantial expenditures and is frequently non-productive.
Mineral exploration is highly speculative in nature and is frequently non-productive. Substantial expenditures are required to:
| · | establish ore reserves through drilling and metallurgical and other testing techniques; | |
| · | determine metal content and metallurgical recovery processes to extract metal from the ore; and, | |
| · | design mining and processing facilities. |
If we discover ore at the Excelsior Springs Project, we expect that it would be several additional years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production could change. As a result of these uncertainties, there can be no assurance that our exploration programs will result in proven and probable reserves in sufficient quantities to justify commercial operations at the Excelsior Springs Project.
Even if our exploration efforts at Excelsior Springs are successful, we may not be able to raise the funds necessary to develop the Excelsior Springs Project.
If our exploration efforts at Excelsior Springs are successful, our current estimates indicate that we would be required to raise at least $50 million in external financing to develop and construct the Excelsior Springs Project. Sources of external financing could include bank borrowings and debt and equity offerings, but financing has become significantly more difficult to obtain in the current market environment. The failure to obtain financing would have a material adverse effect on our growth strategy and our results of operations and financial condition. There can be no assurance that we will commence production at Langtry or generate sufficient revenues to meet our obligations as they become due or obtain necessary financing on acceptable terms, if at all, and we may not be able to secure the financing necessary to begin or sustain production at the Excelsior Springs Project. In addition, should we incur significant losses in future periods, we may be unable to continue as a going concern, and we may not be able to realize our assets and settle our liabilities in the normal course of business at amounts reflected in our financial statements included or incorporated by reference in this Form 10-K.
We may not be able to obtain all of the permits required for development of the Excelsior Springs Project.
In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. We will be required to obtain numerous permits for our Excelsior Springs Project. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings. Our efforts to develop the Property may also be opposed by environmental groups. In addition, mining projects require the evaluation of environmental impacts for air, water, vegetation, wildlife, cultural, historical, geological, geotechnical, geochemical, soil and socioeconomic conditions. An Environmental Impact Statement would be required before we could commence mine development or mining activities. Baseline environmental conditions are the basis on which direct and indirect impacts of the Excelsior Springs Project are evaluated and based on which potential mitigation measures would be proposed. If the Excelsior Springs Project were found to significantly adversely impact the baseline conditions, we could incur significant additional costs to avoid or mitigate the adverse impact, and delays in the Excelsior Springs Project could result.
Permits would also be required for, among other things, storm-water discharge; air quality; wetland disturbance; dam safety (for water storage and/or tailing storage); septic and sewage; and water rights appropriation. In addition, compliance must be demonstrated with the Endangered Species Act and the National Historical Preservation Act.
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The mining industry is intensely competitive.
The mining industry is intensely competitive. We may be at a competitive disadvantage because we must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than we do. Increased competition could adversely affect our ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future. We may also encounter increasing competition from other mining companies in our efforts to locate acquisition targets, hire experienced mining professionals and acquire exploration resources.
Our future success is subject to risks inherent in the mining industry.
Our future mining operations, if any, would be subject to all of the hazards and risks normally incident to developing and operating mining properties. These risks include:
| · | insufficient ore reserves; | |
| · | fluctuations in metal prices and increase in production costs that may make mining of reserves uneconomic; | |
| · | significant environmental and other regulatory restrictions; | |
| · | labor disputes; geological problems; | |
| · | failure of underground stopes and/or surface dams; | |
| · | force majeure events; and | |
| · | the risk of injury to persons, property or the environment. |
Our future profitability will be affected by changes in the prices of metals.
If we establish reserves, complete a favorable feasibility study for the Excelsior Springs Project, and complete development of a mine, our profitability and long-term viability will depend, in large part, on the market price of gold. The market prices for metals are volatile and are affected by numerous factors beyond our control, including:
| · | global or regional consumption patterns; | |
| · | supply of, and demand for, silver and other metals; | |
| · | speculative activities; | |
| · | expectations for inflation; and | |
| · | political and economic conditions. |
The aggregate effect of these factors on metals prices is impossible for us to predict. Decreases in metals prices could adversely affect our ability to finance the exploration and development of our properties, which would have a material adverse effect on our financial condition and results of operations and cash flows. There can be no assurance that metals prices will not decline.
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The market price of gold is volatile. Low gold prices could result in decreased revenues, decreased net income or increased losses and decreased cash flows, and may negatively affect our business.
Gold is a commodity. Its price fluctuates, and is affected by many factors beyond our control, including interest rates, expectations regarding inflation, speculation, currency values, governmental decisions regarding the disposal of precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors.
The price of gold may decline in the future. Factors that are generally understood to contribute to a decline in the price of gold include sales by private and government holders, and a general global economic slowdown. If the price of silver is depressed for a sustained period and our net losses continue, we may be forced to suspend operations until the prices increase, and to record asset impairment write-downs. Any continued or increased net losses or asset impairment write-downs would adversely affect our financial condition and results of operations.
We might be unable to raise additional financing necessary to complete capital needs, conduct our business and make payments when due.
We will need to raise additional funds in order to meet capital needs and implement our business plan. Any required additional financing might not be available on commercially reasonable terms, or at all. If we raise additional funds by issuing equity securities, holders of our common stock could experience significant dilution of their ownership interest, and these securities could have rights senior to those of the holders of our common stock.
Mineral exploration and development inherently involves significant and irreducible financial risks. We may suffer from the failure to find and develop profitable mines.
The exploration for and development of mineral deposits involves significant financial risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. Unprofitable efforts may result from the failure to discover mineral deposits. Even if mineral deposits are found, such deposits may be insufficient in quantity and quality to return a profit from production, or it may take a number of years until production is possible, during which time the economic viability of the Project may change. Few properties which are explored are ultimately developed into producing mines. Mining companies rely on consultants and others for exploration, development, construction and operating expertise.
Substantial expenditures are required to establish ore reserves, extract metals from ores and, in the case of new properties, to construct mining and processing facilities. The economic feasibility of any development project is based upon, among other things, estimates of the size and grade of ore reserves, proximity to infrastructures and other resources (such as water and power), metallurgical recoveries, production rates and capital and operating costs of such development projects, and metals prices. Development projects are also subject to the completion of favorable feasibility studies, issuance and maintenance of necessary permits and receipt of adequate financing.
Once a mineral deposit is developed, whether it will be commercially viable depends on a number of factors, including: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; government regulations including taxes, royalties and land tenure; land use, importing and exporting of minerals and environmental protection; and mineral prices. Factors that affect adequacy of infrastructure include: reliability of roads, bridges, power sources and water supply; unusual or infrequent weather phenomena; sabotage; and government or other interference in the maintenance or provision of such infrastructure. All of these factors are highly cyclical. The exact effect of these factors cannot be accurately predicted, but the combination may result in not receiving an adequate return on invested capital.
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Significant investment risks and operational costs are associated with our exploration, development and mining activities. These risks and costs may result in lower economic returns and may adversely affect our business.
Mineral exploration, particularly for gold, involves many risks and is frequently unproductive. If mineralization is discovered, it may take a number of years until production is possible, during which time the economic viability of the Project may change.
Development projects may have no operating history upon which to base estimates of future operating costs and capital requirements. Development project items such as estimates of reserves, metal recoveries and cash operating costs are to a large extent based upon the interpretation of geologic data, obtained from a limited number of drill holes and other sampling techniques, and feasibility studies. Estimates of cash operating costs are then derived based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates of metals from the ore, comparable facility and equipment costs, anticipated climate conditions and other factors. As a result, actual cash operating costs and economic returns of any and all development projects may materially differ from the costs and returns estimated, and accordingly, our financial condition and results of operations may be negatively affected.
The estimation of ore reserves is imprecise and depends upon subjective factors. Estimated ore reserves may not be realized in actual production. Our operating results may be negatively affected by inaccurate estimates.
If, in the future, we present estimates of ore reserve figures in our public filings, those figures may be estimated by our technical personnel. Reserve estimates are a function of geological and engineering analyses that require us to make assumptions about production costs and gold market prices. Reserve estimation is an imprecise and subjective process. The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation, judgment and experience. Assumptions about gold market prices are subject to great uncertainty as those prices have fluctuated widely in the past. Declines in the market prices of gold may render future potential reserves containing relatively lower grades of ore uneconomic to exploit, and we may be required to reduce reserve estimates, discontinue development or mining at one or more of our properties, or write down assets as impaired. Should we encounter mineralization or geologic formations at any of our projects different from those we predicted, we may adjust our reserve estimates and alter our mining plans. Either of these alternatives may adversely affect our actual future production and operating results.
The estimation of the ultimate recovery of metals contained within a heap leach pad inventory is inherently inaccurate and subjective and requires the use of estimation techniques. Actual recoveries can be expected to vary from estimations.
We expect to use the heap leach process to extract gold from ore. The heap leach process is a process of extracting gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver, which is then recovered in metallurgical processes.
We will use several integrated steps in the process of extracting gold to estimate the metal content of ore placed on the leach pads. Although we will refine our estimates as appropriate at each step in the process, the final amounts are not determined until a third-party smelter converts the doré and determines final ounces of gold available for sale. We will then review this end result and reconcile it to the estimates we developed and used throughout the production process. Based on this review, we may adjust our estimation procedures when appropriate. As a result, actual recoveries can vary from estimates, and the amount of the variation could be significant and could have a material adverse impact on our financial condition and results of operations.
Gold mining involves significant production and operational risks. We may suffer from the failure to efficiently operate our mining projects.
Gold mining involves significant degrees of risk, including those related to mineral exploration success, unexpected geological or mining conditions, the development of new deposits, climatic conditions, equipment and/or service failures, compliance with current or new governmental requirements, current availability of or delays in installing and commissioning plant and equipment, import or customs delays and other general operating risks. Problems may also arise due to the quality or failure of locally obtained equipment or interruptions to services (such as power, water, fuel or transport or processing capacity) or technical support, which results in the failure to achieve expected target dates for exploration or production activities and/or result in a requirement for greater expenditure. The right to develop gold reserves may depend on obtaining certain licenses and quotas, the granting of which may be at the discretion of the relevant regulatory authorities. There may be delays in obtaining such licenses and quotas, leading to our results of operations being adversely affected, and it is possible that from time-to-time mining licenses may be refused.
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There will be significant hazards associated with our mining activities, some of which may not be fully covered by insurance. To the extent we must pay the costs associated with such risks, our business may be negatively affected.
The mining business is subject to risks and hazards, including environmental hazards, industrial accidents, the encountering of unusual or unexpected geological formations, cave-ins, flooding, earthquakes and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Insurance fully covering many environmental risks (including potential liability for pollution or other hazards as a result of disposal of waste products occurring from exploration and production) is not generally available to us or to other companies in the industry. Although we maintain insurance in an amount that we consider to be adequate, liabilities might exceed policy limits, in which event we could incur significant costs that could adversely affect our financial condition, results of operation and liquidity.
We are subject to significant governmental regulations.
Our operations and exploration and development activities are subject to extensive federal, state, and local laws and regulations governing various matters, including:
| · | environmental protection; | |
| · | management and use of toxic substances and explosives; | |
| · | management of natural resources; | |
| · | exploration and development of mines, production and post-closure reclamation; | |
| · | taxation; | |
| · | labor standards and occupational health and safety, including mine safety; and | |
| · | historic and cultural preservation. |
Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining or curtailing operations or requiring corrective measures, installation of additional equipment or remedial actions, any of which could result in us incurring significant expenditures. We may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of any future operations and delays in the exploration of our properties.
Changes in mining or environmental laws could increase costs and impair our ability to develop our properties.
From time to time the U.S. Congress may consider revisions in its mining and environmental laws. It remains unclear to what extent new legislation may affect existing mining claims. The effect of any such revisions on our operations cannot be determined conclusively until such revision is enacted; however, such legislation could materially increase costs on properties located on federal lands, such as ours, and such revision could also impair our ability to develop the Langtry Project and to explore and develop other mineral projects.
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Compliance with environmental regulations and litigation based on environmental regulations could require significant expenditures.
Mining exploration and mining are subject to the potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Insurance against environmental risk (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) is not generally available to us (or to other companies in the minerals industry) at a reasonable price.
Environmental regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors and employees.
To the extent we are subject to environmental liabilities, the settlement of such liabilities or the costs that we may incur to remedy environmental pollution would reduce funds otherwise available to us and could have a material adverse effect on our financial condition and results of operations. If we are unable to fully remedy an environmental problem, it might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. The environmental standards that may ultimately be imposed at a mine site impact the cost of remediation and may exceed the financial accruals that have been made for such remediation. The potential exposure may be significant and could have a material adverse effect on our financial condition and results of operations.
Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the environmental, health and safety impacts of our operations, which could lead to the imposition of substantial fines, remediation costs, penalties and other civil and criminal sanctions. Substantial costs and liabilities, including for restoring the environment after the closure of mines, are inherent in our proposed operations.
Some mining wastes are currently exempt to a limited extent from the extensive set of federal Environmental Protection Agency (“EPA”) regulations governing hazardous waste under the Resource Conservation and Recovery Act (“RCRA”). If the EPA designates these wastes as hazardous under RCRA, we may be required to expend additional amounts on the handling of such wastes and to make significant expenditures to construct hazardous waste disposal facilities. In addition, if any of these wastes causes contamination in or damage to the environment at a mining facility, such facility may be designated as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). Under CERCLA, any owner or operator of a Superfund site since the time of its contamination may be held liable and may be forced to undertake extensive remedial cleanup action or to pay for the government’s cleanup efforts. Such owner or operator may also be liable to governmental entities for the cost of damages to natural resources, which may be substantial. Additional regulations or requirements are also imposed under the federal Clean Water Act (“CWA”). The Company considers the current proposed federal legislation relating to climate change and its potential enactment may have future impacts to the Company’s operations in the United States.
In addition, there are numerous legislative and regulatory proposals related to climate change, including legislation pending in the U.S. Congress to require reductions in greenhouse gas emissions. The Company has reviewed and considered current federal legislation relating to climate change and does not believe it to have a material effect on its operations, however, additional regulation or requirements under any of these laws and regulations could have a materially adverse effect upon the Company and its results of operations.
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Compliance with CERCLA, the CWA and state environmental laws could entail significant costs, which could have a material adverse effect on our operations.
In the context of environmental permits, including the approval of reclamation plans, we must comply with standards and regulations which entail significant costs and can entail significant delays. Such costs and delays could have a dramatic impact on our operations. There is no assurance that future changes in environmental regulation, if any, will not adversely affect our operations. We intend to fully comply with all applicable environmental regulations.
We are required to obtain government permits to begin new operations. The acquisition of such permits can be materially impacted by third party litigation seeking to prevent the issuance of such permits. The costs and delays associated with such approvals could affect our operations, reduce our revenues, and negatively affect our business as a whole.
Mining companies are required to seek governmental permits for the commencement of new operations. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings. The duration and success of permitting efforts are contingent on many factors that are out of our control. The governmental approval process may increase costs and cause delays depending on the nature of the activity to be permitted, and could cause us to not proceed with the development of a mine. Accordingly, this approval process could harm our results of operations.
Any of our future acquisitions may result in significant risks, which may adversely affect our business.
An important element of our business strategy is the opportunistic acquisition of precious metal mines, properties and businesses or interests therein. While it is our practice to engage independent mining consultants to assist in evaluating and making acquisitions, any mining properties or interests therein we may acquire may not be developed profitably or, if profitable when acquired, that profitability might not be sustained. In connection with any future acquisitions, we may incur indebtedness or issue equity securities, resulting in increased interest expense, or dilution of the percentage ownership of existing shareholders. We cannot predict the impact of future acquisitions on the price of our business or our common stock. Unprofitable acquisitions, or additional indebtedness or issuances of securities in connection with such acquisitions, may impact the price of our common stock and negatively affect our results of operations.
We are continuously considering possible acquisitions of additional mining properties or interests therein that are located in other countries, and could be exposed to significant risks associated with any such acquisitions.
In the ordinary course of our business, we are continuously considering the possible acquisition of additional significant mining properties or interests therein that may be located in countries other than those in which we now have interests. Consequently, in addition to the risks inherent in the valuation and acquisition of such mining properties, as well as the subsequent development, operation or ownership thereof, we could be subject to additional risks in such countries as a result of governmental policies, economic instability, currency value fluctuations and other risks associated with the development, operation or ownership of mining properties or interests therein. Such risks could adversely affect our results of operations.
Our ability to find and acquire new mineral properties is uncertain. Accordingly, our prospects are uncertain for the future growth of our business.
Because mines have limited lives based on proven and probable ore reserves, we expect we will be continually seeking to replace and expand any future ore reserves. Identifying promising mining properties is difficult and speculative. Furthermore, we encounter strong competition from other mining companies in connection with the acquisition of properties producing or capable of producing gold. Many of these companies have greater financial resources than we do. Consequently, we may be unable to replace and expand future ore reserves through the acquisition of new mining properties or interests therein on terms we consider acceptable. As a result, our future revenues from the sale of gold may decline, resulting in lower income and reduced growth.
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Current economic conditions and in the global economy generally, including ongoing disruptions in the debt and equity capital markets, may adversely affect our business and results of operations, and our ability to obtain financing.
The global economy has undergoing a slowdown, which some observers view as a deepening recession, and the future economic environment may continue to be less favorable than that of recent years. The mining industry has experienced and may continue to experience significant downturns in connection with, or in anticipation of, declines in general economic conditions. We are unable to predict the likely duration and severity of the current disruptions in debt and equity capital markets and adverse economic conditions in the United States and other countries, which may continue to have an adverse effect on our business and results of operations.
The global stock and credit markets have recently experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective and outstanding debt financings to widen considerably. These circumstances have materially impacted liquidity in the financial markets, making terms for certain financings materially less attractive, and in certain cases have resulted in the unavailability of certain types of financing. This volatility and illiquidity have negatively affected a broad range of mortgage and asset-backed and other fixed income securities. As a result, the market for fixed income securities has experienced decreased liquidity, increased price volatility, credit downgrade events, and increased defaults. Global equity markets have also been experiencing heightened volatility and turmoil, with issuers exposed to the credit markets particularly affected. These factors and the continuing market disruption have an adverse effect on us, in part because we, like many companies, from time to time may need to raise capital in debt and equity capital markets including in the asset-backed securities markets.
In addition, continued uncertainty in the stock and credit markets may negatively affect our ability to access additional short-term and long-term financing, including future securitization transactions, on reasonable terms or at all, which would negatively impact our liquidity and financial condition. In addition, if one or more of the financial institutions that support our future credit facilities fails, we may not be able to find a replacement, which would negatively impact our ability to borrow under the credit facilities. These disruptions in the financial markets also may adversely affect our credit rating and the market value of our common stock. If the current pressures on credit continue or worsen, we may not be able to refinance, if necessary, our outstanding debt when due, which could have a material adverse effect on our business. While we believe we will have adequate sources of liquidity to meet our anticipated requirements for working capital, debt servicing and capital expenditures for the foreseeable future if our operating results worsen significantly and our cash flow or capital resources prove inadequate, or if interest rates increase significantly, we could face liquidity problems that could materially and adversely affect our results of operations and financial condition.
As we do not maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting. This would harm our business and the trading price of our stock.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide financial reports or prevent fraud, our business reputation and operating results could be harmed. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
Risks Related to Our Stock
Future issuances of our common stock could dilute current shareholders and adversely affect the market if it develops.
We have the authority to issue up to 250 million shares of common stock and 5 million shares of preferred stock and to issue options and warrants to purchase shares of our common stock, without shareholder approval. Future share issuances are likely due to our need to raise additional working capital in the future. Those future issuances will likely result in dilution to our shareholders. In addition, we could issue large blocks of our common stock to fend off unwanted tender offers or hostile takeovers without further shareholder approval, which would not only result in further dilution to investors in this offering but could also depress the market value of our common stock, if a public trading market develops.
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We may issue preferred stock that would have rights that are preferential to the rights of our common stock that could discourage potentially beneficial transactions to our common shareholders.
An issuance of shares of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over our common stock and could, upon conversion or otherwise, have all of the rights of our common stock. Our Board of Directors' authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve. The issuance of preferred stock could impair the voting, dividend and liquidation rights of common stockholders without their approval.
Outstanding shares that are eligible for future sale could adversely impact a public trading market for our common stock
In the future, we may offer and sell shares without registration under the Securities Act. All of such shares will be "restricted securities" as defined by Rule 144 ("Rule 144") under the Securities Act and cannot be resold without registration except in reliance on Rule 144 or another applicable exemption from registration. Under Rule 144, our non-affiliates can sell restricted shares held for at least six months, subject only to the restriction that we made available public information as required by Rule 144. Our affiliates can sell restricted securities after six months, subject to compliance with the volume limitation, manner of sale, Form 144 filing and current public information requirements.
No prediction can be made as to the effect, if any, that future sales of restricted shares of common stock, or the availability of such common stock for sale, will have on the market price of the common stock prevailing from time to time. Sales of substantial amounts of such common stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of the common stock.
Owners of our common stock will be subject to the “penny stock” rules.
Since our shares are not listed on a national stock exchange or quoted on the Nasdaq Capital Market within the United States, trading in our shares on the OTC market will be subject, to the extent the market price for our shares is less than $5.00 per share, to a number of regulations known as the "penny stock rules". The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide the customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the investor and receive the investor’s written agreement to the transaction. To the extent these requirements may be applicable they will reduce the level of trading activity in the secondary market for our shares and may severely and adversely affect the ability of broker-dealers to sell our shares.
We do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of our stock.
We have never paid any cash dividends on any shares of our capital stock, and we do not anticipate that we will pay any dividends in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors, and will be dependent upon our financial condition, results of operations, capital requirements and other factors as our board of directors may deem relevant at that time. If we do not pay cash dividends, our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.
Delaware law and our by-laws protect our directors from certain types of lawsuits.
Delaware law provides that our directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as directors. Our by-laws require us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.
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ITEM 1B – UNRESOLVED STAFF COMMENTS.
None.
ITEM 2 – PROPERTIES.
Descriptions of our mining and other properties are contained in the Business discussion in this Report.
ITEM 3 – LEGAL PROCEEDINGS.
None.
ITEM 4 – REMOVED AND RESERVED.
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PART II
ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
The Company’s common stock is quoted for trading on the OTCQB under the symbol “AHNR” and is traded on the Canadian Securities Exchange (or CSE) under the symbol “ATHA”. Over-the-counter market quotations on the OTCQB reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
On December 31, 2022, there were 136,091,400 Common Shares issued and outstanding, and the Company had approximately 92 shareholders of record. On December 30, 2022, the closing price of the shares of common stock as reported by the CSE was C$0.10 and on OTCQB was $0.06.
Dividends
Our Board of Directors may declare and pay dividends on outstanding shares of common stock out of funds legally available therefore in its sole discretion; however, to date, no dividends have been paid on common stock and we do not anticipate the payment of dividends in the foreseeable future.
Trading in our common stock is subject to rules adopted by the SEC regulating broker dealer practices in connection with transactions in "penny stocks." Those disclosure rules applicable to penny stocks require a broker dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC. That disclosure document advises an investor that investment in penny stocks can be very risky and that the investor's salesperson or broker is not an impartial advisor but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in penny stocks, to independently investigate the security, as well as the salesperson with whom the investor is working and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.
Recent Sales of Unregistered Securities
None, except as reported on Forms 8-K.
Equity Compensation Plan Information
The Company adopted its 2020 Equity Incentive Plan which became effective in January 2021. Under the Plan, the Company is authorized to issue up to 10 million shares of common stock pursuant to grants and the exercise of rights under the Plan. As of the date of this Report, there have been 4,980,000 option grants under the Plan.
ITEM 6 – SELECTED FINANCIAL DATA.
We are a smaller reporting company as defined by the Exchange Act and are not required to provide the information required under this item.
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ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We use the terms “Athena,” “we,” “our,” and “us” to refer to Athena Gold Corporation and its consolidated subsidiary, Athena Minerals, Inc (“AMI”).
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.
Forward-Looking Statements
Some of the information presented in this Form 10-K constitutes “forward-looking statements. These forward-looking statements include, but are not limited to, statements that include terms such as “may,” “will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,” “plan,” or the like, as well as all statements that are not historical facts. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
Results of Operations:
Results of Operations for the Years Ended December 31, 2022 and 2021
A summary of our results from operations is as follows:
| Twelve Months Ended | ||||||||
| 12/31/22 | 12/31/21 | |||||||
| Operating expenses | ||||||||
| Exploration, evaluation and project expenses | $ | 617,262 | $ | 137,983 | ||||
| General and administrative expenses | 682,512 | 614,478 | ||||||
| Total operating expenses | 1,299,774 | 752,461 | ||||||
| Net operating loss | (1,299,774 | ) | (752,461 | ) | ||||
| Interest expense | (463 | ) | (12,192 | ) | ||||
| Gain on extinguishment of debt | 0 | 3,880 | ||||||
| Revaluation of warrant liability | 616,579 | (269,482 | ) | |||||
| Net loss | $ | (683,658 | ) | $ | (1,030,255 | ) | ||
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Operating expenses:
For the twelve months ending December 31, 2022, the Company increased general and administrative expenses by approximately $69,000. The increase was due to the following year over year variances:
| Twelve months ending | 12/31/2022 | 12/31/2021 | Variance | |||||||||
| Legal and other professional fees | $ | 318,000 | $ | 370,000 | $ | (52,000 | ) | |||||
| Share based compensation | 231,000 | 158,000 | 73,000 | |||||||||
| Stock exchange fees and related expenses | 115,000 | 68,000 | 47,000 | |||||||||
| Other general expenses | 19,000 | 18,000 | 1,000 | |||||||||
| Total | $ | 683,000 | $ | 614,000 | $ | 69,000 | ||||||
| · | The decrease in legal and professional fees increase is associated with the acquisition and maintenance of the Excelsior Springs project and our listing on the Canadian Stock Exchange (“CSE”) in 2021. | |
| · |
The increase in share-based compensation is due to the following:
On March 22, 2021, the Company issued a total of 2,000,000 non-statutory stock options to four individuals, three of which are Directors of the Company, the other an independent technical consultant. Upon vesting, each option is exercisable to purchase one share of common stock at a price of $0.09 per share. The options vest 50% upon issuance, and 25% on each of the first and second anniversaries of the grant date. The Company recognized share-based compensation expense related to the stock options of $128,000 for 2021. In addition, the Company agreed to issue a total of 300,000 restricted stock units at a price of $0.10 per share to the independent technical consultant helping design our 2021 exploration programs at Excelsior Springs. As such, we have recorded stock-based compensation in the amount of $30,000, with a share-based compensation of $47,548 in 2022 and | |
| On October 12, 2022, the Company granted 2,250,000 options pursuant to the terms of the Company’s Stock Option Plan. The Black Scholes option pricing model was used to estimate the aggregate fair value of the October 2022 options of $106,109 as stock-based compensation. In addition, 675,000 shares were issued to officers and directors with a fair value of $33,750. On August 24, 2022, the Company granted 730,000 options pursuant to the terms of the Company’s Stock Option Plan. The Black Scholes option pricing model was used to estimate the aggregate fair value of the August 2022 options of $43,456 as stock-based compensation. | ||
| · | The increase in stock exchange fees was a result of listing on the CSE and other compliance reporting. |
For the year ended December 31, 2022, there was a variance of approximately $479,000 for the same period in 2021 in exploration and evaluation expenses. The Company engaged in activities on our exploration programs, including drilling, mapping, permitting, consulting and assay testing which has resulted in additional exploration cost compared to 2021.
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Other income and expense:
The revaluation of warrant liability for the twelve months ending December 31, 2022, is based on the following warrants that were issued as part of the private placements as detailed in Note 4 to the financial statements.
| Warrant date | 12/31/2022 | 2022 initial valuation | 12/31/2021 | (Gain) loss on revaluation | ||||||||||||
| October 2022 | $ | 21,266 | $ | 18,630 | $ | 0 | $ | (2,636 | ) | |||||||
| September 2022 | 115,000 | 100,656 | 0 | (14,344 | ) | |||||||||||
| August 31, 2022 | 95,351 | 139,255 | 0 | 43,904 | ||||||||||||
| August 12, 2022 | 134,067 | 129,812 | 0 | (4,255 | ) | |||||||||||
| April 2022 | 293,698 | 203,838 | 0 | (89,860 | ) | |||||||||||
| September 2021 | 115,122 | 0 | 341,145 | 226,023 | ||||||||||||
| May 2021 | 225,316 | 0 | 683,063 | 457,747 | ||||||||||||
| Total | $ | 999,820 | $ | 592,191 | $ | 1,024,208 | $ | 616,579 | ||||||||
Liquidity and Capital Resources:
The Company has no revenue generating operations from which it can internally generate funds. To date, the Company’s ongoing operations have been financed by the sale of its equity securities by way of public offerings, private placements and the exercise of incentive stock options and share purchase warrants. The Company believes that it will be able to secure additional private placements and public financings in the future, although it cannot predict the size or pricing of any such financings. This situation is unlikely to change until such time as the Company can develop a bankable feasibility study on one of its projects.
During August, September and October 2022, the Company completed the private placement of four tranches (August 12, 2022; August 31, 2022; September 14, 2022; October 28, 2022) in which we sold 8,807,700 units. We realized total proceeds of $529,908 net of offering costs.
In April 2022 the Company completed a private placement in which we sold 6,250,000 units. We realized total proceeds of $394,082 net of offering costs.
On May 25, 2021 we completed a private placement in which we sold 6,250,000 units. We realized total proceeds of $401,823 net of offering costs. Additionally, on September 30, 2021 we completed a private placement in which we sold 3,108,700 units. We realized total proceeds of $190,552 net of offering costs.
Going Concern
Our financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.
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Liquidity
As of December 31, 2022, we had approximately $15,000 of cash and a negative working capital of approximately $215,000. This compares to cash on hand of approximately $73,000 and working capital of approximately $74,000 at December 31, 2021.
The Company expects that it will operate at a loss for the foreseeable future and believes the current cash and cash equivalents and working capital will be sufficient for it to maintain its currently held properties, fund its planned exploration, and fund its currently anticipated general and administrative costs for at least the next 12 months from the date of this report.
However, the Company does expect that it will be required to raise additional funds through public or private equity financings in the future in order to continue in business in the future past the immediate 12-month period. Should such financing not be available in that timeframe, the Company will be required to reduce its activities and will not be able to carry out all of its presently planned exploration and, if warranted, development activities on its currently anticipated scheduling.
Capital Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development and exploration of its mineral properties and to maintain a flexible capital structure, which optimizes the costs of capital to an acceptable risk.
As of December 31, 2022, the capital structure of the Company consists of 136,091,400 shares of common stock, par value $0.0001. The Company manages the capital structure and adjusts it in response to changes in economic conditions, its expected funding requirements, and risk characteristics of the underlying assets. The Company’s funding requirements are based on cash forecasts. In order to maintain or adjust the capital structure, the Company may issue new debt, new shares and/or consider strategic alliances. Management reviews its capital management approach on a regular basis. The Company is not subject to any externally imposed capital requirements.
Off Balance Sheet Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the amounts reported in our financial statements. The accounting positions described below are significantly affected by accounting estimates.
We believe that the significant estimates, assumptions and judgments used when accounting for items and matters such as capitalized mineral rights, asset valuations, recoverability of assets, asset impairments, taxes, and other provisions were reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
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ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required by this item are located in Item 15 beginning on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference.
ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None, except as previously disclosed.
ITEM 9A – CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives.
Our management, with the participation of our CEO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Based upon this evaluation, our CEO concluded that our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is described below.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on this evaluation, management concluded that that our internal control over financial reporting was not effective as of December 31, 2022. Our CEO concluded we have a material weakness due to lack of segregation of duties, a limited corporate governance structure, and a lack of a formal management review process over preparation of financial information. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our system of internal control. Therefore, while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting and financial reporting duties. Management reported the following material weaknesses:
| · | Lack of segregation of duties in certain accounting and financial reporting processes including the initiation, processing, recording and approval of disbursements; | |
| · | Our corporate governance responsibilities are performed by the Board of Directors, none of whom are independent under applicable standards; we do not have an independent audit committee or compensation committee. Our Board of Directors acts primarily by written consent without meetings which results in several of our corporate governance functions not being performed concurrent (or timely) with the underlying transactions, including evaluation of the application of accounting principles and disclosures relating to those transactions; and | |
| · | Certain reports that we prepare and accounting and reporting conclusions reached in connection with the financial statement preparation process are not subjected to a formal review process that includes multiple levels of review, and are not submitted timely to the Board of Directors for review or approval. |
While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full-time staff. We believe that this is typical in many exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time, we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the SEC rules that permit us to provide only management's report in this Annual Report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B – OTHER INFORMATION.
None.
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PART III
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and Executive Officers
Our current executive officers and directors are:
| Name | Age | Position |
| John C. Power(1) | 60 | CEO, President, Secretary and Director |
| Brian Power(1) | 57 | Director |
| John Hiner | 75 | Director |
| Markus Janser | 55 | Director |
| Tyler Minnick | 53 | CFO |
__________
(1) John C. Power and Brian Power are brothers.
John C. Power has served as a director of Athena since its inception in December 2003 and has served as Athena’s President from December 2005 to December 2007 and from January 2009 to the present and has served as Athena’s Secretary since January 2007. He has also served as director of Magellan Gold Corporation since its formation in September 2010 until November 2020 and as an officer of Magellan from its formation until August 2017 and from January 2018 until November 2020.
Mr. Power is also a co-managing member since 2011 of Silver Saddle Resources, LLC that owns mining claims in Nevada.
From March 2010 to present, Mr. Power has severed as co-Managing Member of Ryan Air Exposition, LLC, a private California holding company that invests in antique airplanes. Mr. Power has served as President and director of Four Rivers Broadcasting, Inc., a radio broadcaster, from May 1997 to March 2005 and Vice President from March 2005 to the present. Mr. Power served as Co-Managing Member of Wyoming Resorts, LLC, which owned and operated an historic hotel in Thermopolis, Wyoming, from June 1997 until June 2017. Mr. Power has been a general partner of Power Vacaville, LP a real estate investment firm since January 2008. Mr. Power also serves as the vice-president and director of The Tide Community Broadcasting, Inc. since July 2012.
Mr. Power attended, but did not receive a degree from, Occidental College and University of California at Davis.
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Brian Power has served as an officer/director of the company since its inception in December 2003. He was CEO and President from December 2003 until December 2005 and currently serves as a director of the company. From 1997 to 2014 Mr. Power served as CEO and President of Lone Oak Vineyards, Incorporated, a real estate/agricultural investment company. From October 1998 to 2005, he was a co-founder and managing member of Spirit of Adventure, LLC a company engaged in the development of deep ocean exploration technologies including the design/build of advanced manned submersibles. From 1996 through the present he serves on the board of directors of Snuba, Incorporated, a manufacturer and international licensor of proprietary ocean diving systems. From 2014 through the present, Mr. Power founded and is the managing member of Asperatus LLC, a company engaged in the development of airborne remote earth sensing technologies and related data processing analytics. Mr. Power attended Solano Community College and the University of California at Davis.
John Hiner is a director of the Issuer and provides his services to the Issuer on a part-time basis. He has served as a director of the Issuer since March 22, 2021 and will devote approximately 10% of his time to the affairs of the Issuer. As a director, he is responsible for directing and overseeing management of the Issuer.
Mr. Hiner is a licensed geologist in the State of Washington (2002) and SME registered member (2012) and he has an exploration history of over 45 years with several major mining companies exploring for geothermal energy, precious metals and industrial minerals. He has served as a director and/or officer of mineral exploration and mining development companies and works as an independent consulting geologist for mining companies. Previously, Mr. Hiner was an officer of Geocom Resources Inc. (from 2003 to 2013) and a director of Red Pine Petroleum Ltd. (from 2003 to 2013), Straightup Resources Inc. (from 2017 to 2021) and Gold Basin Resources Corporation (from 2017-2021). Mr. Hiner is currently a director of Golden Lake Exploration Inc. (since 2018).
Mr. Janser has been a director of the Issuer since March 22, 2021 and provides his services to the Issuer on a part-time basis. He will devote approximately 5% of his time to the affairs of the Issuer. As a director, he is responsible for directing and overseeing management of the Issuer.
Mr. Janser has 20 years of experience as a senior executive and business consultant in private and offshore banking, finance and investment, project management, junior mining and exploration and property development. He was also the founding partner of a retail textile company, a financial service group and a property development company. Mr. Janser holds a Master of Arts in Economics from the University of Fribourg, Switzerland (March 1994). Currently, Mr. Janser is also a director of Nubian Resources Ltd., a position he has held since December 2009.
Tyler Minnick has been the Chief Financial Officer of the Issuer since May 6, 2021 and provides his services to the Issuer on a part-time basis. He will devote approximately 10 hours per month of his time to the affairs of the Issuer.
Since December 2018, Mr. Minnick has acted as a Certified Public Accountant (1993) with Grand Mesa CPAs, LLC, and from 2011 to the present he has worked for Augusta Gold Corp. as a consultant, (formerly, Bullfrog Gold Corp.), and was its Chief Financial Officer until October 2020. From May 2018 to September 2018, he was a financial reporting manager with Bowie Resources, LLC. From September 2014 to May 2018 Mr. Minnick acted as the Director of Finance and Administration of the Grand Junction Regional Airport Authority. Mr. Minnick has 11 years of experience in the mining industry.
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Involvement in Certain Legal Proceedings
During the last 10 years, except as disclosed above, none of our directors or officers has:
a. had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
b. been convicted in a criminal proceeding or subject to a pending criminal proceeding;
c. been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
d. been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Our executive officers are elected at the annual meeting of our Board of Directors held after each annual meeting of our shareholders. Our directors are elected at the annual meeting of our shareholders. Each director and executive officer holds office until his successor is duly elected and qualified, until his resignation or until he is removed in the manner provided by our by-laws.
Family Relationships
John C. Power and Brian Power are brothers. There do not exist any arrangements or understandings between any director and any other person pursuant to which any director was elected as such.
Director Independence
Our common stock is listed on the OTC Market Inc.’s OTCQB and OTC Pinks inter-dealer quotation systems, which does not have director independence requirements. Nevertheless, for purposes of determining director independence, we have applied the definition set forth in NASDAQ Rule 4200(a)(15). The following directors are considered “independent” as defined under Rule 4200(a)(15): None. John C. Power and Brian Power would not be considered “independent” under the NASDAQ rule due to the fact that John C. Power is an officer and Brian Power is John C. Power’s brother. John Hiner and Markus Janser are considered independent.
Board Meetings
During the year ended December 31, 2022, Our Board held four meetings and took numerous actions by unanimous written consent.
Committees of the Board of Directors
We currently do not have standing compensation or nominating committees of the Board of Directors. We do have an audit committee that consists of Brian Power, John Hiner and Markus Janser. We plan to form audit, compensation and nominating committees when it is necessary to do so to comply with federal securities laws or to meet listing requirements of a stock exchange or the Nasdaq Capital Market.
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Compliance with Section 16(a), Beneficial Ownership
Under the Securities Laws of the United States, our directors, executive (and certain other) officers, and any persons holding more than ten percent (10%) of our common stock during any part of our most recent fiscal year are required to report their ownership of common stock and any changes in that ownership to the SEC. Specific due dates for these reports have been established and we are required to report in this Report any failure to file by these dates. During the year ended December 31, 2022, all these filing requirements were satisfied by our officers, directors, and ten- percent holders, except that John Gibbs failed to file three reports, covering twelve transactions in a timely manner and Messrs. Brian Power, Tyler Minnick, Markus Janser, John Hiner and John Power each failed to file one report covering two transactions in a timely manner. In making these statements, we have relied on the written representation of our directors and officers or copies of the reports that they have filed with the Commission.
Code of Ethics
We have adopted a Code of Ethics that apples to, among other persons, our company’s principal executive officer, as well as persons performing similar functions. As adopted, our Code of Ethics sets forth written guidelines to promote:
| · | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; | |
| · | full, fair, accurate, timely and understandable disclosure in all reports and documents that we file with, or submit to, the SEC and in other public communications made by us that are within the executive officer’s area of responsibility; | |
| · | compliance with applicable governmental laws, rules and regulations; | |
| · | the prompt internal reporting of violations of the Code; and | |
| · | accountability for adherence to the Code. |
Our Code of Ethics has been filed with the SEC as Exhibit 14 to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006, as filed with the SEC on April 24, 2007. We will provide a copy of the Code of Ethics to any person without charge, upon request. Requests can be sent to: Athena Gold Corporation, 2010A Harbison Drive # 312, Vacaville, CA 95687.
ITEM 11 – EXECUTIVE COMPENSATION
Director Compensation
The following table shows compensation paid to our directors (excluding compensation included under our summary compensation table above) for service as directors during the year ended December 31, 2022.
Fees Earned or Paid in Cash |
Stock Awards |
Option Awards |
All Other Compensation |
Total | |
| Name | ($) | ($)* | ($)* | ($) | ($) |
| John C. Power ** | $0 | $0 | $0 | $0 | $0 |
| Brian Power | $0 | $7,500 | $23,580 | $0 | $31,080 |
| John Hiner | $0 | $7,500 | $23,580 | $0 | $31,080 |
| Markus Janser | $0 | $7,500 | $23,580 | $0 | $31,080 |
* Represents the aggregate grant date fair value computed in accordance with FASB 123.
** Compensation disclosed in Executive Compensation table.
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Executive Compensation
The table below sets forth, for the last two fiscal years, the compensation earned by our named executive officers consisting of our chief executive officer and chief financial officer. No other executive officer had annual compensation in excess of $100,000 during the last two fiscal years.
Summary Compensation Table
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other ($) | Total ($) | ||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||
| John C. Power, | 2022 | $ | 30,000 | $ | 0 | $ | 7,500 | $ | 23,580 | $ | 0 | $ | 0 | $ | 0 | $ | 61,080 | ||||||||||||||||||
| Chief Executive Officer | 2021 | $ | 30,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 30,000 | ||||||||||||||||||
| Tyler Minnick, | 2022 | $ | 0 | $ | 0 | $ | 3,750 | $ | 11,790 | $ | 0 | $ | 0 | $ | 21,240 | $ | 36,780 | ||||||||||||||||||
| Chief Financial Officer(2) | 2021 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 9,000 | $ | 9,000 | ||||||||||||||||||
(1) Represents the aggregate grant date fair value computed in accordance with FASB 123.
(2) Mr. Minnick’s Other Compensation were consulting fees paid for his services as Chief Financial Officer.
Employment Agreements
We do not have any written employment agreements other than the above-referenced consulting agreement with any of our executive officers; nor do we have or maintain key man life insurance on Mr. Power.
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth the stock options granted to our named executive officers during the year, as of December 31, 2022.
| Option Awards | Stock Awards | |||||
| Name | Number of Securities Underlying Unexercised Options: (#) Exercisable |
Number of Securities Underlying Unexercised Options: (#) Unexercisable |
Option Exercise Price ($) |
Expiration Date |
Number of Shares or Units of Stock that Have Not Vested (#) | |
| John C. Power | 500,000 | 0 | $0.06 | 10/12/2032 | 0 | |
| Brian Power | 500,000 | 0 | $0.06 | 10/12/2032 | 0 | |
| John Hiner | 500,000 | 0 | $0.06 | 10/12/2032 | 0 | |
| Markus Janser | 500,000 | 0 | $0.06 | 10/12/2032 | 0 | |
| Tyler Minnick | 250,000 | 0 | $0.06 | 10/12/2032 | 0 | |
Expense Reimbursement
We will reimburse our officers and directors for reasonable expenses incurred during the course of their performance.
Retirement Plans and Benefits
None.
Indemnification of Directors and Officers
Our bylaws contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:
| · | any breach of the director’s duty of loyalty to us or our stockholders, | |
| · | any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law, | |
| · | unlawful payments of dividends or unlawful stock repurchases, or redemptions as provided in Section 174 of the Delaware General Corporation Law, or | |
| · | any transaction from which the director derived an improper personal benefit. |
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Our bylaws provide that we are required to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. Any repeal of or modification to our restated certificate of incorporation or bylaws may not adversely affect any right or protection of a director or executive officer for or with respect to any acts or omissions of such director or executive officer occurring prior to such amendment or repeal. Our bylaws also provide that we may advance expenses incurred by a director or executive officer in advance of the final disposition of any action or proceeding and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We believe that these bylaw provisions are necessary to attract and retain qualified persons as directors and officers.
The limitation of liability and indemnification provisions in our bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information with respect to beneficial ownership of our common stock by:
| · | each person who beneficially owns more than 5% of our common stock; | |
| · | each of our named executive officers; | |
| · | each of our directors; and | |
| · | all named executive officers and directors as a group. |
| 44 |
The following table shows the number of shares owned as of December 31, 2022, and the percentage of outstanding common stock owned as of that date. Each person has sole voting and investment power with respect to the shares shown, except as noted.
Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership (2) | Ownership as a Percentage of Outstanding Common Shares(3) | ||||||
| John C. Power (4) | 10,523,238 | 7.69% | ||||||
| Brian Power (5) | 1,850,000 | 1.35% | ||||||
| John Hiner (5) | 1,150,000 | 0.84% | ||||||
| Markus Janser (5) | 1,150,000 | 0.84% | ||||||
| Tyler Minnick (6) | 575,000 | 0.42% | ||||||
| All officers and directors as a group (five persons) | 15,248,238 | 11.14% | ||||||
| Nubian Resources, Ltd. 2526 Yale Court Abbostford, BC V2S 8G9 | 50,000,000 | 36.74% | ||||||
| John Gibbs (7) 807 Wood N Creek Ardmore, OK 73041 | 40,589,470 | 28.48% | ||||||
| (1) | Unless otherwise stated, address is 2010A Harbison Drive # 312, Vacaville, CA 95687. |
| (2) | Under SEC Rules, we include in the number of shares owned by each person the number of shares issuable under outstanding options or warrants if those options or warrants are exercisable within 60 days of the date of this prospectus. In calculating percentage ownership, we calculate the ownership of each person who owns exercisable options by adding (i) the number of exercisable options for that person only to (ii) the number of total shares outstanding and dividing that result into (iii) the total number of shares and exercisable options owned by that person. |
| (3) | Shares and percentages beneficially owned are based upon 136,091,400 shares outstanding on December 31, 2022 |
| (4) | Includes 300,000 warrants and 500,000 options. |
| (5) | Includes 1,000,000 options. |
| (6) | Includes 250,000 options. |
| (7) | Includes 5,655,000 shares owned by TriPower Resources, Inc., of which John D. Gibbs is President and controlling shareholder; includes 500,000 shares owned by Redwood Microcap Fund, of which Mr. Gibbs is a control person; and includes Warrants exercisable to purchase 6,435,202 shares of Common Stock. |
| 45 |
ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
Except as disclosed herein and in the Notes to Financial Statements, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.
The information required by this Item is located in the Notes to our consolidated financial statements included in Item 15 beginning on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference.
Director Independence
Our common stock is listed on the OTC Market Inc.’s OTQB and OTC Pinks inter-dealer quotation systems, which does not have director independence requirements. Nevertheless, for purposes of determining director independence, we have applied the definition set forth in NASDAQ Rule 4200(a)(15). John C. Power and Brian Power would not be considered “independent” under the NASDAQ rule due to the fact that John C. Power is an officer and Brian Power is John C. Power’s brother.
ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES.
We understand the need for our principal accountants to maintain objectivity and independence in their audit of our financial statements. To minimize relationships that could appear to impair the objectivity of our principal accountants, our Board of Directors has restricted the non-audit services that our principal accountants may provide to us primarily to tax services and audit-related services. We are only to obtain non-audit services from our principal accountants when the services offered by our principal accountants are more effective or economical than services available from other service providers, and, to the extent possible, only after competitive bidding. These determinations are among the key practices adopted by the Board of Directors. Our Board has adopted policies and procedures for pre-approving work performed by our principal accountants.
The aggregate fees billed for the years ended December 31, 2022, and 2021 for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by our accountants in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
| 2022 | 2021 | |||||||
| Audit fees - audit of annual financial statements and review of financial statements included in our quarterly reports, services normally provided by the accountant in connection with statutory and regulatory filings | $ | 51,900 | $ | 40,500 | ||||
| Audit-related fees - related to the performance of audit or review of financial statements not reported under "audit fees" | – | – | ||||||
| Tax fees - tax compliance, tax advice and tax planning | 3,000 | 5,000 | ||||||
| All other fees - services provided by our principal accountants other than those identified above | 14,000 | 5,500 | ||||||
| Total fees | $ | 68,900 | $ | 51,000 | ||||
After careful consideration, the Board of Directors has determined that payment of the audit fees is in conformance with the independent status of our principal independent accountants.
| 46 |
PART IV
ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
| 47 |
| 48 |
| 49 |
__________________
| (1) | Incorporated by reference from the Company's Registration Statement on Form SB-2, SEC File No. 121351 as declared effective by the Commission on February 14, 2006. |
| (2) | Incorporated by reference from the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2006, and filed with the Commission on April 24, 2007. |
| (3) | Incorporated by reference from the Company’s Current Report on Form 8-K dated September 4, 2007 and filed with the Commission on September 14, 2007. |
| (4) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 4, 2007 and filed with the Commission on December 6, 2007. |
| (5) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 11, 2007 and filed with the Commission on December 18, 2007. |
| (6) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 12, 2008 and filed with the Commission on March 14, 2008. |
| (7) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 31, 2008 and filed with the Commission on January 6, 2009. |
| (8) | Incorporated by reference from the Company’s Current Report on Form 8-K dated February 11, 2009 and filed with the Commission on February 13, 2009. |
| (9) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 2, 2009 and filed with the Commission on March 5, 2009. |
| 50 |
| (10) | Incorporated by reference from the Company’s Annual Report on Form 10-K dated December 31, 2009 and filed with the Commission on April 14, 2009. |
| (11) | Incorporated by reference from the Company’s Current Report on Form 8-K dated April 28, 2009 and filed with the Commission on May 6, 2009. |
| (12) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 15, 2009 and filed with the Commission on June 19, 2009. |
| (13) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 26, 2009 and filed with the Commission on July 2, 2009. |
| (14) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 14, 2009 and filed with the Commission on December 18, 2009. |
| (15) | Incorporated by reference from the Company’s Current Report on Form 8-K dated January 5, 2010 and filed with the Commission on January 7, 2010. |
| (16) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 11, 2010 and filed with the Commission on March 15, 2010. |
| (17) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 25, 2010 and filed with the Commission on June 25, 2010. |
| (18) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 30, 2010 and filed with the Commission on July 28, 2010. |
| (19) | Incorporated by reference from the Company’s Current Report on Form 8-K dated August 3, 2010 and filed with the Commission on August 4, 2010. |
| (20) | Incorporated by reference from the Company’s Current Report on Form 8-K dated August 20, 2010 and filed with the Commission on August 23, 2010. |
| (21) | Incorporated by reference from the Company’s Current Report on Form 8-K dated August 20, 2010 and filed with the Commission on August 30, 2010. |
| (22) | Incorporated by reference from the Company’s Current Report on Form 8-K/A dated August 20, 2010 and filed with the Commission on November 1, 2010. |
| (23) | Incorporated by reference from the Company’s Current Report on Form 8-K dated November 15, 2010 and filed with the Commission on November 17, 2010. |
| (24) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 31, 2010 and filed with the Commission on January 6, 2011 |
| (25) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 2, 2011 and filed with the Commission on March 7, 2011. |
| (26) | Incorporated by reference from the Company’s Current Report on Form 8-K dated April 1, 2011 and filed with the Commission on June 2, 2011. |
| (27) | Incorporated by reference from the Company’s Current Report on Form 8-K dated August 1, 2011 and filed with the Commission on August 3, 2011. |
| (28) | Incorporated by reference from the Company’s Current Report on Form 8-K dated August 22, 2011 and filed with the Commission on September 9, 2011. |
| (29) | Incorporated by reference from the Company’s Current Report on Form 8-K dated October 26, 2011 and filed with the Commission on January 4, 2012. |
| (30) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 15, 2011 and filed with the Commission on January 5, 2012. |
| (31) | Incorporated by reference from the Company’s Current Report on Form 8-K dated February 2, 2012 and filed with the Commission on February 9, 2012. |
| (32) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 18, 2012 and filed with the Commission on March 23, 2012. |
| (33) | Incorporated by reference from the Company’s Current Report on Form 8-K/A dated February 2, 2012 and filed with the Commission on March 26, 2012. |
| (34) | Incorporated by reference from the Company’s Current Report on Form 8-K dated April 27, 2012 and filed with the Commission on May 2, 2012. |
| (35) | Incorporated by reference from the Company’s Current Report on Form 8-K dated May 10, 2012 and filed with the Commission on May 16, 2012. |
| (36) | Incorporated by reference from the Company’s Current Report on Form 8-K dated May 22, 2012 and filed with the Commission on May 25, 2012 |
| (37) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 16, 2012 and filed with the Commission on June 19, 2012. |
| (38) | Incorporated by reference from the Company’s Current Report on Form 8-K dated July 18, 2012 and filed with the Commission on July 19, 2012. |
| (39) | Incorporated by reference from the Company’s Current Report on Form 8-K dated November 28, 2012 and filed with the Commission on November 29, 2012. |
| (40) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 5, 2013 and filed with the Commission on June 6, 2013. |
| (41) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 19, 2013 and filed with the Commission on December 23, 2013. |
| (42) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 31, 2013 and filed with the Commission on January 2, 2014. |
| (43) | Incorporated by reference from the Company’s Current Report on Form 8-K dated January 21, 2015 and filed with the Commission on January 21, 2015. |
| (44) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 31, 2014 and filed with the Commission on March 31, 2015. |
| (45) | Incorporated by reference from the Company’s Current Report on Form 8-K dated May 5, 2015 and filed with the Commission on May 6, 2015. |
| (46) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 10, 2016 and filed with the Commission on March 15, 2016. |
| (47), (48) | Incorporated by reference from the Company’s Current Report on Form 8-K dated September 12, 2016 and filed with the Commission on October 14, 2016. |
| (49) | Incorporated by reference from the Company’s Current Report on Form 8-K dated June 27, 2018 and filed with the Commission on June 28, 2018. |
| (50) | Incorporated by reference from the Company’s Current Report on Form 8-K dated July 31, 2018 and filed with the Commission on August 6, 2018. |
| 51 |
| (51) | Incorporated by reference from the Company’s Current Report on Form 8-K dated March 1, 2007 and filed with the Commission on March 8, 2007 |
| (52) | Incorporated by reference from the Company’s Current Report on Form 8-K dated November 5, 2019 and filed with the Commission on November 6, 2019. |
| (53), (54) | Incorporated by reference from the Company’s Current Report on Form 8-K dated February 21, 2020 and filed with the Commission on February 24, 2020. |
| (55), (56) | Incorporated by reference from the Company’s Current Report on Form 8-K dated April 28, 2020 and filed with the Commission on April 29, 2020. |
| (57), (58) | Incorporated by reference from the Company’s Current Report on Form 8-K dated August 3, 2020 and filed with the Commission on August 31, 2020. |
| (59) | Incorporated by reference from the Company’s Current Report on Form 8-K dated October 19, 2020 and filed with the Commission on October 19, 2020. |
| (60) | Incorporated by reference from the Company’s Current Report on Form 8-K dated October 22, 2020 and filed with the Commission on October 28, 2020. |
| (61) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 15, 2020 and filed with the Commission on December 21, 2020. |
| (62), (63), (64), (65) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 21, 2020 and filed with the Commission on January 5, 2021. |
| (66) | Incorporated by reference from the Company’s Current Report on Form 8-K dated January 21, 2021 and filed with the Commission on January 27, 2021. |
| (67) | Incorporated by reference from the Company’s Current Report on Form 8-K dated May 6, 2021 and filed with the Commission on May 12, 2021. |
| (68) | Incorporated by reference from the Company’s Current Report on Form 8-K dated November 10, 2021 and filed with the Commission on November 15, 2021. |
| (69) | Incorporated by reference from the Company’s Current Report on Form 8-K dated December 27, 2021 and filed with the Commission on January 6, 2022. |
| (70) | Incorporated by reference from the Company’s Current Report on Amended Form 8-K/A dated December 27, 2021 and filed with the Commission on March 14, 2022. |
| # | Filed herewith |
| ## | Furnished, not filed. |
| 52 |
ATHENA GOLD CORPORATION
(Formerly Athena Silver Corporation)
TABLE OF CONTENTS
| Page | |
| Report of Independent Registered
Public Accounting Firm MaloneBailey, LLP, PCAOB ID |
F-2 |
| Consolidated Balance Sheets | F-3 |
| Consolidated Statements of Operations | F-4 |
| Consolidated Statements of Stockholders’ Equity | F-5 |
| Consolidated Statements of Cash Flows | F-6 |
| Notes to Consolidated Financial Statements | F-7 |
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Athena Gold Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Athena Gold Corporation and its subsidiary (collectively, the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, 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 December 31, 2022 and 2021, 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.
Going Concern Matter
The accompanying 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 suffered recurring losses from operations and has a net capital deficiency that raises 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.
/s/
www.malonebailey.com
We have served as the Company's auditor since 2011.
March 15, 2023
| F-2 |
ATHENA GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
| Assets | 12/31/22 | 12/31/21 | ||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Mineral Rights | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable – related party | ||||||||
| Notes payable | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities | ||||||||
| Warrant liability | ||||||||
| Total long term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock, $ par value, shares authorized, outstanding | ||||||||
| Common stock - $ par value; shares authorized, and issued and outstanding | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
See accompanying notes to the financial statements.
| F-3 |
ATHENA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| Twelve Months Ended | ||||||||
| 12/31/22 | 12/31/21 | |||||||
| Operating expenses | ||||||||
| Exploration, evaluation and project expenses | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Net operating loss | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on extinguishment of debt | ||||||||
| Revaluation of warrant liability | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding – basic and diluted | ||||||||
| Loss per common share – basic and diluted | $ | ) | $ | ) | ||||
See accompanying notes to the financial statements.
| F-4 |
ATHENA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
| Additional | |||||||||||||||||||
| Common Stock | Paid In | Accumulated | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | |||||||||||||||
| December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
| Conversion of management fees | |||||||||||||||||||
| Stock based compensation | – | ||||||||||||||||||
| Private placement | |||||||||||||||||||
| Warrant liability | – | ( | ) | ( | ) | ||||||||||||||
| Common stock issued for mineral property | |||||||||||||||||||
| Common stock issued for debt and accrued interest | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ||||||||||||||
| December 31, 2021 | $ | $ | $ | ( | ) | $ | |||||||||||||
| December 31, 2021 | $ | $ | $ | ( | ) | $ | |||||||||||||
| Stock based compensation | – | ||||||||||||||||||
| Shares issued for services | |||||||||||||||||||
| Private placement | |||||||||||||||||||
| Warrant liability | – | ( | ) | ( | ) | ||||||||||||||
| Common stock issued for mineral property | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ||||||||||||||
| December 31, 2022 | $ | $ | $ | ( | ) | $ | |||||||||||||
See accompanying notes to the financial statements.
| F-5 |
ATHENA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Twelve Months Ended | ||||||||
| 12/31/22 | 12/31/21 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Amortization of debt discount | ||||||||
| Revaluation of warrant liability | ( | ) | ||||||
| Shares issued for services | ||||||||
| Share based compensation | ||||||||
| Gain on forgiveness of debt | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Prepaid expense | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable – related party | ||||||||
| Other liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of mineral properties | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from private placement of stock | ||||||||
| Proceeds from related parties | ||||||||
| Payments to related parties | ( | ) | ||||||
| Payments on notes payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Noncash investing and financing activities | ||||||||
| Stock issued to payoff note payable | $ | $ | ||||||
| Common stock issued for mineral properties | $ | $ | ||||||
| Note payable for mineral property | $ | $ | ||||||
| Conversion of management fee payable | $ | $ | ||||||
| Warrant liability | $ | $ | ||||||
| Stock issued for accrued interest | $ | $ | ||||||
See accompanying notes to the financial statements.
| F-6 |
ATHENA GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 – Nature of Business and Summary of Significant Accounting Policies
Nature of Operations
Athena Gold Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We were incorporated in Delaware on December 23, 2003 and began our mining operations in 2010.
In December 2009, we formed and organized a wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owns and operates mining interests and property in California. On December 31, 2020 we sold the subsidiary to Mr. John Gibbs, a related party, in a non-cash exchange.
The Company’s properties do not have any reserves. The Company plans to conduct exploration programs on these properties with the objective of ascertaining whether any of its properties contain economic concentrations of precious and base metals that are prospective for mining.
Basis of Presentation
We prepared these financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).
Foreign Currency Translation
The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency. The Company has not entered any contracts to manage foreign exchange risk.
The functional currency of the Company is the US dollar; therefore, the Company is exposed to currency risk from financial assets and liabilities denominated in Canadian dollars.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
Liquidity and Going Concern
Our financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.
At December 31, 2022, we had not yet achieved profitable operations and we have accumulated losses of approximately $ since our inception. We expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due.
| F-7 |
Cash
We consider all amounts on deposit with financial institutions and highly liquid investments with an original maturity of three months or less to be cash equivalents.
Mineral Rights - Unproven
We have determined that our mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, our direct costs to acquire or lease mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with: leasing or acquiring patented and unpatented mining claims; leasing mining rights including lease signature bonuses, lease rental payments and advance minimum royalty payments; and options to purchase or lease mineral properties.
If we establish proven and probable reserves for a mineral property and establish that the mineral property can be economically developed, mineral rights will be amortized over the estimated useful life of the property following the commencement of commercial production or expensed if it is determined that the mineral property has no future economic value or if the property is sold or abandoned. For mineral rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
The net carrying value of our mineral rights represents the fair value at the time the mineral rights were acquired less accumulated depletion and any impairment losses. Proven and probable reserves have not been established for mineral rights as of December 31, 2022.
Impairment of Long-lived Assets
We continually monitor events and changes in circumstances that could indicate that our carrying amounts of long-lived assets, including mineral rights, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.
Exploration Costs
Mineral exploration costs are expensed as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, exploration costs incurred to further delineate and develop the property are considered pre-commercial production costs and will be capitalized and included as mine development costs in our consolidated balance sheets.
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). This ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on Company stock price history. The Company determines the expected life based on the simplified method given that its own historical share option exercise experience does not provide a reasonable basis for estimating expected term. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of common stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any subsidiary of the Company, and such number of shares of common stock are reserved for such purpose.
| F-8 |
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1 - Valuation based on quoted market prices in active markets for identical assets and liabilities.
Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.
Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.
The fair value of cash, receivables and accounts payable approximates their carrying values due to their short term to maturity. The warrant liabilities are measured using level 3 inputs (Note 4).
Income Taxes
Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.
The Company reports a liability, if any, for unrecognized
tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to
classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the
statement of operations.
The Company incurred net losses during the twelve months ended December 31, 2022, and 2021. At December 31, 2022 and 2021, potentially dilutive shares of common stock representing shares issuable on conversions of debt, options and warrants totaling and , respectively, have been excluded from diluted net loss per common share because the impact of such inclusion would be anti-dilutive.
| F-9 |
Note 2 – Mineral Rights - Excelsior Springs
Effective December 27, 2021 (“Effective Date”), the Company simultaneously executed and consummated a definitive Share Purchase Agreement (the “SPA”) with Nubian Resources, Ltd. (“Nubian”). The SPA was the result of a previously disclosed Option Agreement with Nubian dated as of December 11, 2020, as amended by First Amendment to Option Agreement dated November 10, 2021 (the “Option”). While the Option granted the Company the right to acquire up to a 100% interest in the mining claims comprising the Excelsior Springs Prospect (the “Property”) located in Esmerelda County, Nevada, the Company and Nubian agreed to restructure the transaction so that the Company purchased 100% of the issued and outstanding shares of common stock of Nubian Resources USA, Ltd (“Nubian USA”), a wholly-owned subsidiary of Nubian which held the Property. By purchasing 100% of Nubian USA, the Company effectively acquired the remaining 90% interest in the Property through the issuance of 45,000,000 shares, the Company having previously acquired a 10% interest in the Property in December 2020 with the issuance of 5,000,000 shares. The 50 million shares issued to Nubian were issued as “restricted securities” under the Securities Act of 1933, as amended (“Securities Act”).
The mineral property was valued at the December
31, 2021, the closing date for the SPA with a stock price of $0.13, resulting in a fair value consideration of $
On June 9, 2022, the Company entered into an Acquisition
Agreement (the “Agreement”) to purchase an undivided 100% interest in the Fortunatus and Prout patented lode mining claims
in Esmeralda County, Nevada $
| · | $ | |
| · | $ | |
| · | $ |
Note 3 – Convertible Note Payable
Effective April 1, 2015, the Company executed
a convertible promissory note (the “Note”) in the principal amount of $
On April 24, 2020, the Company agreed to reduce
the conversion price from $0.0735 per share to $0.0210 per share. All other terms of the Note remain unchanged, and therefore did not
change the cash flows of the Note. The Company determined the transaction was considered an extinguishment because of the change in conversion
price in which no gain or loss was recorded according to ASC 470-50. However, because the conversion price was reduced below the $0.03
market value on the date of the change, a beneficial conversion feature resulted from the price reduction in the amount of $
On November 30, 2021, the Company received a notice
of conversion of the Note with a principal balance of $
| F-10 |
Note 4 – Common Stock and Warrants
During August, September and October 2022, the
Company completed the private placement of four tranches (August 12, 2022; August 31, 2022; September 14, 2022; October 28, 2022) in which
we sold units. Each unit was priced at C$0.08 and consisted of one share of the Company’s common stock and one stock purchase
warrant granting the holder the right to purchase one additional share of common stock at a price of C$0.12. The warrants expire 24 months
from issue date. All securities issued in connection with the offering are subject to restrictions on resale in Canada and the United
States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional
The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.
Tranche 1 – August 12, 2022:
The warrant liability had an initial value of
$
| Fair value assumptions – warrant liability: | 8/12/22 | 12/31/22 | ||||||
| Risk free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
Tranche 2 – August 31, 2022:
The warrant liability had an initial value of
$
| Fair value assumptions – warrant liability: | 8/31/22 | 12/31/22 | ||||||
| Risk free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
| F-11 |
Tranche 3 – September 14, 2022:
The warrant liability had an initial value of
$
| Fair value assumptions – warrant liability: | 9/14/22 | 12/31/22 | ||||||
| Risk free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
Tranche 4 – October 28, 2022:
The warrant liability had an initial value of
$
| Fair value assumptions – warrant liability: | 10/28/22 | 12/31/22 | ||||||
| Risk free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
On June 9, 2022, the Company entered into an Acquisition
Agreement (the “Agreement”) to purchase an undivided 100% interest in the Fortunatus and Prout patented lode mining claims
in Esmeralda County, Nevada $
| · | $ | |
| · | $ | |
| · | $ |
In April 2022 the Company completed a private
placement in which we sold units. Each unit was priced at C$0.08 and consisted of one share of the Company’s common stock
and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of C$0.15. The
warrants expire April 13, 2025. All securities issued in connection with the offering are subject to restrictions on resale in Canada
and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional
| F-12 |
The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.
In April 2022, the warrant liability had an initial
value of $
| Fair value assumptions – warrant liability: | 4/13/22 | 12/31/22 | ||||||
| Risk free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
During the twelve months ended December 31, 2021,
we sold shares of common stock in private placements realizing proceeds of $
On September 30, 2021, the Company completed a
private placement in which we sold units. Each unit was priced at C$0.08 and consisted of one share of the Company’s common
stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of C$0.15.
The warrants expire May 31, 2024. All securities issued in connection with the offering are subject to restrictions on resale in Canada
and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional
The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.
At December 31, 2021, the warrant liability was
valued at $
| Fair value assumptions – warrant liability: | 9/30/21 | 12/31/21 | 12/31/22 | |||||||||
| Risk free interest rate | % | % | % | |||||||||
| Expected term (years) | ||||||||||||
| Expected volatility | % | % | % | |||||||||
On May 25, 2021, the Company completed a private
placement in which we sold units. Each unit was priced at C$0.08 and consisted of one share of the Company’s common stock
and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of C$0.15. The
warrants expire May 31, 2024. All securities issued in connection with the offering are subject to restrictions on resale in Canada and
the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional
The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.
| F-13 |
At December 31, 2021, the warrant liability was
valued at $
| Fair value assumptions – warrant liability: | 5/25/21 | 12/31/21 | 12/31/22 | |||||||||
| Risk free interest rate | % | % | % | |||||||||
| Expected term (years) | ||||||||||||
| Expected volatility | % | % | % | |||||||||
Total outstanding warrants of
| Warrants Issued | Total | |||||||||||||||||||||||||||
| Warrants issued | ||||||||||||||||||||||||||||
| Broker warrants issued (1) | ||||||||||||||||||||||||||||
| Issued date | ||||||||||||||||||||||||||||
| Expiration date | ||||||||||||||||||||||||||||
| Exercise price (Canadian $) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Balance at December 31, 2020 | ||||||||||||||||||||||||||||
| Exercised | ||||||||||||||||||||||||||||
| Issued | ||||||||||||||||||||||||||||
| Expired | ||||||||||||||||||||||||||||
| Balance at December 31, 2021 | ||||||||||||||||||||||||||||
| Exercised | ||||||||||||||||||||||||||||
| Issued | ||||||||||||||||||||||||||||
| Expired | ||||||||||||||||||||||||||||
| Balance at December 31, 2022 | ||||||||||||||||||||||||||||
| (1) |
During the quarter ended March 31, 2021, we
sold
shares of common stock in private placements to six individuals at a price of $0.03 per share, realizing total proceeds of $
On January 1, 2021 Mr. John Power, the Company’s
CEO/CFO agreed to convert accrued management fees totaling $
| F-14 |
On October 12, 2022, the Company granted
options pursuant to the terms of the Company’s Stock Option Plan. The options were issued to five individuals, the CEO, CFO, and
three Directors of the Company. The Black Scholes option pricing model was used to estimate the aggregate fair value of the October 2022
options of $
| Options | Exercise Price |
Expected Life |
Volatility |
Risk Free Interest Rate |
| $ | years | % | % |
On August 24, 2022, the Company granted options pursuant to the terms of the Company’s Stock Option Plan. The Black Scholes option pricing model was used
to estimate the aggregate fair value of the August 2022 options of $
| Options | Exercise Price |
Expected Life |
Volatility |
Risk Free Interest Rate |
| $ | years | % | % |
On March 22, 2021, the Company issued a total of non-statutory stock options to four individuals, three of whom are Directors of the Company, the other an independent technical consultant that is helping design our 2021 exploration programs at Excelsior Spring. Upon vesting, each option is exercisable to purchase one share of common stock at a price of $0.09 per share. The options vest 50% upon issuance, and 25% on each of the first and second anniversaries of the grant date.
We estimated the fair value of the options using the Black-Scholes option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected remaining life of the options. The total estimated fair value of the options utilized the following assumptions:
| Expected volatility | % | |
| Expected life | years | |
| Risk free interest rate | % |
The calculations resulted in the total fair value
of the options issued to be $
| F-15 |
A summary of the stock options as of December 31, 2022, and changes during the periods are presented below:
Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (Years) |
Aggregate Intrinsic Value | |
| Balance at December 31, 2020 | $ |
0 | $ | |
| Exercised | 0 | 0 | ||
| Issued | 0 | |||
| Canceled | 0 | 0 | ||
| Balance at December 31, 2021 | ||||
| Exercised | 0 | 0 | ||
| Issued | 0 | |||
| Canceled | 0 | 0 | 0 | |
| Balance at December 31, 2022 | ||||
| Options exercisable at December 31, 2022 | 0 |
Also, on March 22, 2021, the Company agreed to issue a total of restricted stock units at a price of $0.10 per share to the independent technical consultant helping design our 2021 exploration programs at Excelsior Springs. However, the shares shall not be issued until such time the individual either provides a written request or his termination date, whichever is sooner. The shares shall have no voting rights until issued. As such, we have recorded stock-based compensation in the amount of $.
Note 6 – Commitments and Contingencies
We are subject to various commitments and contingencies.
Note 7 – Related Party Transactions
Conflicts of Interests
Magellan Gold Corporation (“Magellan”) is a company under common control. Mr. John Gibbs is a significant shareholder in both Athena and Magellan. Athena and Magellan are both involved in the business of acquisition and exploration of mineral resources.
Silver Saddle Resources, LLC (“Silver Saddle”) is also a company under common control. Mr. Power and Mr. Gibbs are the owners and managing members of Silver Saddle. Athena and Silver Saddle are both involved in the business of acquisition and exploration of mineral resources.
There exists no arrangement or understanding with respect to the resolution of future conflicts of interest. The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Athena, Magellan and Silver Saddle been autonomous.
| F-16 |
Management Fees
The Company is subject to a month-to-month management
agreement with Mr. Power requiring a monthly payment of $2,500 as consideration for the day-to-day management of Athena, $
On January 1, 2021, the Company agreed to convert
the $
Note Payable
During March 2022, the Company executed two promissory
notes with John Gibbs for $
In June 2022, the Company executed a promissory note with John Gibbs
for $
Sales of Common Stock
On May 25, 2021, the Company sold units
in its private placement at a price of C$0.08 to Mr. Gibbs, realizing net proceeds of $
On January 15, 2021, the Company sold
shares of common stock at a price of $0.03 per share in a private placement to Mr. Gibbs, realizing total proceeds of $
Note 8 – Income Taxes
The Company is current on all its corporate tax filings. Tax year 2022 will be extended if not filed by its due date. Tax returns filed for the years 2018 through 2021 are open for examination from taxing authorities.
Due to the enactment of the Tax Reform Act of
2018, the corporate tax rate for those tax years beginning with 2018 has been reduced to
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Expected federal income tax benefit at statutory rate | $ | 224,568 | $ | |||||
| State taxes | 94,532 | |||||||
| Change in valuation allowance | (319,100 | ) | ( | ) | ||||
| Income tax benefit | $ | – | $ | |||||
| F-17 |
Our deferred tax assets as of December 31, 2022, and 2021 were as follows:
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net operating loss | $ | 2,015,974 | $ | 1,696,874 | ||||
| Valuation allowance | (2,015,974 | ) | (1,696,874 | ) | ||||
| Deferred tax assets, net of valuation allowance | $ | – | $ | – | ||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We have provided a valuation allowance of 100% of our net deferred tax asset due to the uncertainty of generating future profits that would allow us to realize our deferred tax assets.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryover for Federal income tax reporting purposes may be subject to annual limitations. Should a change in ownership occur, use of the net operating loss carryover could be limited in future years.
Note 9 – Subsequent Events
On January 16, 2023, the Company granted 250,000 stock options to a consultant. The options vest 50% immediately and 50% one year from issuance, exercisable at C$0.09 and expire in 5 years.
On January 21, 2023, the Company executed a note payable to John Gibbs for $25,000 at 6% that is payable on demand.
| F-18 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amended annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ATHENA GOLD CORPORATION | |
| Date: March 15, 2023 |
By: /s/ John C. Power John C. Power Chief Executive Officer, President, Secretary & Director (Principal Executive Officer) |
| Date: March 15, 2023 |
By: /s/ Tyler Minnick Tyler Minnick Chief Financial Officer (Principal Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| SIGNATURE | TITLE | DATE |
|
/s/ John C. Power John C. Power |
Chief Executive Officer, President, Secretary & Director (Principal Executive Officer) |
March 15, 2023 |
| March 15, 2023 | ||
|
/s/ Brian Power Brian Power |
Director | |
|
/s/ John Hiner John Hiner |
Director | March 15, 2023 |
|
/s/ Markus Janser Markus Janser |
Director | March 15, 2023 |
|
/s/ Tyler Minnick Tyler Minnick |
Chief Financial Officer (Principal Accounting Officer) |
March 15, 2023 |
| 53 |