Thunder Mountain Gold Inc 10-Q for FY2022 Q3
Thunder Mountain Gold Inc (THMG)
About this 10-Q
Thunder Mountain Gold Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $75K
- down 76.9% from $325K a year earlier
- Net loss
- $298.49K
- compared with a net loss of $654.86K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
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For the transition period from __________ to __________
Commission File Number:
(Exact name of Registrant as specified in its charter)
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Securities registered pursuant to Section 12(g) of the Act:
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(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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Indicate by check mark whether the Registrant is ☐ a large accelerated filer, ☐ an accelerated file, ☒ a
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
☐ Yes
Number of shares of issuer's common stock outstanding at October 21, 2022:
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TABLE OF CONTENTS
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Item 1 - Financial Statements
Thunder Mountain Gold, Inc.
Consolidated Balance Sheets (Unaudited)
September 30, 2022 and December 31, 2021
| September 30, 2022 |
December 31, 2021 |
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| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | $ | ||||
| Prepaid expenses, deposits and other assets | ||||||
| Total current assets | ||||||
| Property and Equipment: | ||||||
| Land | ||||||
| Equipment, net of accumulated depreciation of $ |
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| Total property and equipment | ||||||
| Investment in BeMetals, at fair value (Note 4) | ||||||
| Total assets | $ | $ | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable and other accrued liabilities | $ | $ | ||||
| Accrued related party liability (Note 6) | ||||||
| Accrued interest payable to related parties (Note 6) | ||||||
| Advance from BeMetals (Note 3) | ||||||
| Deferred officer compensation (Note 6) | ||||||
| Related parties notes payable (Note 6) | ||||||
| Total current liabilities | ||||||
| Accrued reclamation costs | ||||||
| Total liabilities | ||||||
| Commitments and Contingencies (Notes 2 and 3) | ||||||
| Stockholders' equity: | ||||||
| Preferred stock; $ |
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| Common stock; $ |
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| Additional paid-in capital | ||||||
| Less: |
( |
) | ( |
) | ||
| Accumulated deficit | ( |
) | ( |
) | ||
| Total Thunder Mountain Gold, Inc stockholders' equity | ||||||
| Noncontrolling interest in Owyhee Gold Trust (Note 3) | ||||||
| Total stockholders' equity | ||||||
| Total liabilities and stockholders' equity | $ | $ |
The accompanying notes are an integral part of these consolidated financial statements.
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Thunder Mountain Gold, Inc.
Consolidated Statements of Operations (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenues: | ||||||||||||
| Gain on mineral interest | $ | $ | $ | $ | ||||||||
| Management service income | ||||||||||||
| Total revenues | ||||||||||||
| Operating expenses: | ||||||||||||
| Exploration | ||||||||||||
| Legal and accounting | ||||||||||||
| Management and administrative | ||||||||||||
| Depreciation | ||||||||||||
| Total operating expenses | ||||||||||||
| Net operating income (loss) | ( |
) | ( |
) | ||||||||
| Other income (expense): | ||||||||||||
| Unrealized gain (loss) on investment | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Gain on sale of investment | ||||||||||||
| Other income | ( |
) | ||||||||||
| Total other income (expense) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Net (loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Net Income (loss) - noncontrolling interest in Owyhee Gold Trust | ||||||||||||
| Net (loss) - Thunder Mountain Gold, Inc. | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Net (loss) per common share-basic and diluted | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||
| Weighted average common shares outstanding-basic and diluted | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Thunder Mountain Gold, Inc.
Consolidated Statements of Cash Flows (Unaudited)
| Nine Months Ended | ||||||
| September 30, | ||||||
| 2022 | 2021 | |||||
| Cash flows from operating activities: | ||||||
| Net (loss) | $ | ( |
) | $ | ( |
) |
| Adjustments to reconcile net income to net cash used by operating activities: | ||||||
| Depreciation | ||||||
| Stock based compensation | ||||||
| Gain on mineral interest | ( |
) | ||||
| Unrealized (gain) loss on investment | ||||||
| Gain on sale of investment | ( |
) | ||||
| Change in: | ||||||
| Prepaid expenses and other assets | ( |
) | ( |
) | ||
| Accounts payable and other accrued liabilities | ( |
) | ||||
| Accrued liability payable to related parties | ( |
) | ( |
) | ||
| Accrued interest payable to related parties | ( |
) | ( |
) | ||
| Advance from BeMetals | ||||||
| Net cash used by operating activities | ( |
) | ( |
) | ||
| Cash flows from investing activities: | ||||||
| Proceeds from sale of investment | ||||||
| Proceeds from mineral interest | ||||||
| Net cash provided by investing activities | ||||||
| Cash flows from financing activities: | ||||||
| Proceeds from Exercise of Options | ||||||
| Payments on related parties notes payable | ( |
) | ( |
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| Net cash used by financing activities | ( |
) | ( |
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| Net increase (decrease) in cash and cash equivalents | ( |
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| Cash and cash equivalents, beginning of period | ||||||
| Cash and cash equivalents, end of period | $ | $ | ||||
| Noncash financing activities | ||||||
| Shares issued for settlement of option exercise with accrued interest and wages | $ | $ | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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Thunder Mountain Gold, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
For three-month periods ended September 30, 2022 and September 30, 2021
| Common Stock Shares |
Common Stock Amount |
Additional Paid-In Capital |
Treasury Stock |
Accumulated Deficit |
Non- Controlling Interest in OGT |
Total | |||||||||||||||
| Balances at July 1, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Stock Options exercised | - | - | - | ||||||||||||||||||
| Net income(loss) | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Balances at September 30, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Balances at July 1, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Net (loss) | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Balances at September 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| For nine-month periods ended September 30, 2022 and September 30, 2021 | |||||||||||||||||||||
| Balances at January 1, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Stock Options exercised | - | - | - | ||||||||||||||||||
| Net income(loss) | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Balances at September 30, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Balances at January 1, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Stock Options issued for Services | - | - | - | - | - | ||||||||||||||||
| Net income(loss) | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Balances at September 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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1. Summary of Significant Accounting Policies and Business Operations
Business Operations
Thunder Mountain Gold, Inc. ("Thunder Mountain", "THMG", or "the Company") was originally incorporated under the laws of the State of Idaho on November 9, 1935, under the name of Montgomery Mines, Inc. In April 1978, the Montgomery Mines Corporation was obtained by a group of the Thunder Mountain property holders and changed its name to Thunder Mountain Gold, Inc., with the primary goal to further develop their holdings in the Thunder Mountain Mining District, located in Valley County, Idaho. Thunder Mountain Gold, Inc. takes its name from the Thunder Mountain Mining District, where its principal lode mining claims were located. For several years, the Company's activities were restricted to maintaining its property position and exploration activities. During 2005, the Company sold its holdings in the Thunder Mountain Mining District. During 2007, the Company acquired the South Mountain Mines property in southwest Idaho and initiated exploration activities on that property, which continue today.
On February 27, 2019, the Company entered into an Option Agreement, (the "BeMetals Option Agreement") with BeMetals Corporation. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase
Basis of Presentation and Going Concern
The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has historically incurred losses, however, under the BeMetals Option Agreement (Note 3), the Company now has a recurring source of revenue, and its ability to continue as a going concern is no longer dependent on equity capital raises and borrowings. However, if necessary, the Company continues to have the ability to raise additional capital in order to fund its future exploration and working capital requirements. The Company's plans for the long-term continuation as a going concern include operating on the cash flows and consideration payments provided under the BeMetals Option Agreement.
COVID-19
In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention. Its rapid spread around the world and throughout the United States prompted many countries, including the United States, to institute restrictions on travel, public gatherings and certain business operations. These restrictions disrupted economic activity in Thunder Mountain Gold's business related to raising capital. As of September 30, 2022, the disruption did not materially impact the Company' financial statements. However, if the severity of the economic disruptions increase as the duration of the COVID-19 pandemic continues, the negative financial impact could be significantly greater in future periods.
The COVID-19 outbreak could have a variety of adverse impacts to the Company, including their ability to continue operations of their exploration under the BeMetals Options Agreement. As of September 30, 2022, there were no material adverse impacts to the Company's BeMetals Options Agreement due to COVID-19.
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Principles of Consolidation
The consolidated financial statements include the accounts of the Company; its wholly owned subsidiaries, Thunder Mountain Resources, Inc. ("TMRI") and South Mountain Mines, Inc. ("SMMI"); and a company in which the Company owns
Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions include the carrying value of properties and mineral interests, environmental remediation liabilities, deferred tax assets, and stock-based compensation. Management's estimates and assumptions are based on historical experience and other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.
Revenue Recognition
Management service revenue is recognized when the Company has satisfied its performance obligation required under its management contract with BeMetals. Such obligation is satisfied over time as work is performed and the Company has a contractual right to payment.
Income Taxes
The Company recognizes deferred income tax liabilities or assets at the end of each period using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized.
Cash and Cash Equivalents
For the purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be a cash equivalent.
Fair Value Measurements
When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At September 30, 2022, the Company has one financial asset, investment in equity security, that is adjusted to fair value on a recurring basis for which the fair value is determined based on Level 1 inputs as the equity security is traded on a stock exchange. The Company has no financial liabilities that are adjusted to fair value on a recurring basis.
Financial Instruments
The Company's financial instruments include cash and cash equivalents, investment in BeMetal's equity security and related party notes payable, the carrying value of which approximates fair value based on the nature of those instruments.
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Investments
The Company determines the appropriate classification of investments at the time of acquisition and re-evaluates such determinations at each reporting date. Equity securities that have a readily determined fair value are carried at fair value determined using Level 1 fair value measurement inputs with the change in fair value recognized as unrealized gain (loss) in the consolidated statement of operations each reporting period. Gains and losses on the sale of securities are recognized on a specific identification basis.
Mineral Interests
The Company capitalizes costs for acquiring mineral interests, and expenses costs to maintain mineral rights and leases as incurred. Exploration costs are expensed in the period in which they occur. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method based on periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value and any subsequent losses are charged to operations at the time of impairment.
If a mineral interest is abandoned or sold, its capitalized costs are charged to operations. Consideration received by the Company pursuant to joint ventures or purchase option agreements is applied against the carrying value of the related mineral interest. When and if payments received exceed the carrying value, the excess amount is recognized as a gain in the consolidated statement of operations in the period the consideration is received.
Investments in Joint Ventures
For companies and joint ventures where the Company holds more than 50% of the voting interests, but less than 100%, and has significant influence, the company or joint venture is consolidated, and other investor interests are presented as noncontrolling. See Note 3 regarding the Company's investment in Owyhee Gold Trust. Joint ventures in which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method of accounting.
Reclamation and Remediation
The Company's operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company would record the fair value of an asset retirement obligation as a liability in the period in which the Company incurred a legal obligation for the retirement of tangible long-lived assets. A corresponding asset would also be recorded and depreciated over the life of the asset.
For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred, and they are reasonably estimable. Such costs are based on management's estimate of amounts expected to be incurred when the remediation work is performed. At September 30, 2022 and December 31, 2021, the Company had accrued $
Share-Based Compensation
Share-based payments to employees and directors, including grants of employee stock options, are measured at fair value and expensed in the consolidated statements of operations over the vesting period.
Recent Accounting Pronouncements
Accounting Standards Updates Adopted
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The update is to address issues identified because of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. The update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and with early adoption permitted. The adoption of this standard did not impact the Company's consolidated financial statements.
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Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
Net Income (Loss) Per Share
The Company is required to have dual presentation of basic earnings per share ("EPS") and diluted EPS. The Company calculates basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. We do not include the impact of any potentially dilutive common stock equivalents in our basic earnings (loss) per share calculations. Diluted earnings per share reflect potentially dilutive common stock equivalents, including options and warrants that could share in our earnings through the conversion to common shares, except where their inclusion would be anti-dilutive. For the three-month and nine month periods ended September 30, 2022 and September 30, 2021 Outstanding common stock equivalents were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive due to the net loss for the period.
2. Mineral Interest Commitments
The Company has two lease arrangements with landowners that own land parcels adjacent to the Company's South Mountain patented and unpatented mining claims. The leases were originally for a
| Annual Payment |
|||
| Acree Lease (June) | $ | ||
| Lowry Lease (October) | |||
| Total | $ |
The Company has
The claim fees are paid on these unpatented claims annually as follows:
| Target Area | 2022 | ||
| Trout Creek -State of Nevada | $ | ||
| Trout Creek -Lander County, Nevada | |||
| South Mountain-State of Idaho | |||
| Total | $ |
3. South Mountain Project
BeMetals Option Agreement:
On February 27, 2019, the Company entered into an Option Agreement, (the "BeMetals Option Agreement") with BeMetals Corp., a British Columbia corporation ("BeMetals"), and BeMetals USA Corp., a Delaware corporation ("BMET USA"), a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase
10
On September 14, 2021, the BeMetals Option Agreement was amended, effecting Tranche 6 with the addition of Tranches 7 and 8. The option period has been extended to December 31, 2022, unless agreed to be further extended by all parties.
Pursuant to the amended BeMetals Option Agreement, BMET USA will be entitled to purchase
- Tranche 1: cash payment of $
- Tranche 2: Tranche 2 conditions were completed on June 10, 2019, with the issuance of
-
Tranche 3: Cash payment of $
-
Tranche 4: Cash payment of $
-
Tranche 5: Cash payment of $
-
Tranche 6: Cash payment of $
- Tranche 7: Commencing from September 14, 2021, BeMetals shall fund and complete a surface drilling exploration program with a minimum of
- Tranche 8: Upon BeMetal's intention to exercise their option, and completion of Tranches 1 through 7.
- US$
- The Tranche 2 Shares Value $
- The aggregate value of the South Mountain Project Liabilities, excluding reclamation and environmental liabilities.
BeMetals Management Service Income
Concurrent with the BeMetals Option Agreement, BMET USA and SMMI entered a management contract whereby BeMetals will pay $
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Advance from BeMetals
BeMetals provides funding to SMMI for ongoing project expenses, including office lease payments. Under the terms of the Option Agreement, SMMI's management provides BeMetals a request for funds monthly to cover the upcoming month's expenses. At September 30, 2022, and December 31, 2021, advances received from BeMetals that have not yet been spent totaled $
SMMI Joint Venture - OGT, LLC
The Company's wholly owned subsidiary SMMI is the sole manager of the South Mountain Project in its entirety through a separate Mining Lease with Option to Purchase ("Lease Option") with the Company's majority-owned subsidiary OGT. The Lease Option includes a capped $
4. Investment in Equity Security
In June 2019 in connection with the BeMetals Option Agreement (see Note 3), the Company received
On May 4, 2021, the Company sold
The fair value of the Company's shares in BeMetals is $
5. Property and Equipment
The Company's property and equipment are as follows:
| September 30 | December 31, | |||||
| 2022 | 2021 | |||||
| Vehicles | $ | $ | ||||
| Buildings | ||||||
| Construction Equipment | ||||||
| Mining Equipment | ||||||
| Accumulated Depreciation | ( |
) | ( |
) | ||
| Land | ||||||
| Total Property and Equipment | $ | $ |
6. Related Notes
Board of Directors Compensation
On March 16, 2022, the Company's Compensation Committee recommended that the Company's Board of Directors receive nominal compensation for their service. The Company's Board of Directors passed the resolution for Board members compensation on March 21, 2022. During the nine-month period ended September 30, 2022, the total amount of cash compensation paid to the Board of Directors was $
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Notes Payable
Mr. Jones is the Company's President and Chief Executive Officer on September 30, 2022 Mr. Jones had a note payable balance of $
James Collord, the Company's Vice President and Chief Operating Officer was paid $
Deferred Officer Compensation
Three of the Company's officers began deferring compensation for services on April 1, 2015. On July 31, 2018, the Company stopped expensing and deferring compensation for the three Company officers in the interest of marketing the SMMI project. As part of the BeMetals agreement (Note 3), the Company resumed compensation for these officers on May 15, 2019. The officers deferred compensation balances at September 30, 2022 and December 31, 2021 represent the balances deferred prior to the BeMetals agreement and are as follows: Eric Jones, President and Chief Executive Officer - $
Accrued Related Party Liability
During 2015 to 2018 he Company engaged Baird Hanson LLP ("Baird"), a company owned by one of the Company's former directors, to provide legal services. The Company's director Joseph Baird retired from the Board of Directors of Thunder Mountain Gold, Inc., and from all other positions or offices with the Company effective April 11, 2022. Baird received $
On May 10, 2022, the Company agreed to facilitate the sale of
7. Stockholders' Equity
The Company's common stock has a par value of $
On July 19, 2021, the Company issued
8. Stock Options
The Company has a Stock Incentive Plan (the "SIP") that provides for the grant of stock options, incentive stock options, stock appreciation rights, restricted stock awards, and incentive awards to eligible individuals including directors, executive officers and advisors that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction. On July 12, 2022, the Company's shareholders, at their Annual Meeting, ratified and reapproved the Stock Option Plan.
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On March 21, 2022, the Company granted
On July 19, 2021, management and Board members exercised stock options for
On July 19, 2021, the Company's President and Chief Executive Officer, Eric Jones, exercised stock options representing
The fair value of each option award was estimated on the date of the grant using the assumptions noted in the following table:
| March 21, 2022 | |
| Stock price | $ |
| Exercise price | $ |
| Expected volatility | |
| Expected dividends | |
| Expected terms (in years) |
|
| Risk-free rate |
During the nine months ended September 30, 2022,
The following is a summary of the Company's options issued and outstanding under the SIP:
| Shares | Weighted Average Exercise Price |
|||||
| Outstanding and exercisable at December 31, 2020 | $ | |||||
| Exercised | ( |
) | ||||
| Expired | ( |
) | ||||
| Outstanding and exercisable at December 31, 2021 | $ | |||||
| Granted | ||||||
| Expired | ( |
) | ||||
| Outstanding and exercisable at September 30, 2022 | $ |
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The average remaining contractual term of the options outstanding and exercisable at September 30, 2022 was
9. Leases
The Company renewed its office operating lease on February 1, 2022, for 12 months, and does not anticipate the lease will be more than 12 months as of September 30, 2022. Since the remaining lease term is one year or less the Company did not recognize a right to use asset and a related lease liability on the balance sheet for the lease renewal. For the nine months ended September 30, 2022, the Company paid $
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The following Management's Discussion and Analysis of Financial Condition and Results of Operation ("MD&A") is intended to help the reader understand our financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying integral notes ("Notes") thereto. The following statements may be forward-looking in nature and actual results may differ materially.
COVID-19
In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention. Its rapid spread around the world and throughout the United States prompted many countries, including the United States, to institute restrictions on travel, public gatherings, and certain business operations. These restrictions disrupted economic activity in the Company's business related to raising capital. As of September 30, 2022, the disruption did not materially impact the Company's financial statements. However, if the severity of the economic disruptions increase as the duration of the COVID-19 pandemic continues, the negative financial impact due to the BeMetals Option Agreement could be significantly greater in future periods.
The effects of the continued outbreak of COVID-19 and related government responses could have disruptions to the Company`s Option Agreement with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. ("SMMI") from the Company. The term of the agreement is for two years starting June 10, 2019, with an option to extend an additional year, with BeMetals conducting a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company's common stock. In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments. The COVID-19 outbreak could have a variety of adverse impacts to the Company, including their ability to continue operations of their exploration under the BeMetals Operation Agreement. Thunder Mountain Gold evaluated these impairment considerations and determined that no such impairments occurred as of September 30, 2022.
COVID-19 Additional Precautions
Thunder Mountain Gold Inc. has also taken steps to mitigate the potential risks to employees and suppliers posed by the spread of COVID-19. The Company has taken extra precautions for employees who work under the terms of the BeMetals Option Agreement and have implemented work from home policies where appropriate.
As of September 30, 2022, there has been no material adverse impact to the BeMetals Operation Agreement. Management will continue to review and modify plans as conditions change. Despite efforts to manage these impacts to the Company, the ultimate impact of COVID-19 also depends on factors beyond management's knowledge or control, including the duration and severity of this outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects. Therefore, management cannot estimate the potential future impact to financial position, results of operations and cash flows, but the impacts could be material.
Plan of Operation:
FORWARD LOOKING STATEMENTS: The following discussion may contain forward-looking statements that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include the following: inability to locate property with mineralization, lack of financing for exploration efforts, competition to acquire mining properties; risks inherent in the mining industry, and risk factors that are listed in the Company's reports and registration statements filed with the Securities and Exchange Commission.
On February 27, 2019, the Company entered into an Option Agreement, (the "BeMetals Option Agreement") with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. ("SMMI") from Thunder Mountain Resources, Inc. ("TMRI"), both wholly owned subsidiaries of the Company. The term of the agreement is for two years with BeMetals completing a PEA completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires BeMetals to issue 10,000,000 shares of BMET stock to the Company, and cash payments to the Company of $1,350,000: $1,100,000 in cash and $250,000 in exchange for shares of the Company's common stock. Through September 30, 2022, cash proceeds of $1,100,000 and $250,000 in exchange for shares of the Company's common stock have been received. In the event BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.
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The Company's plan of operation through the end of the 2022 calendar year will be supporting BeMetals Corp. during their option period and aiding in the exploration and advancement of the project.
On September 5, 2022 Crone Geophysics based in Toronto, Canada initiated a time domain pulse electromagnetic (PEM) survey began over a portion of the South Mountain Mines property for BeMetals Corp. The objective of the survey is to delineate massive sulfide mineralization within a marble unit bounded by Paleozoic schists. Historic mining on the area was conducted on massive sulfide mineralization associated hosted by the Laxey marble within the survey area. Bowes (1985) describes the sulfide bodies as pipe-like dipping to the southwest at 40-50° and raking 50°. The survey is expected to be completed by November 7, 2022.
In addition to the PEM survey, property scale topography, geology and ground magnetics will be included to provide supporting data for the interpretation. The digital products include raw data, intermediate processed products, and final products in several data formats.
South Mountain Project, Owyhee County, Idaho
South Mountain is a polymetallic, carbonate replacement style deposit (CRD) in the pre-development stage focused on high-grade zinc, silver, gold, copper and lead. It is located approximately 70 miles southwest of Boise, Idaho (see Figure 2). The Project was intermittently mined from the late 1800s to the late 1960s and its existing underground workings remain intact and well maintained. Historic production at the Project has largely come from high-grade massive sulfide bodies that remain open at depth and along strike. According to historical smelter records, approximately 53,642 tons of mineralized material has been mined to date. These records also indicate average grades; 14.5% Zn, 11.63 opt Ag, 0.063 opt Au, 2.4% Pb, and 1.4% Cu were mined.
Thunder Mountain Gold Inc. purchased and advanced the Project from 2007 through 2019 investing approximately US$12M during that period. The current mineral resource estimate of the deposit is detailed in Table 3 below. The Project is largely on and surrounded by private surface land, and as such, the permitting and environmental aspects of the Project are expected to be straightforward. Permits are currently in place for underground and surface exploration and development activities.
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Figure 2. Location of South Mountain Project
South Mountain Project - BeMetals Option Agreement
Under the BeMetals Corporation (TSX-V: BMET) Option Agreement, BeMetals and Thunder Mountain Gold formed a project team early in 2019 that is focused on advancing the South Mountain Project. This Boise Idaho-based team includes key management of Thunder Mountain Gold Inc., who have coordinated re-establishment of the Project site prior to the start of drilling. In addition, BeMetals appointed a project manager and project geologist for this team, along with technical and underground support.
With the help of Thunder Mountain Gold, BeMetals (BMET) commenced drilling at South Mountain in July of 2019 and drilled twenty-one holes totaling 7,517 feet (2,290 meters) from five underground drilling stations within the Sonneman level. The drilling program was designed to test potential down plunge extensions, and overall continuity to the mineralized zones and confirm the grade distribution of the current polymetallic mineral resource. All of the drill core recovered from the drilling was logged on site and assayed by ALS Chemex. Selected intervals and results are summarized in the Company`s Form 10K for the year ended December 31, 2021.
On September 21, 2021, the Company agreed to an extension of the Option Agreement with BeMetals Corp. The Extension is through the 2022 calendar year, with the same terms to acquire up to a 100% interest in the South Mountain Project in southwest Idaho, U.S.A. In exchange for the Extension, BeMetals paid the Company the Tranche 6 Payment of $250,000.
PROJECT HIGHLIGHTS - SOUTH MOUNTAIN PROJECT
In October of 2022, BeMetals Corp. completed a ground electromagnetic (EM) Loop geophysical survey at the South Mountain Project. This geophysical survey covers a broad area at the Project, with the goal of identifying additional drill targets at depth within, and outside of the main mine area. Results of the survey are forthcoming.
In May of 2021, BeMetals Corp. completed an updated Mineral Resource Estimate ("MRE"), incorporating results from Phase 1 and 2 underground diamond drilling programs at the South Mountain Project. The updated MRE includes a substantially increased resource for the Project while maintaining the high-grade nature of the mineralization.
The updated Independent MRE, which has an effective date of April 20, 2021, was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI-43-101") by Hard Rock Consulting, LLC, based in the U.S.A. A technical report for this MRE was filed with SEDAR, and on the Company's website, within 45 days from the date of this news release.
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After signing the Option Agreement Extension, BeMetals Corp. embarked on a phase 3 program at South Mountain with the objective to significantly expand the scale of the current Mineral Resource Estimate ("MRE") at South Mountain (See Summary of the MRE below), testing and establishing the down depth extent of mineralization on the DMEA zone. The DMEA Zone is the largest known body of mineralization on the Property, containing the majority of tonnage in the current MRE, and the mineralized zone remains open at depth.
Based on the last two phases of underground drilling and all the historical exploration data available, we believe there is the potential to expand the down-plunge extensions of the mineral resource with this new phase of surface drilling at the Property. The plan is to initially complete approximately 7,000 feet (2,100 meters) of surface core drilling in this phase of exploration. Assuming this exploration program is successful, the BMET will update the current MRE and continue the ongoing Preliminary Economic Assessment for the Project in 2022.
By December of 2021, 2 surface core holes had been drilled for a combined total of 3,600 feet, the results of which were added to the resource model.
Figure 1: 3D Perspective view inclined 200 looking north-north-east, with hole locations for SM20-028 thru SM20-050
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Figure 1: 3D Perspective View inclined at 20 degrees looking north-north-east, showing locations of rib-sampling, priority target zones, and the phase 1 drill holes and highlighted the recent SM19-016, SM19-017 and SM19-018
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Figure 2: Plan View of the Sonneman & Laxey Levels, South Mountain Deposit,
showing locations of rib-sampling, priority target zones, and drill holes SM19-016, SM19-017 and SM19-018
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Figure 3: Plan View of Sonneman & Laxey Levels,
showing locations of previously reported rib sampling
QUALITY ASSURANCE AND QUALITY CONTROL PROCEDURES
The project employs a rigorous QC/QA program that includes blanks, duplicates and appropriate certified standard reference material. All samples are introduced into the sample stream prior to sample handling/crushing to monitor analytical accuracy and precision. The insertion rate for the combined QA/QC samples is 10 percent or more depending upon batch sizes. ALS Global completed the analytical work with the core samples processed at their preparation facility in Reno, Nevada, U.S.A. All analytical and assay procedures are conducted in the ALS facility in North Vancouver, BC. The samples are processed by the following methods as appropriate to determine the grades; Au-AA23-Au 30g fire assay with AA finish, ME-ICP61-33 element four acid digest with ICP-AES finish, ME-OG62-ore grade elements, four acid with ICP-AES finish, Pb-OG62-ore grade Pb, four acid with ICP-AES finish, Zn-OG62-ore grade Zn, four acid digest with ICP-AES finish, Ag-GRA21-Ag 30g fire assay with gravimetric finish.
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Note to United States investors concerning estimates of measured, indicated and inferred resources.
Information concerning our mining properties has been prepared in accordance with the requirements of subpart 1300 of Regulation SK, which first became applicable to us for the fiscal year ended December 31, 2021. These requirements differ significantly from the previously applicable disclosure requirements of SEC Industry Guide 7. Among other differences, subpart 1300 of Regulation S-K requires us to disclose our mineral resources, in addition to our mineral reserves, as of the end of our most recently completed fiscal year both in the aggregate and for each of our individually material mining properties. You are cautioned that mineral resources do not have demonstrated economic value. Mineral resources are subject to further exploration and development, are subject to additional risks, and no assurance can be given that they will eventually convert to future reserves. Inferred Resources, in particular, have a great amount of uncertainty as to their existence and their economic and legal feasibility. Investors are cautioned not to assume that any part or all of the Inferred Resource exists or is economically or legally mineable. See Item 1A, Risk Factors.
Disclosure of the NI-43-101 has been prepared in accordance with the requirements of Canadian securities laws, including Canadian National Instrument 43-101 ("NI 43-101"). The Highlights of South Mountain NI-43-101 section refers to "mineral resources," "measured mineral resources," "indicated mineral resources," and "inferred mineral resources."
Qualified Person - The technical information in this Form 10K has been reviewed and approved by Larry D. Kornze, (Retired) , Qualified Person, and Director of Thunder Mountain Gold Inc., and a "Qualified Person" as defined by National Instrument 43-101 standards.
This property is without known reserves and the proposed program is exploratory in nature according to Instruction 3 to paragraph (b)(5) of the SEC`s Industry Guide 7. There are currently no permits required for conducting exploration in accordance with the Company`s current board approved exploration plan.
Trout Creek Project, Lander County, Nevada
The Trout Creek project is a highly prospective gold exploration target located along the western flank of the Shoshone Mountain Range in the Reese River Valley in Lander County, Nevada. The Project is located approximately 155 air miles northeast of Reno, Nevada, or approximately 20 miles south of Battle Mountain, Nevada, in Sections 10, 11, 14, 16, 21, 22, 27; T.29N.; R.44E. Mount Diablo Baseline & Meridian, Lander County, Nevada. Latitude: 40 23' 36" North, Longitude: 117 00' 58" West. The property is generally accessible year-round by traveling south from Battle Mountain Nevada on state highway 305, which is paved.
During the year ended December 31, 2021, the Company made the decision to retain 26 (approximately 520 acres) of the 87 unpatented lode mining claims in the Trout Creek area. The Company's 26 unpatented mining claims are staked along a recognizable structural zone in the Eureka-Battle Mountain mineralized gold trend. The Company paid annual fees to BLM of $4,290 and Lander County $324 fees.
The Trout Creek target is anchored by a regional gravity anomaly on a well-defined northwest-southeast trending break in the alluvial fill thickness and underlying bedrock. Previous geophysical work in the 1980s revealed an airborne magnetic anomaly associated with the same structure, and this was further verified and outlined in 2008 by Company personnel, with consultation from Jim Wright - Wright Geophysics using a ground magnetometer. The target is covered by alluvial fan deposits of generally unknown thickness, shed from the adjacent Shoshone Range, a fault block mountain range composed of Paleozoic sediments of both upper and lower plate rocks of the Roberts Mountains thrust.
Wright Geophysics also conducted a ground gravity survey and CSMAT over the pediment target area and this provided insight into the gravel-bedrock contact as well as defining the favorable structural setting within the buried bedrock. An untested drill target was identified under the gravel pediment along these structures, and the geophysics showed that the bedrock was within 500 feet of the surface, which is reasonable depth for exploration drilling and potential mining if a significant mineralization is encountered.
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The Company does not plan to conduct any work on the Trout Creek Property in 2022, but instead will focus all of their efforts on their South Mountain Project.
There are currently no environmental permits required for the planned exploration work on the property. In the future, a notice of intent may be required with the Bureau of Land Management.
Competition
We are an exploration stage company. We compete with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom we compete have greater financial and technical resources than us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.
Employees
The Company employs three full-time officers. As part of the BeMetals agreement, the Company allowed these officers to work on the South Mountain Project on a consulting arrangement with BeMetals.
Results of Operations:
For the nine months ended September 30, 2022, the Company recorded a net loss of $1,263,799 compared to net loss of $512,537 for the same period ended September 30, 2021. The increased net loss for the nine months ended September 30, 2022, compared to the previous year's comparable period is primarily due to a decrease in revenue as a result of recognized revenue of $500,000 on the sale of mineral interest in the nine months ended September 30, 2021, as part of BeMetals Option Agreement. Also contributing to the larger loss during 2022 are Legal and accounting costs that increased from $37,635 to $106,329, an increase of 55%, management and administrative expense increased by $186,372. Partially offsetting the effect of these items in 2022 was the fact the Company had unrealized loss of $851,060 recognized on the Company's investment in BeMetals, for the nine months ended September 30, 2022, compared to the same period unrealized loss of $913,942 for the nine months ended September 30, 2021.
Three-month period comparisons
Total revenue for the three-month periods ended September 30, 2022, and 2021 was $75,000, and $325,000, respectively. Management services income from the Be Metals contract totaled $75,000 for both quarters. The company reported a gain of $250,000 on the sale of mineral interest for the three months ended September 30, 2021 pursuant to the BeMetals agreement. Total operating expenses for the three months ending September 30, 2022, of $143,912 increased from the same respective time period in 2021 by $7,422 or 5%. Legal and Accounting expense increased by $7,050 or 50% to $21,237 compared to $14,187 for the same period last year. Exploration, Management and administrative and depreciation expense remained consistent with the prior year.
Nine-month period comparisons
Total revenues for the nine-month period September 30, 2022 decreased $500,000, or 69%, to $225,000 compared with $725,000 in the same period last year, While management service income remained consistent at $225,000 for both years, the gain on mineral interest decreased to $500,000 as a result of payments receive pursuant to the terms of the Be Metals option agreement. Total operating expenses for the nine months ending September 30, 2022 of $638,331 increased from the same respective time period in 2021 by $213,667 or 50%. Exploration expenses remained consistent with the prior year while legal and accounting expenses increased. Management and administrative expense increased by $186,372 or 55% principally due to stock compensation of $158,341 for stock options issued to our officers and directors on March 21, 2022. There were no stock options issued during the nine months ended September 30, 2021.
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The consolidated financial statements for the nine-months ended September 30, 2022 have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the consolidated financial statements as of September 30, 2022, we have sufficient cash reserves to cover normal operating expenditures for the following 12 months.
Liquidity and Capital Resources:
The consolidated financial statements for the year ended September 30, 2022 have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the consolidated financial statements for the three-month period ended September 30, 2022, we have sufficient cash reserves to cover normal operating expenditures for the following 12 months.
The liquidity of the Company was enhanced on February 27, 2019 when the Company entered the BeMetals Option Agreement with BeMetals Corp., and BMET USA, a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of SMMI from TMRI, both wholly owned subsidiaries of the Company. The term of the agreement is for two years with BeMetals completing a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company's common stock. Through September 30, 2022, cash proceeds of $1,100,000 and $250,000 in exchange for shares of the Company's common stock have been received. BeMetals also agreed to pay the Company $25,000 per month for management services. In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.
The Company has historically incurred losses, however, under the BeMetals Option Agreement, the Company now has a recurring source of revenue, and its ability to continue as a going concern is no longer dependent on equity capital raises and borrowings. However, the Company believes it has the ability to raise capital in order to fund its future exploration and working capital requirements if necessary.
Potential additional sources of cash, include additional external debt, the sale of shares of our stock, or alternative methods such as mergers or sale of 8,000,000 BeMetals common stock shares held by the company. (See South Mountain Project above), No assurances can be given, however, that we will be able to obtain any of these potential sources of cash.
Our plans for the long-term continuation as a going concern include financing our future operations through sales of our common stock and/or debt and the potential exploitation of our mining properties. Our plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.
In addition to the BeMetals Corp. Option Agreement, we believe that the Company will be able to meet its financial obligations because of the following:
- On October 19, 2022, we had $717,102 cash in our bank accounts.
- We do not include in this consideration any option payments mentioned below.
- Management is committed to manage expenses of all types to not exceed the on-hand cash resources of the Company at any point in time, now or in the future.
- The Company will also consider other sources of funding, including potential mergers, the sale of all or part of the Company`s BeMetals Corp. (TSX-V: BMET) common shares beneficially held, and/or additional farm-out of its other exploration property.
For the nine-month period ended September 30, 2022 the Company reported a net cash decrease of $315,802, compared to a net cash increase of $946,420 for the same period in 2021. The Company reported net cash used by operating activities of $277,802 compared to cash used by operating activities of $198,863 for the same period in 2021. The Company did not have any cash provided or used by investing for the period ended September 30, 2022 compared to cash provided by investing activities of $1,149,557 for the same period in 2021. In 2021 the Company received cash from investing activities of $500,000 from the sale of mineral interests for Tranche 5 and 6 payment, pursuant to the BeMetals Option Agreement, and $649,557 proceeds from sale of 2,000,000 shares of BeMetals common shares. The Company reported cash used in financing activities of $38,000 and $4,274 for the period ended September 30, 2022 and 2021, respectively, related to the repayment of related party notes payable to officer and directors of the Company.
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Our future liquidity and capital requirements will depend on many factors, including timing, cost and progress of our exploration efforts, our evaluation of, and decisions with respect to, our strategic alternatives, and costs associated with the regulatory approvals. If it turns out that we do not have enough cash to complete our exploration programs, we will attempt to raise additional funds from a public offering, a private placement, mergers, farm-outs or loans.
Additional financing may be required in the future to fund our planned operations. We do not know whether additional financing will be available when needed or on acceptable terms, if at all. If we are unable to raise additional financing, when necessary, we may have to delay our exploration efforts or any property acquisitions or be forced to cease operations. Collaborative arrangements may require us to relinquish our rights to certain of our mining claims.
Contractual Obligations
During 2008 and 2009, three lease arrangements were made with landowners that own land parcels adjacent to the Company's South Mountain patented and unpatented mining claims. The leases were for a seven-year period, with options to renew, with annual payments (based on $20 per acre) listed in the following table. The leases have no work requirements.
| Contractual obligations | Payments due by period | ||||||||||||||
| Total* | Less than 1 year |
2-3 years |
4-5 years |
More than 5 years |
|||||||||||
| Acree Lease (yearly, June)(1) | $ | 3,390 | $ | 3,390 | - | - | $ | - | |||||||
| Lowry Lease (yearly, October)(1)(2) | $ | 22,560 | $ | 11,280 | $ | 11,280 | - | $ | - | ||||||
| OGT LLC(3) | $ | 25,000 | $ | 5,000 | $ | 10,000 | $ | 10,000 | $ | - | |||||
| Total | $ | 50,950 | $ | 19,670 | $ | 21,280 | $ | 10,000 | $ | - | |||||
(1) Amounts shown are for the lease periods years 15 through 16, a total of 2 years that remains after 2021, the lease was extended an additional 10 years at $30/acre after 2014.
(2) The Lowry lease has an early buy-out provision for 50% of the remaining amounts owed in the event the Company desires to drop the lease prior to the end of the first seven-year period.
(3) OGT LLC, managed by the Company's wholly owned subsidiary SMMI, receives a $5,000 per year payment for up to 10 years, or until a $5 million capped NPI Royalty is paid.
Critical Accounting Policies
We have identified our critical accounting policies, the application of which may materially affect the financial statements, either because of the significance of the financials statement item to which they relate, or because they require management's judgment in making estimates and assumptions in measuring, at a specific point in time, events which will be settled in the future. The critical accounting policies, judgments and estimates which management believes have the most significant effect on the financial statements are set forth below:
a) Estimates. Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition.
b) Stock-based Compensation. The Company records stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation" using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
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c) Income Taxes. We have current income tax assets recorded in our financial statements that are based on our estimates relating to federal and state income tax benefits. Our judgments regarding federal and state income tax rates, items that may or may not be deductible for income tax purposes and income tax regulations themselves are critical to the Company's financial statement income tax items.
d) Investments. In a joint venture where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest. In determining whether significant influences exist, the Company considers its participation in policy-making decisions and its representation on the venture's management committee.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
At the end of the period covered by this report, an evaluation was carried out under the supervision of, and with the participation of, the Company's Management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) of the Securities and Exchange Act of 1934, as amended). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures were adequately designed and effective in ensuring that information required to be disclosed by the Company in its reports that it files or submits to the SEC under the Exchange Act, is recorded, processed, summarized and reported within the time period specified in applicable rules and forms.
Changes in Internal Controls Over Financial Reporting
During the quarter covered by this report, there have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
The effects of the continued outbreak of COVID-19 and related government responses could have disruptions to the Company`s Option Agreement with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. ("SMMI") from the Company. The term of the agreement is for two years starting June 10, 2019, with an option to extend an additional year, with BeMetals conducting a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company's common stock. In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments. The COVID-19 outbreak could have a variety of adverse impacts to the Company, including their ability to continue operations of their exploration under the BeMetals Operation Agreement. Thunder Mountain Gold evaluated these impairment considerations and determined that no such impairments occurred as of September 30, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities.
During the nine-month period ended September 30, 2022, the Company did not have any operating mines and therefore had no such specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events in relation to the Company's United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.
Item 5. Other Information
None.
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Item 6. Exhibits
(a) Documents which are filed as a part of this report:
Exhibits:
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(b) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.
THUNDER MOUNTAIN GOLD, INC.
| By | /s/ Eric T. Jones | ||
| Eric T. Jones | |||
| President and Chief Executive Officer | |||
| Date: November 14,2022 | |||
| Pursuant to the requirements of the Securities Act of 1934 this report signed below by the following person on behalf of the Registrant and in the capacities on the date indicated. | |||
| By | /s/ Larry Thackery | ||
| Larry Thackery | |||
| Chief Financial Officer | |||
| Date: November 14, 2022 | |||
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Exhibit 31.1
CERTIFICATION
I, Eric T. Jones, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Thunder Mountain Gold, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 14, 2022
| By: | /s/ Eric T. Jones | |
| President, Director and Chief Executive Officer |
A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 31.2
CERTIFICATION
I, Larry Thackery, certify that:
1. I have reviewed this quarterly report on Form 10Q of Thunder Mountain Gold, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 14, 2022
| By: | /s/ Larry Thackery | |
| Larry Thackery | ||
| Chief Financial Officer |
A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Thunder Mountain Gold Inc, (the "Company") on Form 10-Q for the period ending September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eric T. Jones, President, Director and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By | /s/ Eric T. Jones | ||
| Eric T. Jones | |||
| President, Director and Chief Executive Officer | |||
| Date: November 14, 2022 | |||
A signed original of this written statement has been provided to and will be retained by Thunder Mountain Gold, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Thunder Mountain Gold Inc, (the "Company") on Form 10-Q for the period ending September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Larry Thackery, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ Larry Thackery | ||
| Larry Thackery | |||
| Chief Financial Officer | |||
| Date: November 14, 2022 | |||
A signed original of this written statement has been provided to and will be retained by Thunder Mountain Gold, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.