UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2019
OR
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to     

 

Commission file number: 000-55447

 

 

 

CORVUS GOLD INC.

(Exact Name of Registrant as Specified in its Charter)

 

British Columbia, Canada	98-0668473
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1750-700 West Pender Street Vancouver, British Columbia, Canada,	V6C 1G8
(Address of Principal Executive Offices)	(Zip code)

 

Registrant’s telephone number, including area code: (604) 638-3246

 

Securities registered pursuant to Section 12(b) of the Act: None

 

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.

Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ☐	Accelerated filer  ☒
Non-accelerated filer    ☐	Small reporting company    ☒
	Emerging growth company  ☒

 

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

 

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

 

As of January 8, 2020, the registrant had 123,987,845 common shares outstanding.

 

 

Table of Contents

 

		Page
PART I	FINANCIAL INFORMATION
ITEM 1	FINANCIAL STATEMENTS	3
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 4	CONTROLS AND PROCEDURES	30
PART II	OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	31
ITEM 1A	RISK FACTORS	31
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	32
ITEM 4	MINE SAFETY DISCLOSURES	32
ITEM 5	OTHER INFORMATION	32
ITEM 6	EXHIBITS	33
SIGNATURES

 

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(Expressed in Canadian dollars)

 

 

Nature and continuance of operations (note 1)

 

Approved on behalf of the Directors:

 

 

“Jeffrey Pontius”		Director
“Anton Drescher”		Director

 

 

These accompanying notes form an integral part of these condensed interim consolidated financial statements

 

 

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Expressed in Canadian dollars)

 

 

These accompanying notes form an integral part of these condensed interim consolidated financial statements

 

 

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in Canadian dollars)

SIX MONTHS ENDED NOVEMBER 30,

 

 

Supplemental cash flow information (note 9)

 

These accompanying notes form an integral part of these condensed interim consolidated financial statements

 

 

 

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

(Expressed in Canadian dollars)

SIX MONTHS ENDED NOVEMBER 30, 2019

 

 

These accompanying notes form an integral part of these condensed interim consolidated financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis should be read in conjunction with our condensed interim consolidated financial statements for the six months ended November 30, 2019, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors. See section heading “Note Regarding Forward-Looking Statements” below. All currency amounts are stated in Canadian dollars unless noted otherwise.

 

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES AND PROVEN AND PROBABLE RESERVES

 

Corvus Gold Inc. (“we”, “us”, “our,” “Corvus” or the “Company”) is a mineral exploration company engaged in the acquisition and exploration of mineral properties. The mineral estimates in the technical report entitled “Technical Report and Preliminary Economic Assessment for the Integrated Mother Lode and North Bullfrog Projects, Bullfrog Mining District, Nye County, Nevada”, dated November 1, 2018 and amended on November 8, 2018, with an effective date of September 18, 2018 (the “Technical Report”) referenced in this Quarterly Report on Form 10-Q have been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws. As used in the Technical Report referenced in this Quarterly Report on Form 10-Q, the terms “Mineral Reserve”, “Proven Mineral Reserve” and “Probable Mineral Reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects” (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended.

 

These definitions differ materially from the definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 (“SEC Industry Guide 7”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves, and the primary environmental analysis or report must be filed with the appropriate governmental authority.

 

In addition, the terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all, or any part, of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.

 

Accordingly, information contained in this report and the Technical Report referenced in this report contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies reporting under SEC Industry Guide 7 requirements.

 

The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC. These amendments became effective February 25, 2019 (the “SEC Modernization Rules”) and, following a two-year transition period, the SEC Modernization Rules will replace the historical property disclosure requirements for mining registrants that are included in SEC Industry Guide 7. The Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules until its fiscal year beginning May 31, 2021. Under the SEC Modernization Rules, the definitions of “Proven Mineral Reserves” and “Probable Mineral Reserves” have been amended to be substantially similar to the corresponding CIM Definition Standards and the SEC has added definitions to recognize “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources” which are also substantially similar to the corresponding CIM Definition Standards; however there are differences in the definitions under the SEC Modernization Rules and the CIM Definition Standards and therefore once the Company begins reporting under the SEC Modernization Rules there is no assurance that the Company’s Mineral Reserve and Mineral Resource estimates will be the same as those reported under CIM Definition Standards as contained in this report.

 

 

CAUTIONARY NOTE TO ALL INVESTORS CONCERNING ECONOMIC ASSESSMENTS THAT INCLUDE INFERRED RESOURCES

 

The Company currently holds or has the right to acquire interests in an advanced stage exploration project in Nye County, Nevada referred to as the North Bullfrog Project (the “NBP”) and the Mother Lode Project (“MLP” or “Mother Lode”). Mineral resources that are not mineral reserves have no demonstrated economic viability. The preliminary economic assessment included in the Technical Report on the NBP-MLP is preliminary in nature and includes Inferred Mineral Resources that have a great amount of uncertainty as to their existence, and are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. It cannot be assumed that all, or any part, of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies. There is no certainty that such Inferred Mineral Resources at the NBP and MLP will ever be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Investors are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable. Readers should refer to the Technical Report for additional information.

 

NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended, and “forward-looking information” within the meaning of applicable Canadian securities legislation, collectively “forward-looking statements”. Such forward-looking statements concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities, the adequacy of the Company’s financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” (or the negative and grammatical variations of any of these terms) occur or be achieved. These forward-looking statements may include, but are not limited to, statements concerning:

 

·

the Company’s strategies and objectives, both generally and in respect of its specific mineral properties;

·

the results of the preliminary economic assessment;

·

the timing of decisions regarding the timing and costs of exploration programs with respect to, and the issuance of the necessary permits and authorizations required for, the Company’s exploration programs, including for the NBP and the MLP;

·

the Company’s estimates of the quality and quantity of the Mineral Resources at its mineral properties;

·

the timing and cost of planned exploration programs of the Company, and the timing of the receipt of results therefrom;

·

the Company’s future cash requirements and use of proceeds of sales;

·

general business and economic conditions;

·

the Company’s ability to meet its financial obligations as they come due, and the ability to raise the necessary funds to continue operations;

·

the Company’s expectation that it will be able to add additional mineral projects of merit to its assets;

·

the potential for the existence or location of additional high-grade veins at the NBP, or high-grade mineralization at the MLP;

·

the potential to expand Company’s existing deposits and discover new deposits;

·

the potential for any delineation of higher grade mineralization at the NBP or MLP;

·

the potential for there to be one or more additional vein zones;

·

the potential discovery and delineation of mineral deposits/resources/reserves and any expansion thereof beyond the current estimate;

·

the potential for the NBP or the MLP mineralization systems to continue to grow and/or to develop into a major new higher-grade, bulk tonnage, Nevada gold discovery;

·

the Company’s expectation that it will be able to build itself into a non-operator gold producer with significant carried interests and royalty exposure;

·

that the Company will operate at a loss;

·

that the Company will need to scale back anticipated costs and activities or raise additional funds;

·

that the Company will have to raise substantial additional capital to accomplish its business plan over the next couple of years;

·

the estimated reclamation and asset retirement costs;

·

the plans related to the potential development of the MLP and the NBP; and

·

the NBP and MLP work plans and mine development plan/programs.

 

 

Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks related to:

 

·

our requirement of significant additional capital;

·

our limited operating history;

·

our history of losses;

·

cost increases for our exploration and, if warranted, development projects;

·

our properties being in the exploration stage;

·

mineral exploration and production activities;

·

our lack of mineral production from our properties;

·

estimates of Mineral Resources;

·

changes in Mineral Resource estimates;

·

differences in United States and Canadian Mineral Reserve and Mineral Resource reporting;

·

our exploration activities being unsuccessful;

·

fluctuations in gold, silver and other metal prices;

·

our ability to obtain permits and licenses for production;

·

government and environmental regulations that may increase our costs of doing business or restrict our operations;

·

proposed legislation that may significantly affect the mining industry;

·

land reclamation requirements;

·

competition in the mining industry;

·

equipment and supply shortages;

·

tax issues;

·

current and future joint ventures and partnerships;

·

our ability to attract qualified management;

·

the ability to enforce judgment against certain of our directors;

·

currency fluctuations;

·

claims on the title to our properties;

·

surface access on our properties;

·

potential future litigation;

·

our lack of insurance covering all our operations;

·

our status as a “passive foreign investment company” under US federal tax code; and

·

the common shares.

 

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including without limitation those discussed in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K, as filed with the SEC on August 8, 2019, which are incorporated herein by reference, as well as other factors described elsewhere in this report and the Company’s other reports filed with the SEC.

 

The Company’s forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations and opinions of management as of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements.

 

Current Business Activities

 

General

 

The Company’s material mineral properties are the NBP and the MLP, advanced exploration stage projects in Nevada which have a number of high-priority, bulk tonnage and high-grade vein targets (held through Corvus Nevada, a Nevada subsidiary). While exploring the NBP, the Company acquired the MLP in June 2017, which is located approximately 12 miles to the south east of the NBP. The MLP was mined in the late 1980s and has substantial gold mineralization remaining unexploited extending to the north of the existing open pit mine.

 

 

The primary focus of the Company will be to leverage its exploration expertise to expand its existing deposits and discover major new gold deposits. Other than with respect to the ongoing exploration of the MLP and NBP, the Company’s strategy is to leverage its other non-core assets by maintaining a retained royalty.

 

Highlights of activities during the period and to the date of this MD&A include:

 

·

The NBP drilling program completed 2,650 m of drilling in 13 holes between September 1, 2019 and October 20, 2019.

·

The drilling rig was moved to the Mother Project at the end of October and had completed 2,965 m of drilling in 11 holes to the end of Q4 2019.

·

Metallurgical test work on MLP sulphide composites was performed to test bioxidation processing of whole mineralization without concentration. Gold recovery ranged between 91% and 92.6%, with 100% of the sulphide minerals being oxidized.

·

A bulk sample of mineralized Sierra Blanca tuff was collected from surface outcrops and shipped to the Resource Development laboratory in Denver.

·

A vein and vein stockwork sample from YellowJacket core materials at NBP was created and shipped to Resource Development Labs in Denver.

·

Metallurgical testing was designed to evaluate agglomeration of a gravity tail material from YellowJacket core on to Sierra Blanca mineralization for column leaching.

·

The Mother Lode Environmental Assessment (“EA”) document was finalized and submitted to the Bureau of Land Management (“BLM”).

·

Revision #7 of the Mother Lode Notice of Intent was submitted to BLM.

·

Baseline characterization activities at the NBP continued with the water quality sampling of the active water quality monitoring wells. The meteorological monitoring report was submitted to the Nevada Department of Environmental Protection (“NDEP”) for calendar Q3 2019.

·

Pump tests were performed on the Mother Lode water wells (MW-4 and MW-3) and on the Sarcobatus and NB-WW-14 water wells at the NBP. The calendar Q4 2019 production volumes were reported to the NDWR.

 

Corporate Financial Activities

 

On October 10, 2019, the Company announced the completion of a $23,000,000 public bought deal financing, where the Company issued 11,500,000 common shares at a price of $2.00 per common share (the “Offering”). No warrants were issued in relation to this financing. The Offering was arranged by the sole underwriter, BMO Capital Markets. AngloGold Ashanti (USA) Inc. participated in the Offering on a pro-rata basis to maintain ownership of 19.9 percent of the issued and outstanding shares of Corvus. The Company intends to use the net proceeds of the Offering (i) for exploration expenditures at the Company’s NBP and MLP and (ii) for corporate general and administrative expenses, land and permits.

 

Nevada Properties

 

NBP and MLP

 

Our principal mineral properties are the NBP and the MLP, which form a unified gold exploration project (the “NBP-MLP”) located in northwestern Nye County, Nevada, in the Northern Bullfrog Hills and Bare Mountains to the east, north and west of the town of Beatty. The NBP-MLP does not have any known proven or probable reserves under SEC Industry Guide 7 and the project is exploratory in nature. The Technical Report is available under Corvus’ SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov, which describes the integration of the two properties into a single mining operation. The Technical Report is referred to herein for informational purposes only and is not incorporated herein by reference. The Technical Report contains disclosure regarding Mineral Resources that are not SEC Industry Guide 7 compliant proven or probable reserves. See “Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” above.

 

The following disclosure is derived, in part, and supported by the Technical Report.

 

The NBP-MLP is located in the Bullfrog Hills and Bare Mountains of northwestern Nye County, Nevada (Figure 1). The NBP covers about 12,707 hectares of patented and unpatented mining claims in Sections 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36 of T10S, R46E; sections 1, 2, 3, 4, 5, 6, 10, 11, 12, 13, 14, 15, 23, 24, 25, 26, 34 and 35 of T11S, R46E; section 30, 31, and 32 of T10S, R47E; and sections 4, 5, 6, 7, 8, 9, 10, 11, 14, 15, 16, 17, 18, 22, 23, 26, 27, 34, 35 and 36 of T11S, R47E, sections 1, 2, 3, 9, 10, 11, 12 and 13 of T12S 47E , sections 2, 3, 4, 5, 6,7, 8, 9, 10, and18 of T12S R46E, sections 7, 8, 9, 16, 17 and 18 of T12S R48E, MDBM. We have a total of nine option/lease agreements in place that give us control of an aggregate of 51 patented lode claims (see Private Lands in Figure 1). Corvus Nevada owns an additional five patented claims (the Millman claims) and a 430 acre property with 1600 acre-feet of water rights located north of NBP in the Sarcobatus hydrographic basin (Basin 146). During 2018, the NBP property was extended to the south by locating the GAP claims, which consist of 190 Federal Lode mining claims extending south from the previous southwest boundary of the NBP, and an additional 65 claims were added to the GAP claims in 2019.

 

 

 

 

 

 

Figure 1. Property Map showing the Location of the NBP and the MLP with respect to the town of Beatty, NV.

 

Studies at the NBP have been focused on the integration of the NBP and the newly acquired MLP into a single mining operation. The Technical Report describing the integrated NBP-MLP dated November 1, 2018 and amended November 8, 2018 is available on SEDAR.

 

NBP Drilling Activities

 

The most recent phase of drilling at NBP was completed on October 20, 2019 with a total of 11,630 m drilled in 47 holes from the April 10, 2019 startup of drilling. These holes tested early stage targets at Cat Hill, the YellowJacket North Extension, North Jolly Jane and the West Sierra Blanca (“WSB”) targets. Results of this work are reported in NR19-10 (August 6, 2019), NR19-13 (September 23. 2019) and NR19-17 (October 23, 2019).

 

Promising results were obtained from Cat Hill, where the assays indicated gold associated with stockwork quartz veins and associated high silver and gold grades in multiple holes.

 

Drilling at WSB revealed expanding mineralization to the southwest of the main Sierra Blanca zone and the extension of a new higher-grade “NW Structural Target” in the northwest part of the WSB area. These results are being incorporated into a new Sierra Blanca/YellowJacket resource model.

 

 

Two of the four new holes drilled at North Jolly Jane were lost prior to hitting the target zones, however, the holes successfully drilled to depth suggest that the Jolly Jane system is large, approximately 2 km by 0.5 km of drill defined mineralization with good potential for a high grade feeder zone like the nearby Sierra Blanca/YellowJacket system.

 

MLP Drilling Activities

 

Phase 4 drilling a Mother Lode began October 21, 2019 in the southwest part of the deposit. The first two holes indicated that the Main Zone mineralization extends to the southwest part of the resource area. The holes also indicated that the higher grade (+2 g/t) part of the Mother Lode system extends farther to west than previously modeled. A new deep intrusive related gold zone was intersected in hole ML 19-119 (NR19-19; December 5, 2019), below the main Mother Lode deposit in Paleozoic carbonates.

 

Phase 4 has produced 2,965 meters of drilling, with results for 9 of the holes pending.

 

Corvus performed a preliminary geophysical study with a deep penetrating Induced Polarization (“IP”) survey over the Mother Lode deposit. The survey may have outlined a deep target with high conductivity and high resistivity (NR19-18; November 7, 2019).

 

Mother Lode Metallurgical Test Program

 

Further metallurgical test work was performed during the period to test the performance of biological oxidation on Mother Lode whole mineralization. This work was performed to compare to previously successful testwork on bioxidation of concentrate, and indicated 100% oxidation of the sulphide minerals and 91-92.6% recovery of the contained gold.

 

NBP-MLP Project Activities

 

NBP Activities

 

A bulk sample of Sierra Blanca heap leach mineralization was collected during the period. The sample will be used in conjunction with the tail material from gravity processed vein and vein stockwork mineralization from the YellowJacket zone, to test gold recovery from leach columns of agglomerated tail material and Sierra Blanca mineralization.

 

Monitoring programs to develop baseline characterization data for support of future permitting activities continued during the period.

 

The Company operated a meteorological monitoring station at NBP and submitted the report for calendar Q3 2019 to the NDEP in October of 2019.

 

Quarterly pump tests of the Sarcobatus water well and the water production well (NB-WW-14) were performed in June 2019 and the production volumes reported to NDWR. Drill water at the NBP is being produced from NB-WW-14 in the NW corner of NBP, and production volumes are being reported monthly to NDWR. The extraction point for the entire Sarcobatus water resource has been transferred to the NBP on a temporary basis to support the mining project.

 

A completion report for NB-WW-14 was filed with NDWR during this reporting period.

 

MLP Activities

 

A Right-of-Way documents were submitted to BLM and processing fees were paid to acquire access permission for use of the Fluorspar Canyon Road from Highway 95 east to the MLP project site and to the water production wells, MW-3, MW-4 and PW-2.

 

Quarterly pump tests were conducted at wells MW-3 and MW-4, and the production volumes were reported to NDWR in June 2019.

 

Use of Proceeds

 

The net proceeds to the Company from the Offering was $21,020,000 after deducting the Underwriter’s Fee in the amount of $1,380,000, and the estimated expenses of the Offering of $600,000, which was paid out of the proceeds of the Offering.

 

 

The net proceeds of the Offering are anticipated to be applied as follows:

 

Use of Net Proceeds			Amount
Exploration Expenditures at the North Bullfrog and Mother Lode Properties
Resource Expansion Drilling (42,000 m)		$	10,000,000
New Discovery Drilling (7,000 m)		$	2,300,000
Metallurgical Studies		$	1,500,000
Mining and Development Studies		$	600,000
Corporate general and administration, land and permits		$	6,620,000
TOTAL		$	21,020,000

 

The Company expects to use the net proceeds over a period of approximately 20 months to accelerate resource expansion at both the MLP and NBP, by spending approximately $10,000,000 on drilling activities. This work includes approximately 12,000 m of core and 30,000 m of RC drilling, taking place over approximately a 12 to 15 month period of time. In addition, the Company will spend approximately $2,300,000 on its ongoing “New Discovery” drilling program that is testing a series of high priority surface targets for the discovery of new ore deposits. This drilling program includes approximately 1,000 m of core and 6,000 m of RC drilling taking place over a period of approximately 12 to 15 months. The Company will also use the funding to advance the MLP and NBP processing and mining characterization to define an optimized development plan with approximately $1,500,000 of spending on advance metallurgical testing and design work for both the sulfide and oxide mineralization to more accurately define the process flow sheet and facility design criteria and approximately $600,000 on mining studies to further advance the overall project development design and financial requirements.

 

Working capital and general corporate expenditures cover costs over a period of approximately 20 months for land payments (approximately $1,000,000), personnel (approximately $2,800,000) and the office, general corporate, land and permitting operating expenses ($2,820,000).

 

Progress accounting of expenditures against the use of proceeds on a quarterly basis is listed as follows:

 

Company Cost Center		Total Proceeds ($ M)				Expended ($ M) (October 1, 2019 – November 30, 2019)				Cumulative Expenditure ($ M) (October 1, 2019 – November 30, 2019)
Exploration Expenditures at the North Bullfrog and Mother Lode Properties
Resource Expansion Drilling		$	10.00			$	0.73			$	0.73
New Discovery Drilling		$	2.30			$	0.00			$	0.00
Metallurgical Studies		$	1.50			$	0.03			$	0.03
Mining and Development Studies		$	0.60			$	0.01			$	0.01
Corporate general and administration, land & permits		$	6.60			$	1.46			$	1.46
TOTAL		$	21.02			$	2.23			$	2.23

 

Expenditures correlate with progress and time for the budgeted amounts for the period October 1, 2019 – November 30, 2019. Corporate general and administration, land and permits expenditures were impacted by scheduled timing of expenditures and financial fees due to the offering.

 

Qualified Person and Quality Control/Quality Assurance

 

Jeffrey A. Pontius (CPG 11044), a qualified person as defined by NI 43-101, has supervised the preparation of the scientific and technical information that forms the basis for the disclosure in this Report on Form 10-Q (other than the Mother Lode Mineral Resource estimate) and has reviewed and approved the disclosure herein. Mr. Pontius is not independent of the Company, as he is the Chief Executive Officer and President and holds common shares and incentive stock options in Corvus.

 

Carl E. Brechtel (Colorado PE 23212, Nevada PE 008744 and Registered Member 353000 of SME), a qualified person as defined by NI 43-101, has coordinated execution of the technical work and has reviewed and approved the disclosure in this Report on Form 10-Q related thereto. Mr. Brechtel is not independent of the Company, as he is the Chief Operating Officer and holds Common Shares and incentive stock options in Corvus.

 

The work program at the NBP and the MLP was designed and supervised by Mark Reischman, Corvus’ Nevada Exploration Manager, who is responsible for all aspects of the work, including the quality control/quality assurance program. On-site personnel at the project log and track all samples prior to sealing and shipping. Quality control is monitored by the insertion of blind certified standard reference materials and blanks into each sample shipment. All resource sample shipments are sealed and shipped to American Assay Laboratories in Reno, Nevada, for preparation and assaying.

 

 

Assaying for the NBP and the MLP holes has been performed by American Assay Laboratories (“AAL”) in Sparks, Nevada. Corvus has no business relationship with AAL beyond being a customer for analytical services. The Sparks laboratory is Standards Council of Canada, Ottawa, Ontario Accredited Laboratory No. 536 and conforms with requirements of CAN-P-1579, CAN-P-4E (ISO/IEC 17025:2005).

 

Check assaying has been performed by Bureau Veritas North America (“BV”, formerly Inspectorate America Corporation), in Sparks Nevada and Vancouver, Canada, and ALS Minerals Laboratories (“ALS Minerals”), in Sparks, Nevada. Corvus has no business relationship with BV or ALS Minerals beyond being a customer for analytical services. The BV laboratory is Accredited Laboratory No. 720 and conforms to requirements of CAN-P-1579, CAN-P-4E (ISO 9001:2008) and ALS is Accredited Laboratory No. 660 and conforms to requirements of CAN-P-1579, CAN-P-4E (ISO/IEC 17025:2005).

 

Mr. Scott E. Wilson, CPG (10965), Registered Member of SME (4025107) and President of Resource Development Associates Inc., is an independent consulting geologist specializing in Mineral Reserve and Mineral Resource calculation reporting, mining project analysis and due diligence evaluations. He has acted as the Qualified Person, as defined in NI 43-101, for the Mineral Resource estimate and the Technical Report. Mr. Wilson has over 29 years of experience in surface mining, resource estimation and strategic mine planning. Mr. Wilson and Resource Development Associates Inc. are independent of the Company under NI 43-101. Mr. Wilson, a Qualified Person, has verified the data underlying the information disclosed herein by reviewing the reports of AAL and all procedures undertaken for QA/QC. All matters were consistent and accurate accordingly to his professional judgment. There were no limitations on the verification process.

 

For additional information on the NBP-MLP, including information relating to exploration, data verification and the Mineral Resource estimates, see the Technical Report, which is available under Corvus’ SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. The Technical Report is referred to herein for informational purposes only and is not incorporated herein by reference. The Technical Report contains disclosure regarding Mineral Resources that are not Guide 7 compliant proven or probable reserves, see “Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” above.

 

Results of Operations

 

Six months ended November 30, 2019 Compared to Six months ended November 30, 2018

 

For the six months ended November 30, 2019, the Company had a net loss of $6,382,325 compared to a net loss of $5,109,226 in the comparative period of the prior year. Included in net loss was $1,601,894 (2018 - $309,369) in stock-based compensation charges which is a result of stock options granted during the current period and previously granted stock options which vested during the period. The increase in loss of $1,273,099 in the six month period of the current year was due to a combination of factors discussed below.

 

The exploration expenditures decreased to $2,594,946 (2018 - $3,146,799) mainly due to decrease in exploration in the current period while the Company worked on securing additional financing. This was offset by an increase in stock-based compensation charges of $137,018 during the current period compared to $27,661 in the comparative period of the prior year. Management expects increases in exploration costs over prior periods are likely to continue in the immediate future periods as the Company secured further financing in October 2019.

 

Consulting expenses increased to $935,159 (2018 - $270,689) mainly due to an increase in stock-based compensation charges of $750,840 during the current period compared to $140,189 in the comparative period of the prior year, and an increase in consultant fees due to additional services provided in relation to the final prospectus filed in October 2019.

 

Depreciation expenses increased to $27,747 (2018 - $7,475) mainly due to depreciation of ROU assets after the adoption of Topic 842 – Leases.

 

Investor relations expenses increased to $904,050 (2018 - $687,725) mainly due to an increase in stock-based compensation charges of $217,654 during the current period compared to $42,106 in the comparative period of the prior year, an increase in advertising and marketing, and an increase in investor relations-related travels during the current period as part of the Company’s efforts to secure additional financing and financial advisory fees. The increase was offset by a decrease in investor fees during the current period as compared to the comparative period of the prior year.

 

Professional fees decreased to $150,617 (2018 - $157,432) due to the professional fees incurred for updating the tax model for the Technical Report and the adjustment of prior years’ audit overaccrual during the comparative period of the prior year. The decrease was offset by an increase in stock-based compensation charges of $12,003 during the current period compared to $3,000 in the comparative period of the prior year.

 

 

Regulatory expenses increased to $112,959 (2018 - $69,451) mainly due to an increase in the base and variable fee paid to the TSX in the current period which was based on the Company’s market capitalization.

 

Rent expenses decreased to $15,906 (2018 - $36,686) mainly due to the adoption of Topic 842 – Leases. Rent was classified as lease payment which was applied to lease liabilities and interest expenses.

 

Travel expenses increased to $168,596 (2018 - $137,975) mainly due to more attendances in conference to secure additional financing.

 

Wages and benefits increased to $1,281,227 (2018 - $547,036) mainly due to an increase in stock-based compensation charges of $484,379 during the current period compared to $96,413 in the comparative period of the prior year, an increase of $374,304 in wages and benefits in the current period as the 2018 bonus was paid in the third quarter of the prior year whereas the 2019 bonus was paid in the second quarter of the current year. This increase was offset by a decrease of $28,079 in employee expenses due to expenses associated with stock option exercises in the comparative period of the prior year.

 

Other expense categories that reflected only moderate changes period over period were administration expenses of $214 (2018 - $215), insurance expenses of $110,156 (2018 - $102,226), and office expenses of $53,320 (2018 - $60,255).

 

Other items amounted to a loss of $27,428 compared to a gain of $114,738 in the comparative period of the prior year. There was an increase in foreign exchange loss to $105,386 (2018 – gain of $86,134), which is the result of factors outside of the Company’s control and an increase in interest income to $77,958 (2018 - $28,604) as a result of more investment in cashable GIC’s as a result of proceeds from the October 2019 financing during the current period.

 

Three months ended November 30, 2019 Compared to Three months ended November 30, 2018

 

For the three months ended November 30, 2019, the Company had a net loss of $3,446,919 compared to a net loss of $2,666,778 in the comparative period of the prior year. Included in net loss was $806,137 (2018 - $145,001) in stock-based compensation charges which is a result of stock options granted during the period and previously granted stock options which vested during the period. Stock-based compensation in the current period comprised of stock options granted on July 31, 2017, November 19, 2018, April 9, 2019, June 13, 2019 and October 11, 2019 which vested during the period. The prior period comparative had stock-based compensation arising from stock options granted on September 15, 2016, July 31, 2017, and November 19, 2018 which vested during the comparative period of the prior year. The increase in loss of $780,141 in the three month period of the current year was due to a combination of factors discussed below.

 

The exploration expenditures decreased to $1,200,791 (2018 - $1,493,699) mainly due to decrease in exploration in the current period while the Company worked on securing additional financing. This was offset by an increase in stock-based compensation charges of $69,051 during the current period compared to $13,363 in the comparative period of the prior year. Management expects increases in exploration costs over prior periods are likely to continue in the immediate future periods as the Company secured further financing in October 2019.

 

Consulting fees increased to $492,052 (2018 - $129,994) mainly due to an increase in stock-based compensation charges of $377,416 during the current period compared to $64,744 in the comparative period of the prior year and an increase in consultant fees and directors’ fees.

 

Depreciation expenses increased to $18,716 (2018 - $3,802) mainly due to depreciation of ROU assets after the adoption of Topic 842 – Leases.

 

Investor relations expenses increased to $569,537 (2018 - $470,054) mainly due to an increase in stock-based compensation charges of $110,811 during the current period compared to $19,572 in the comparative period of the prior year.

 

Office expenses decreased to $26,588 (2018 - $36,847) mainly due to the software acquisition in comparative period of the prior year.

 

Professional fees decreased to $73,528 (2018 - $101,269) mainly due the professional fees incurred for updating the tax model for the Technical Report and the adjustment of prior years’ audit overaccrual during the comparative period of the prior year. This was offset by an increase in stock-based compensation charges of $6,084 during the current period compared to $1,179 in the comparative period of the prior year.

 

 

Regulatory expenses increased to $51,872 (2018 - $27,163) mainly due to an increase in the base and variable fee paid to the TSX in the current period which was based on the Company’s market capitalization.

 

Rent expenses decreased to $1,765 (2018 - $18,479) mainly due to the adoption of Topic 842 – Leases. Rent was classified as lease payment which was applied to lease liabilities and interest expenses.

 

Travel expenses increased to $125,205 (2018 - $99,746) mainly due to more attendances in conference to secure additional financing.

 

Wages and benefits increased to $831,420 (2018 - $289,817) mainly due to an increase in stock-based compensation charges of $242,775 during the current period compared to $46,143 in the comparative period of the prior year, an increase of $370,692 in wages and benefits in the current period as the 2018 bonus was paid in the third quarter of the prior year whereas the 2019 bonus was paid in the second quarter of the current year. This increase was offset by a decrease of $27,662 in employee expenses due to expenses associated with stock option exercises in the comparative period of the prior year.

 

Other expense categories that reflected only moderate change period over period were administration expenses of $107 (2018 - $109) and insurance expenses of $54,458 (2018 - $50,597).

 

Other items amounted to a loss of $880 compared to an income of $54,798 in the prior period. There was an increase in foreign exchange loss of $62,772 (2018 - gain of $41,494), which was the result of factors outside of the Company’s control and an increase in interest income and expenses of $61,892 (2018 - $13,304) as a result of more investment in cashable GIC’s during the current period net of interest expenses.

 

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. In addition, the Company can raise funds through the sale of interests in its mineral properties, although current market conditions have substantially reduced the number of potential buyers/acquirers of any such interest(s). This situation is unlikely to change until such time as the Company can develop a bankable feasibility study on one of its projects. When acquiring an interest in mineral properties through purchase or option, the Company will sometimes issue Common Shares to the vendor or optionee of the property as partial or full consideration for the property interest in order to conserve its cash.

 

The condensed interim consolidated financial statements have been prepared on a going concern basis, which presume the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and/or obtaining additional financing.

 

In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future within one year from the date the condensed interim consolidated financial statements are issued.  There is substantial doubt upon the Company’s ability to continue as going concern, as explained below and in the condensed interim consolidated financial statements.

 

The Company has sustained significant losses from operations, has negative cash flows and has an ongoing requirement for capital investment to explore its mineral properties.  Based on its current plans, budgeted expenditures, and cash requirements, the Company does have sufficient cash to finance its current plans for the 12 months from the date the condensed interim consolidated financial statement are issued.

 

The Company reported cash and cash equivalents of $22,585,039 as at November 30, 2019 compared to $4,145,085 as at May 31, 2019. The change in cash position was the net result of $4,611,626 used for operating activities, $19,916 used for lease liabilities payments, and $23,221,316 received from the private placements of common shares in June 2019, August 2019 and October 2019 (net of share issue costs) during the period ended November 30, 2019.

 

As at November 30, 2019, the Company had working capital of $22,608,364 compared to working capital of $4,204,082 as at May 31, 2019. On June 5, 2019, the Company closed a non-brokered private placement equity financing and issued 500,000 common shares at a price of $1.80 per share for gross proceeds of $900,000 and sold its non-core Alaskan royalty interests for a purchase price of $350,000, before legal fees. On August 19, 2019, the Company closed a private placement equity financing and issued 500,000 common shares at a price of $2.60 per common share for gross proceeds of $1,300,000. On October 10, 2019, the Company closed a public bought deal equity financing and issued 11,500,000 common shares at a price of $2.00 per common share for gross proceeds of $23,000,000.

 

 

The Company expects that it will operate at a loss for the foreseeable future and believes the current cash and cash equivalents will be sufficient for it to maintain its currently held properties, and fund its currently anticipated general and administrative costs until May 2021. Following May 2021, the Company will need to scale back anticipated activities and costs or raise additional financing to fund operations through the year ending May 31, 2022. The Company’s current anticipated operating expenses are $7,790,000 until May 31, 2020 and $19,160,000 until May 31, 2021. The Company’s anticipated monthly burn rate averages approximately $1,298,000 for December 2019 to May 2020, where approximately $446,000 is budgeted for administrative purposes and approximately $852,000 is for planned exploration expenditures and holding costs for the NBP and the MLP. From December 2019 to May 2021, the Company’s anticipated monthly burn rate averages approximately $1,064,000, of which $321,000 is budgeted for administrative purposes and approximately $743,000 is for planned exploration expenditures and holding costs for the NBP and the MLP. In any event, the Company will be required to raise additional funds, again through public or private equity financings, prior to the end of May 2021 in order to continue in business. Should such financing not be available in that time-frame, 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 at the NBP and the MLP on its currently anticipated scheduling.

 

Despite the Company’s success to date in raising significant equity financing to fund its operations, there is significant uncertainty that the Company will be able to secure any additional financing in the current or future equity markets. See “Risk Factors – We will require additional financing to fund exploration and, if warranted, development and production”. Failure to obtain additional financing could have a material adverse effect on our financial condition and results of operation and could cast uncertainty on our ability to continue as a going concern. The quantity of funds to be raised and the terms of any proposed equity financing that may be undertaken will be negotiated by management as opportunities to raise funds arise. Specific plans related to the use of proceeds will be devised once financing has been completed and management knows what funds will be available for these purposes. Due to this uncertainty, if the Company is unable to secure additional financing, it may be required to reduce all discretionary activities at the NBP and the Mother Lode Property to preserve its working capital to fund anticipated non-discretionary expenditures beyond the 2021 fiscal year.

 

The Company has no exposure to any asset-backed commercial paper. Other than cash held by its subsidiaries for their immediate operating needs in Alaska and Nevada, all of the Company’s cash reserves are on deposit with a major Canadian chartered bank. The Company does not believe that the credit, liquidity or market risks with respect thereto have increased as a result of the current market conditions. However, in order to achieve greater security for the preservation of its capital, the Company has, of necessity, been required to accept lower rates of interest, which has also lowered its potential interest income.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements.

 

Environmental Regulations

 

The operations of the Company may in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible measures.

 

Certain U.S. Federal Income Tax Considerations for U.S. Holders

 

The Company has been a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes in recent years and expects to continue to be a PFIC in the future. Current and prospective U.S. shareholders should consult their tax advisors as to the tax consequences of PFIC classification and the U.S. federal tax treatment of PFICs. Additional information on this matter is included in the Company’s Annual Report on Form 10-K as filed with the SEC on August 8, 2019, under “Certain United States Federal Income Tax Considerations”.

 

Emerging Growth Company Status

 

We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of May 31, 2019, being the last day of our last fiscal year.

 

We will lose our status as an emerging growth company on May 31, 2020, the last day of our fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement.

 

 

As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A (a) and (b) of the Exchange Act. Such sections are provided below:

 

·

Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public company’s auditor to attest to, and report on, management's assessment of its internal controls.

 

·

Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Act, require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.

 

As long as we qualify as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Exchange Act, we may however determine to voluntarily comply with such requirements in our discretion.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

 

 

 

 

 

 

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

As of November 30, 2019 an evaluation was carried out under the supervision of and with the participation of the Company’s management, including the Chief Executive Officer (the principal executive officer) and Chief Financial Officer (the principal financial officer and accounting officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) of the Exchange Act). Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of November 30, 2019, the Company’s disclosure controls and procedures were effective in ensuring that: (i) information required to be disclosed in reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, in a manner that allows for accurate and timely decisions regarding required disclosures.

 

The effectiveness of our or any system of disclosure controls and procedures, however well designed and operated, can provide only reasonable assurance that the objectives of the system will be met and is subject to certain limitations, including the exercise of judgement in designing, implementing and evaluating controls and procedures and the assumptions used in identifying the likelihood of future events.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in internal control over financial reporting during the period ended November 30, 2019 that have materially, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

 

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

Except for the below risk factors, which update those previously set forth in our Annual Report on Form 10-K as filed with the SEC on August 8, 2019, there have been no material changes from the risk factors set forth in such Annual Report.

 

Ability to Continue as a Going Concern

 

The Company’s auditor has indicated in the Company’s audited annual financial statements that there is substantial doubt about the Company’s ability to continue as a going concern. The Company is in the preliminary stages of its planned operations and has not yet determined whether its processes and business plans are economically viable. The Company’s ability to determine if proven and probable mineral reserves exist at its properties, to continue exploration and if warranted, develop its existing properties and to identify and acquire additional properties to diversify its properties portfolio are dependent upon the ability of the Company to obtain sufficient financing, or alternatively, upon the Company’s ability to dispose of its interest on an advantageous basis, all of which are uncertain. Importantly, the inclusion in the Company’s financial statements of a going concern opinion may negatively impact the Company’s ability to raise future financing and achieve future revenue. If the Company is unable to obtain additional financing from outside sources and/or eventually generate enough revenues, the Company may be forced to sell a portion or all of the Company’s assets or, if applicable, curtail or discontinue its operations. If any of these events happens, a prospective investor could lose all or part of its investment. In addition, the Company’s financial statements do not include any adjustments to the Company’s recorded assets or liabilities that might be necessary if the Company becomes unable to continue as a going concern.

 

Need for Significant Additional Capital

 

We will be required to expend significant funds to determine if proven and probable mineral reserves exist at our properties, to continue exploration and if warranted, develop our existing properties and to identify and acquire additional properties to diversify our properties portfolio. We have spent and will be required to continue to expend significant amounts of capital for drilling, geological and geochemical analysis, assaying and feasibility studies with regard to the results of our exploration. We may not benefit from some of these investments if we are unable to identify commercially exploitable mineralized material.

 

Our ability to obtain necessary funding for these purposes, in turn, depends upon a number of factors, including the status of the national and worldwide economy and the price of gold and silver. We may not be successful in obtaining the required financing or, if we can obtain such financing, such financing may not be on terms that are favorable to us. Failure to obtain such additional financing could result in delay or indefinite postponement of further mining operations or exploration and development and the possible partial or total loss of our potential interest in our Properties.

 

Negative Operating Cash Flow

  

The Company is an exploration stage company and has not generated cash flow from operations.  The Company is devoting significant resources to the development of its properties and to actively pursue exploration and development opportunities, however, there can be no assurance that it will generate positive cash flow from operations in the future.  The Company expects to continue to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production at a particular project.  The Company currently has negative cash flow from operating activities. 

  

Market Price of Securities

  

The market price of the Company’s common shares could be subject to significant fluctuations due to various factors and events, including any regulatory or economic changes affecting the Company’s operations, variations in the Company’s operating results, developments in the Company’s business or its competitors, or changes in market sentiment towards the common shares. Investors should be aware that the value of the common shares may be volatile and investors may, on disposing of the common shares, realize less than their original investment or may lose their entire investment.

  

The Company’s operating results and prospects from time to time may be below the expectations of market analysts and investors. In addition, stock markets from time to time suffer significant price and volume fluctuations that affect the market price of the securities listed thereon and which may be unrelated to the Company’s operating performance. Any of these events could result in a decline in the market price of the common shares. The common shares may, therefore, not be suitable as a short-term investment. In addition, the market price of the common shares may not reflect the underlying value of the Company’s net assets. The price at which the common shares will be traded and the price at which investors may realize their shares will be influenced by a large number of factors, some specific to the Company and its proposed operations, and some which may affect the business sectors in which the Company operates. Such factors could also include the performance of the Company’s operations, variations in operating results, announcements by the Company (i.e. disappointing results of exploratory drilling, the incurrence of environmental liabilities or other material developments), announcements of material developments by the Company’s competitors, involvement in litigation, large purchases or sales of the common shares, liquidity or the absence of liquidity in the common shares, limited trading volume, the prices of gold and other precious metals, legislative or regulatory changes relating to the business of the Company, the Company’s ability to raise additional funds, other material events and general financial market and economic conditions. In the event that the occurrence of any of these events causes the price of the common shares to decrease, investors may be forced to sell their shares at a loss.

 

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Unregistered Sales of Equity Securities

 

Other than as reported below, all sales of unregistered equity securities during the period covered by this report were previously reported on Form 8-K.

 

On October 18, 2019, the Company issued 25,000 common shares in connection with the lease on the Mayflower property (see note 4a)(ii)(1) to the Financial Statements), with a fair value of $48,750. The common shares were issued in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) on the basis of representations of eligibility and suitability made to the Company by the investor in the lease agreement.

 

Repurchase of Securities

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Pursuant to Section 1503(a) of 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 specified information about mine health and safety in their periodic reports. These reporting requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health Administration (“MSHA”). During the three months period ended November 30, 2019 the Company and its subsidiaries and their properties or operations were not subject to regulation by MSHA under the Mine Act and thus no disclosure is required under Section 1503(a) of the Dodd-Frank Act.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 

 

ITEM 6. EXHIBITS

 

2.1	Arrangement Agreement and Plan of Arrangement with International Tower Hill Mines Ltd., incorporated by reference to Exhibit 2.1 to the Company’s DRS filing as filed with the SEC on May 12, 2014
3.1	Notice of Articles, dated April 13, 2010, incorporated by reference to Exhibit 3.1 to the Company’s DRS filing as filed with the SEC on May 12, 2014
3.2	Articles, dated April 12, 2010, incorporated by reference to Exhibit 3.2 to the Company’s DRS filing as filed with the SEC on May 12, 2014
23.1	Consent of Carl Brechtel
23.2	Consent of Jeffrey Pontius
23.3	Consent of Scott Wilson
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(1)	XBRL Instance Document
101.SCH(1)	XBRL Taxonomy Extension – Schema
101.CAL(1)	XBRL Taxonomy Extension – Calculations
101.DEF(1)	XBRL Taxonomy Extension – Definitions
101.LAB(1)	XBRL Taxonomy Extension – Labels
101.PRE(1)	XBRL Taxonomy Extension – Presentations

 

(1)

Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Interim Consolidated Balance Sheets at November 30, 2019 and May 31, 2019, (ii) the Condensed Interim Consolidated Statements of Operations and Comprehensive Loss for the Six Months ended November 30, 2019 and November 30, 2018, (iii) the Condensed Interim Consolidated Statements of Cash Flows for the Six Months Ended November 30, 2019 and November 30, 2018, (iv) the Condensed Interim Consolidated Statement of Changes in Equity for the Six Months Ended November 30, 2019, (v) the Notes to the Condensed Interim Consolidated Financial Statements.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CORVUS GOLD INC.
(the Registrant)
By:	/s/ Jeffrey Pontius
	Jeffrey Pontius
	Chief Executive Officer
	(Principal Executive Officer)
Date: January 8, 2020
By:	/s/ Peggy Wu
	Peggy Wu
	Chief Financial Officer
	(Principal Financial and Accounting Officer)
Date: January 8, 2020

 

 

 

 

  

 

 

 

 

 

 

 

 34