STAR GOLD CORP. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS. (Form 10-K)
The Company maintains a corporate office in
Coeur d'Alene, Idaho. This is the primary administrative office for the Company and is utilized by Board Chairman Lindsay Gorrilland Chief Financial Officer Kelly Stopher. During the fiscal year ended April 30, 2021, the Company commissioned a detailed third-party Preliminary Economic Assessment ("PEA") to redefine the Longstreet Projectand to make sure that the assumptions, and resulting economics, relied on to move the leach pad closer to the Main nob justified the change in design. The PEA has been completed and the Company is currently assessing the best strategy to proceed. The drilling permit granted from the Bureau of Land Management("BLM") in September 2019remains valid until December 2022. This allows the Company to commence drilling mainly for the Hydrology Study but also enabling drilling of other holes on the Main knob for geochemical analysis. A bond has been obtained and there are no impediments to drilling other than capital constraints. The Company may apply for an extension of the permit. For the fiscal year ending April 30, 2023, the Company plans to commence the following activities as it prepares to draft its Environmental Impact Statement ("EIS") on the Longstreet Project:
Hydrological drilling – 2 to 4 holes should be sufficient:
Geochemical analysis – program design to be submitted to
involves core drilling;
Assuming the results of the above-referenced activities are favorable, the Company intends to proceed to the preparation of an EIS and plan of operation for the Longstreet project (the "Longstreet Plan"). The eventual objective of the EIS and Longstreet Plan is the issuance, by each respective governing agency, of the necessary mine permits to authorize the construction of, and ongoing operations at, an open pit/heap leach mine at the Longstreet Property.
Approval of Longstreet’s plan is subject to review by a government agency and may require additional restoration activities.
Management believes it can source additional capital in the investment markets in the coming months and years. The Company may also consider other sources of funding, including potential mergers, sale of property, joint ventures and/or farm-out a portion of its exploration properties. Future liquidity and capital requirements depend on many factors including timing, cost and progress of the Company's exploration efforts. The Company will consider additional public offerings, private placement, mergers or debt instruments. Additional financing will be required in the future to complete all necessary steps to apply for a final permit. Although the Company believes it will be able to source additional financing there are no guarantees any needed financing will be available at the time needed or on acceptable terms, if at all. If the Company is unable to raise additional financing when necessary, it may have to delay exploration efforts or property acquisitions or be forced to cease operations. Collaborative arrangements may require the Company to relinquish rights to certain of its mining claims. RESULTS OF OPERATIONS For the years ended April 30, 2022 2021 $ Change % Change
Mineral exploration expense
$ 25,146 $ 25,146$ - 0.0 % Pre-development expense 57,274 246,088 (188,814 ) (76.7 %) Legal and professional fees 77,067 125,416 (48,349 ) (38.6 %) Management and administrative 229,546 244,151 (14,605 ) (6.0 %) Depreciation - 1,318 (1,318 ) (100.0 %) Interest expense 1,006 946 60 6.3 % Interest expense, related party 3,226 1,367 1,859 136.0 % Interest (income) (70 ) (232 ) 162 (69.8 )% NET LOSS $ 393,195 $ 644,200 $ (251,005 )(39.0 %) Page 29 of 58 The Company earned no operating revenue in 2022 or 2021 and does not anticipate earning any operating revenues in the near future. Star Gold Corp.is a pre-development stage company and presently is seeking other natural resources related business opportunities.
The Company will continue to focus its capital and resources on permitting activities at its Longstreet property.
Total net loss for the year ended
Mineral exploration expense For the years ended April 30, 2022 2021 $ Change % Change Claims 25,146 25,146 - 0.0 %
Total mining exploration expenditures
0.0 % Mineral exploration expense for the year ended
April 30, 2022was $25,146which remained the same as the 2021 mineral exploration expense of $25,146. Aside from annual claims payments, there was no additional mineral exploration expense for the year ended April 30, 2022and 2021, respectively. The Company's emphasis has shifted from exploratory drilling to activities related to pre-development expense including environmental and anthropological studies associated with building a Plan of Operations and obtaining a permit to construct a mine at the Longstreet site. Pre-development expense For the years ended April 30, 2022 2021 $ Change % Change
Environmental impact and plan of operation $ - $
5,232 (5,232 ) (100.0 %) Field expense 4,119 3,870 249 - Permits and fees 200 200 - - Project management 1,625 4,975 (3,350 ) (67.3 %) Technical consultants 12,500 192,453 (179,953 ) (95.2 %) Water rights costs 38,830 39,358 (528 ) (1.3 %)
Total pre-development expense
Pre-development expenses for the year ended
Technical consultant expense decreased to
$12,500in 2022 due to an expiring consulting contract executed with Great Basin Resources, Inc.as consideration for amending the Longstreet Property Agreement, as well as expenses related to preparation of a new technical resource report for the Longstreet Projectand its related economics. The Company is currently assembling bids from engineering firms for development of a full Plan of Operations and Mine Schedule for development and eventual submission of an application to permit construction of a heap leach mining operation on the Longstreet Property. The Company is also soliciting bids for drilling of monitor and water-course wells on the Longstreet property site to determine suitability for future mining and leach pad operations. Page 30 of 58 Legal and professional fees For the years ended April 30, 2022 2021 $ Change % Change Audit and accounting $ 30,717 $ 27,386 $ 3,33112.2 % Legal fees 19,380 60,936 (41,556 ) (68.2 %) Public company expense 26,679 24,030 2,649 11.0 % Investor relations 291 13,064 (12,773 ) (97.8 %)
Total legal and professional fees
Audit and accounting fees for the year ended
compared to the year ended
Legal fees decreased
$41,556, from $60,936for the year ended April 30, 2021to $19,380for the year ended April 30, 2022. The decrease in legal fees for the year ended April 30, 2022was due to a decreased need for legal services related to compliance, property transfer and corporate transaction matters. There are no pending legal issues or contingencies as of April 30, 2022. Investor relations expense decreased $12,773for the year ended April 30, 2022which was attributable to costs associated with redesign and maintenance on the Company's website during the year ended April 30, 2021.
Management and administration fees
For the years ended April 30, 2022 2021 $ Change % Change Auto and travel $ 3,399 $ 3,651
$ (252 )(6.9 %) General administrative and insurance 42,696 43,768 (1,072 ) (2.4 %) Management fees and payroll 180,500 30,000 150,500 501.7 % Office and computer expense 2,433 5,080 (2,647 ) (52.1 %) Stock-based compensation - 161,015 (161,015 ) (100.0 %) Telephone and utilities 518 637 (119 ) (18.7 %)
Total and administrative management
Total general and administrative expense decreased
$14,605for the year ended April 30, 2022to $229,546compared to $244,151for the year ended April 30, 2021.
Management fees have increased
COVID-19 limited business travel resulting in a nominal decrease in car and travel expenses for the year ended
LIQUIDITY AND FINANCIAL SITUATION
April 30, 2022 April 30, 2021 WORKING CAPITAL Current assets
$ 190,147 $ 299,275Current liabilities 40,532 32,336 Working capital $ 149,615 $ 266,939Page 31 of 58 For the year ended April 30, 2022 April 30, 2021 CASH FLOWS Cash flow used by operating activities $ (253,129 ) $ (575,991 )Cash flow used by investing activities (12,000 ) (12,000 ) Cash flow provided by financing activities 50,000
Net change in cash during period
$ (215,129 )$
239,327 As of
April 30, 2022, the Company had cash on hand of $50,815. Since inception, the sole source of financing has been sales of the Company's debt and equity securities. Star Gold Corp.has not attained profitable operations and its ability to pursue any future plan of operation is dependent upon our ability to obtain financing.
The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, or ultimately to attain profitability. Potential sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of the Company's capital stock or alternative methods such as mergers or sale of the Company's assets. No assurances can be given, however, that the Company will be able to obtain any of these potential sources of cash. The Company currently requires additional cash funding from outside sources to sustain existing operations and to meet current obligations and ongoing capital requirements. The Company plans for the long-term continuation as a going concern include financing future operations through sales of our equity and/or debt securities and the anticipated profitable exploitation of the Company's mining properties. These plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders. CRITICAL ACCOUNTING POLICIES
The Company has identified certain accounting policies, described below, that are most significant to representing its current financial condition and results of operations. The significant accounting policies of the Company are presented in the notes to the audited financial statements included in this annual report.
Asset Impairments The Company periodically reviews its long-lived assets to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted net future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value. Mineral Interests Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mineral properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method based on periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.
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