GOLDRICH MINING CO - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the transition period from              to             

Commission file number: 001-06412

GOLDRICH MINING COMPANY

(Exact Name of Registrant as Specified in its Charter)

(509) 535-7367

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

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 past 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. o Yes x No

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o 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:

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. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o Yes x No

Number of shares of issuer’s common stock outstanding at November 13, 2023: 196,559,523

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

2022 Stockholders’ (Deficit)

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and as a result, they are condensed. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine-month periods ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.

For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Going Concern

The accompanying condensed consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception and does not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and/or raising additional funds.

The Company currently has no historical recurring source of revenue, negative working capital of $12,534,571, and an accumulated deficit of $41,660,164 at September 30, 2023. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company may profitably execute a production business plan, and thereby, its ability to continue as a going concern may improve and become less dependent on the Company’s ability to raise capital to fund its future exploration and working capital requirements. The Company’s plans for the long-term return to and continuation as a going concern include the profitable exploitation of its mining properties and financing the Company’s future operations through sales of its common stock and/or debt. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

Earnings (Loss) Per Share

We are authorized to issue 750,000,000 shares of common stock, $0.10 par value per share. At September 30, 2023, there were 196,559,523 shares of our common stock issued and outstanding.

For the three and nine-month periods ended September 30, 2023 and 2022, potentially dilutive shares including outstanding stock options, warrants, convertible interest payable, and convertible preferred stock were excluded from the computation of diluted loss per share because they were anti-dilutive due to net losses in those periods. For the three and nine-month periods ended September 30, 2023 and 2022, potentially dilutive common stock equivalents excluded from the calculation of diluted earnings per share are as follows:

Schedule of Anti-Dilutive Stock Common Stock Equivalent

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

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.

During 2023 and 2022, the Company determined fair value on a recurring basis and non-recurring basis as follows:

Schedule of Fair Value On Recurring and Non-Recurring Basis

The carrying amounts of financial instruments, including notes payable and notes payable – related party, approximate fair value at September 30, 2023 and December 31, 2022. The inputs to the valuation of Level 2 liabilities are described in Note 6 Notes Payable in Gold.

On April 3, 2012, Goldrich Placer, LLC (“GP”), a subsidiary of Goldrich, entered into a term sheet for a joint venture with NyacAU, LLC (“NyacAU”), an Alaskan private company, to bring Goldrich’s Chandalar placer gold properties into production as defined in the joint venture agreement (the “Operating Agreement”), which was subsequently signed and made effective April 2, 2012. In each case as used herein in reference to the JV, ‘production’ is as defined by the Operating Agreement. As part of the Operating Agreement, GP and NyacAU (together the “Members”) formed a 50:50 joint venture company, Goldrich NyacAU Placer LLC (“GNP”), to operate the Chandalar placer mines, with NyacAU acting as managing partner.

Arbitration

In December 2017, the Company filed an arbitration statement of claim against NyacAU and other parties. The claim challenged certain accounting treatment of capital leases, allocations of tax losses, charges to the JV for funding costs related to the JV manager’s financing, related-party transactions, and other items of dispute in a previous mediation that was unsuccessful in reaching an agreement. As a result, the Company participated in an arbitration before a panel of three independent arbitrators during 2018 through 2022 to address these items.

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

Settlement Agreement

On March 31, 2023, the Company signed a settlement agreement between the Company, NyacAU, LLC (“NyacAU”), Goldrich Placer, LLC (“GP”), Goldrich NyacAU Placer, LLC (“GNP”), Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).

In April 2023, all outstanding arbitration issues were resolved with a settlement agreement whereby Goldrich paid $105,000 to NyacAU. The resolution includes all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminates and supersedes all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of fifty percent (50%) of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.

Even though the settlement agreement was consummated subsequent to the end of the 2022 year, the arbitration claim was filed and has been open since 2018; therefore, the event requires the financial effects to be reflected in the financial statement for the year ended December 31, 2022. As a result, the previous expense accruals of $638,193 for arbitration awards and interest made in 2021 and prior years were removed and the settlement amount of $105,000 was recorded. This resulted in a gain on settlement being recorded at December 31, 2022 of $533,193.

Option Agreement

Concurrent with signing the settlement agreement, Goldrich also signed an option agreement with the Parties. The option agreement, among other things, grants Goldrich, or its designee, the right, but not the obligation, to become operator of the Chandalar placer mining permit. If the option is exercised, Goldrich or its designee would also obtain ownership of all camp facilities and mining equipment remaining at the Chandalar placer mine site owned by NyacAU and its affiliates. Currently Goldrich owns the claims but NyacAU is the named operator on the mining permits.

To exercise the option, Goldrich, or its designee, must give written and electronic notice of its intent to do so by April 30, 2024 and pay $1,000,000 into escrow within five business days of giving notice. Upon exercise of the option, Goldrich or its designee would assume all reclamation responsibilities and liability and NyacAU would be released from any reclamation liability. Also, NyacAU would be entitled to limited payments out of the production of placer gold at the Chandalar placer mine up to the greater of $8,500,000 or 4,860 ounces of fine gold (the Maximum Amount). No production payment shall be due to NyacAU on the first 5,000 ounces of fine gold production. Thereafter, NyacAU would receive at least 5% of all production from the Chandalar placer mine until the Maximum Amount is paid. Additionally, after the first 5,000 ounces of fine gold production, NyacAU would be entitled to a minimum annual payment equal to the value of $120,000 or 68 fine gold ounces, whichever is greater, and such payment would apply towards the satisfaction of the Maximum Amount.

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

In addition to related party transactions described in Note 5, the Company has accrued amounts to the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and board of directors fees for amounts earned but not yet paid. Beginning in January 2016 and through September 30, 2023, the CEO’s salary has not been paid in full. Salary due to the CFO has been accrued and remains unpaid, as have board of directors’ fees. 

Schedule of Related Party Transactions 

Convertible Notes Payable

In August 2023, the Company issued convertible notes payable of $105,263, discounted at 5%, or $5,263, resulting in net proceeds of $100,000. These notes were issued with the same terms as the notes payable and notes payable – related party. In a separate agreement, from the notes payable and notes payable – related party, the holders of these notes were granted the right to convert both the principal and interest earned into common shares of the Company at $0.015 per common share.

At September 30, 2023 and December 31, 2022, the Company had outstanding convertible notes payable of $105,263 and $nil, respectively. At September 30, 2023, the notes would convert to 7,017,545 common shares.

At September 30, 2023 the interest payable of $1,753 for these notes would convert to 116,842 common shares.

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

Notes Payable & Notes Payable – Related Party

At September 30, 2023 and December 31, 2022, the Company had outstanding notes payable of $1,276,485 and $1,250,169, respectively, and outstanding notes payable – related party of $4,224,927 and $4,195,979, respectively. The notes payable and notes payable – related party and accrued interest of 15% are due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder.

During the nine months ended September 30, 2023, the Company issued additional notes payable of $55,264, discounted at 5%, or $2,764, resulting in net proceeds of $52,500 of which $27,500 was from a related party, Nicholas Gallagher, a shareholder and director of the Company, who holds the full balance of the notes payable – related party. During the nine months ended September 30, 2022, the Company received no additional tranches of the notes payable and $83,980 of notes payable - related party. The notes are due upon demand; therefore, all discounts have been immediately expensed to interest expense.

During the three and nine months ended September 30, 2023 the Company incurred finder fees totaling $360 and $1,185, of which $nil and $825 was to related party entities, respectively. During the three and nine months ended September 30, 2022 the Company incurred finder fees totaling $1,650 and $2,969, to related party entities. Interest of $208,056 and $617,824 was expensed during the three and nine-month periods ended September 30, 2023, respectively, of which $158,435 and $474,363 was to related parties, respectively, which is included in interest expense and finance costs. on the condensed consolidated statements of operations. Interest and finders fees are included in accounts payable and accrued liabilities, interest payable and interest payable – related party on the condensed consolidated balance sheet at September 30, 2023 and December 31, 2022. Interest of $196,442 and $585,261 was expensed during the three and nine-month periods ended September 30, 2022, respectively, of which $155,626 and $462,814 was to related parties, respectively, which is included in interest expense and finance costs on the condensed consolidated statements of operations.

Inter-Creditor Agreement

As a result of an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) dated November 1, 2019 and a First Amendment dated August 25, 2021, for each holder of the notes payable, whether or not a related party:

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

During 2013, the Company issued notes payable in gold totaling $820,000, less a discount of $205,000, for net proceeds of $615,000. Under the terms of the notes, the Company agreed to deliver gold to the holders at the lesser of $1,350 per ounce of fine gold or a 25% discount to market price as calculated on the contract date and specify delivery of gold in November 2014. The notes bear interest at a rate of 10% per annum and penalty interest of 10% per annum on any due and unpaid interest.

After several amendments to the terms of the note agreements, through the date of the issuance of these financial statements, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. At September 30, 2023 and December 31, 2022, 266.788 ounces of fine gold was due and deliverable to the holder of the notes.

The Company estimates the fair value of the notes based on the market approach with Level 2 inputs of gold delivery contracts based upon previous contractual delivery dates, using the market price of gold on September 30, 2023 of approximately $1,871 per ounce as quoted on the London PM Fix market or $499,028 in total. During the three months ended September 30, 2023 and 2022, this resulted in a gain on change in fair value of notes payable in gold of $11,138 and $38,751, respectively. on the condensed consolidated statement of operations. During the nine months ended September 30, 2023 and 2022, this resulted in a loss on change in fair value of notes payable in gold of $15,514 and a gain on change in fair value of notes payable in gold of $35,777, respectively on the condensed consolidated statement of operations.

At December 31, 2022, the fair value was calculated using the market approach with Level 2 inputs of gold delivery contracts based upon previous contractual delivery dates. At December 31, 2022, the Company had outstanding total notes payable in gold of $483,514.

Interest of $13,015 and $37,783 was expensed during the three and nine months ended September 30, 2023, respectively, and $188,639 is accrued at September 30, 2023 and is included in interest payable. Interest of $11,789 and $34,146 was expensed during the three and nine months ended September 30, 2022, and $139,639 is accrued at December 31, 2022 and is included in interest payable.

During the nine months ended September 30, 2022, two holders of class D preferred stock, converted 60 preferred D shares into 2,000,000 common shares.

During the year ended December 31, 2022, the Company received cash of $30,000 which is included in stock subscription payable at December 31, 2022, for a private placement of common shares priced at $0.01 per share, of which $5,000 was from William Orchow, a related party. During the nine months ended September 30, 2023, the Company reduced stock subscription payable by $30,000 and issued 3,000,000 common shares.

During the nine months ended September 30, 2023, the Company received $162,667 cash as a result of the exercise of Class R warrants at an exercise price of $0.024 per common share, resulting in the issuance of 6,777,778 common shares. These shares were originally owned by Mr. Gallagher and were transferred to unrelated parties. During the nine months ended September 30, 2022, the Company received $133,157 cash as a result of the exercise of Class R warrants at an exercise price of $0.03 and $0.045 and T warrants at an exercise price of $0.03 per common share, resulting in the issuance of 3,660,817 common shares. Of that amount, 2,555,555 of the warrants exercised were owned by Mr. Gallagher and were transferred to unrelated parties. The unrelated parties then exercised the warrants for cash.

Goldrich Mining Company

Notes to the Condensed Consolidated Financial Statements (unaudited)

During the year ended December 31, 2021, the Company received an additional $40,000 for the exercise of Class T warrants which are included in stock subscription payable at December 31, 2022. During the nine months ended September 30, 2023, the exercise was complete, and the Company issued 1,333,333 common shares for the exercise.

During the nine months ended September 30, 2023, 1,666,667 Class R warrants and 1,041,081 Class T warrants expired.

The Company has entered into a consulting contract for $46,500 for which the services have not yet been received.

The Company is subject to Alaska state annual claims rental fees in order to maintain our non-patented claims. In addition to the annual claims rental fees of $125,945 due November 30 of each year, we are also required to meet annual labor requirements of approximately $61,100 due November 30 of each year. The Company is able to carry forward costs for annual labor that exceed the required yearly totals for four years. The Company has significant carryovers to 2023 to satisfy its annual labor requirements. This carryover expires in the years 2023 through 2027 if unneeded to satisfy requirements in those years. 

Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

As used in herein, the terms “Goldrich,” the “Company,” “we,” “us,” and “our” refer to Goldrich Mining Company.

This discussion and analysis contains forward-looking statements that involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Except for historical information, the matters set forth herein, which are forward-looking statements, involve certain risks and uncertainties that could cause actual results to differ. Potential risks and uncertainties include, but are not limited to, unexpected changes in business and economic conditions; significant increases or decreases in gold prices; changes in interest and currency exchange rates; unanticipated grade changes; metallurgy, processing, access, availability of materials, equipment, supplies and water; results of current and future exploration and production activities; local and community impacts and issues; timing of receipt and maintenance of government approvals; accidents and labor disputes; environmental costs and risks; competitive factors, including competition for property acquisitions; and availability of external financing at reasonable rates or at all, and those set forth under the heading “Risk Factors” in our Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on July 5, 2023. Forward- looking statements can be identified by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Forward-looking statements are made based on management’s beliefs, estimates, and opinions on the date the statements are made, and the Company undertakes no obligation to update such forward-looking statements if these beliefs, estimates, and opinions should change, except as required by law.

This discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our condensed consolidated financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its condensed consolidated financial statements and require the most difficult, subjective and complex judgments are outlined below in “Critical Accounting Policies” and have not changed significantly.

General

Our Chandalar, Alaska gold mining property contains both hard-rock (lode) targets and placer deposits and has seen over a hundred years of intermittent mining exploration and extraction history. There has been extraction of gold from several alluvial, or placer gold streams, and from an array of small quartz veins that dot the property. However, only in very recent times is the primary source of the gold becoming evident. As a result of our exploration, considering structural geology, petrographic, geochemical and geophysical evidence, we have realized that all of the gold is sourced within a system of magmatic hydrothermal alteration features such as small pegmatitic dikes and chloritized schist. We believe these features are common to and link all of the hard-rock (lode) prospects, the weathering of which generated the gold placer deposits, and furthermore are an outlying expression of an underlying gold bearing pluton.

We have defined drilling targets for a hard-rock (lode) gold deposit in an area of interest approximately 1,800 feet wide and over five miles long, possibly underlain by a series of mineralized magmatic intrusions (plutons). Exploration therefore has taken on two directions; one toward defining a low-grade, large tonnage body of mineralization running beneath the headwaters of Crystal Creek (formerly Little Squaw Creek) where dense swarms of gold mineralized pegmatitic dikelets are seen, the other a deeper, larger mineralized plutonic body(ies) from which the district’s mineralizing fluids may have emanated and migrated through Chandalar country rock.

In December 2021, Goldrich submitted a permit application to the Alaska Department of Natural Resources (“DNR”) to carry out a multi-year, 25,000-foot diamond core drill program at the Company’s Chandalar Property. The permit was received in February 2022. The target zone of this hard-rock (lode) drill program, located on the Crystal Creek drainage, is immediately above and partially overlapping the Crystal Creek placer deposit and mine. The target zone sits at the heart of a zone surrounded by historic placer workings in every creek and four historic hard-rock gold mines. Previous exploration, including drill programs, soil and rock samples, airborne magnetic and radiometric studies, and advanced petrographic studies in addition to the angularity of the placer gold nuggets indicates close proximity of the Crystal Creek placer deposit to a hard-rock source. Subject to financing, Goldrich plans to commence the program in May 2024.

Although our main focus continues to be the exploration of these hard-rock targets, we also endeavor to develop our placer properties as a source of internal cash to protect us from future market fluctuations and to provide funds for future exploration. In 2012, Goldrich and NyacAU LLC (“NyacAU”) formed Goldrich NyacAU Placer LLC (“GNP”), a 50/50 joint-venture company, managed by NyacAU, to mine Goldrich’s various placer properties at Chandalar.

As shown below, the placer gold extracted by GNP increased each year from 2015 through 2018, trending toward production figures that were anticipated by a preliminary economic assessment authored by qualified geologists for us:

Although GNP’s extraction increased over the years, ultimately the extraction numbers attained over those years fell short of the Minimum Production Requirements required in the GNP Operating Agreement. According to the terms of the agreement, GNP was required to pay a Minimum Production Requirement of 1,100 ounces for 2016, 1,200 ounces for 2017, and 1,300 ounces for 2018 to both Goldrich and NyacAU by October 31, 2018. This payment was not made. Under the joint venture Operating Agreement, GNP would be dissolved if GNP failed to meet the Minimum Production Requirement. On August 20, 2018, we announced the intended dissolution of the GNP joint venture. GNP was formally dissolved in May 2019.

Subsequent to 2019, Goldrich commissioned an independent third-party mining engineering firm to complete a mining plan and initial assessment for the Company’s Chandalar Mine. In June, 2021, Goldrich released the results of an independent Initial Assessment Report (the “IA”), prepared in accordance with the new SEC Subpart 1300 property disclosure requirements, for the Company’s Chandalar placer mine. The IA was prepared by Global Resources Engineering (“GRE”), a widely-respected mining engineering firm in Denver, Colorado.

After the release of the IA, a Revised and Amended Initial Assessment Report (the “RAIA”) was prepared by GRE and has a revised and amended date of February 24, 2023 and an effective date of May 31, 2021. The RAIA did not change the results of the economic analysis.

Both the IA and RAIA completed the economic analysis based on a 0.004 raw troy ounce per bank cubic yard cutoff pit constrained mineral resource that utilized a 0.002 raw troy ounce per bank cubic yard grade shell for grade estimation so there was no change in the economic analysis. However, the RAIA reported the pit constrained mineral resources at a 0.004 raw troy ounce per bank cubic yard cutoff while the IA pit constrained mineral resource used a 0.002 raw troy ounce per bank cubic yard cutoff. This difference caused measured and indicated mineral resources to decrease from 120,000 ounces of fine gold in the IA to 119,000 ounces of fine gold in the RAIA and inferred mineral resources to decrease from 17,000 ounces of fine gold in the IA to 16,000 ounces of fine gold in the RAIA. The RAIA was also revised to include additional information requested by the SEC and to add statements of opinions of qualified persons on the adequacy of sample preparation, security, analytical procedures, and the adequacy of the data.

Using a base case gold price of $1,650, the key economic results of the RAIA with a summarized gold price sensitivity analysis were as follows (A complete copy of the RAIA may be downloaded at https://www.goldrichmining.com/chandalar-gold-district/technical-reports.html).

The RAIA pit-constrained mineral resources for the Crystal Creek Placer deposit at a 0.004 raw troy ounce per bank cubic yard cutoff is as follows:

Goldrich will decide if a preliminary feasibility study should also be prepared for the Chandalar Mine. A preliminary feasibility study would allow Goldrich to disclose any reserves of the Chandalar Mine. The Company is encouraged by the results of the IA as it helps establish the value of the placer deposit, shows a large geochemical anomaly indicative of a potential large hard-rock (lode) gold source, and may provide financing opportunities.

Looking forward, our ability to develop either hard-rock (lode) targets or placer deposits is subject to financing. The on-going development of the hard-rock gold targets, the recent change in SEC regulations which allow us to release the new information in the IA, and significant increases in the price of gold since 2019, and the settlement of the arbitration appear to have increased the availability of funds so we are hopeful to secure sufficient funds for a major exploration program and for reopening the placer mine.

Liquidity and Capital Resources

We are an exploration stage company and have incurred losses since our inception. We currently do not have sufficient cash to support the Company through 2023 and beyond. We anticipate that we will incur approximately $700,000 for general operating expenses and property maintenance, $275,000 for interest, and $630,000 for interest – related party, over the next 12 months, in addition to the current liabilities on the balance sheet at September 30, 2023 of $12,571,896. Additional funds will be needed for any exploration expenditures, should any be undertaken. We plan to raise the financing through a combination of debt and/or equity placements, sale of mining property interests, and revenue from placer operations.

On March 31, 2023, we signed a settlement agreement between the Company, NyacAU, LLC (“NyacAU”), Goldrich Placer, LLC (“GP”), Goldrich NyacAU Placer, LLC (“GNP”), Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).

Subject to Goldrich making a payment of $105,000 to NyacAU by April 30, 2023 (payment was made on April 27, 2023), the settlement agreement, among other things, resolved all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminated and superseded all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of 50% of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.

Even though the settlement agreement was consummated subsequent to the end of the 2022 year, the nature and magnitude of the event requires the financial effects to be reflected in the financial statement for the year ended December 31, 2022. As a result, the previous expense accruals of $638,193 made in 2021 and prior years were removed and the settlement amount of $105,000 was recorded, resulting in a gain on settlement of $533,193 at December 31, 2022.

Because the exercise of the option agreement is at the election of the Company, no financial effects of the option have been recognized at September 30, 2023. If the option agreement is exercised by April 2024, the $1,000,000 payment would be recorded for the purchase of equipment, Goldrich would become the named operator on the Chandalar placer mining permits, the $8,500,000 liability would be recognized and a reclamation liability would be recognized. While the GRE Revised and Amended Initial Assessment Report reflects ample resources to justify a mining activity at the Chandalar Mine, the option would only be exercised if we were able to secure financing sufficient to start up a mining operation or secure a mining partner to economically extract the gold in a mining operation.

The audit opinion and notes that accompany our consolidated financial statements for the year ended December 31, 2022, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying consolidated financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured.

We currently have only a brief, recent history of a recurring source of revenue and in 2016 received our first cash distribution from the now-dissolved GNP joint venture. If we profitably execute a production business plan, our ability to continue as a going concern may improve and become less dependent on our ability to raise capital to fund our future exploration and working capital requirements. Our plans for the long-term include the profitable exploitation of our mining properties and financing our future operations through sales of our common stock and/or debt. Additionally, the capital markets and general economic conditions in the United States are constantly changing and may present significant obstacles to raising the required funds. These factors raise substantial doubt about our ability to continue as a going concern.

During the nine months ended September 30, 2023, we completed financings of $315,166, compared to $247,137 net cash for note financings and placements of our securities during the nine months ended September 30, 2022. On November 1, 2019, the Company and lenders entered into the Amended and Restated Loan Security and Intercreditor Agreement (the “Agreement”). Under the Agreement, the borrower and holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like.

If we are unable to timely satisfy our obligations under these secured senior notes payable, the notes payable in gold, originally due November 2018 and subsequently amended to be on demand, and the interest on both the secured senior note due quarterly and the notes payable in gold, and we are not able to re-negotiate the terms of such agreements, the holders will have rights against us, including potentially seizing or selling our assets. The notes payable in gold are secured against our right to future distributions of gold extracted by our joint venture with NyacAU. At September 30, 2023, we had outstanding total notes payable in gold of $499,028, representing 266.788 ounces of fine gold due on demand. During the year ended December 31, 2019, the Company renegotiated terms with the holders. The Fourth Delayed Delivery Required Quantity shall be delivered to the Purchaser at the Delivery Point on the date that is 60 days after the date that the Purchaser gives notice to the Company. To date, the gold notes have not been paid, the note holders have not demanded payment and have indicated willingness to work with the Company to extend the due date.

At September 30, 2023, the Company had outstanding convertible notes payable of $105,263, notes payable of $1,276,485 and outstanding notes payable – related party of $4,224,927. The notes payable and notes payable – related party had matured on October 31, 2018. In November 2019, the Company and the holders of the notes amended the notes, and the notes are now due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder.

We believe we will be able to secure sufficient financing for further operations and exploration activities of our Company, but we cannot give assurance we will be successful in attracting financing on terms acceptable to us, if at all. Additionally, anticipating continued placer production after dissolution of GNP, we look forward to internal cash flow and additional options for financing. A successful mining operation may provide the long-term financial strength for the Company to remove the going concern condition in future years. To increase its access to financial markets, Goldrich, which currently trades on the OTC Expert Market, intends to requalify to be quoted on the OTCQB of the OTC Markets and intends to also seek a listing of its shares on a recognized stock exchange in Canada.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

Results of Operations

On September 30, 2023, we had total liabilities of $12,852,582 and total assets of $688,753. This compares to total liabilities of $11,976,360 and total assets of $761,924 on December 31, 2022. As of September 30, 2023, our liabilities consist of $280,686 for remediation and asset retirement obligations, $499,028 of notes payable in gold, $105,263 of convertible notes payable, $1,276,485 of notes payable, $4,224,927 of notes payable – related party, $1,477,309 of trade payables and accrued liabilities, $901,353 of accrued interest payable, of which $1,753 is convertible, $2,625,829 of accrued convertible interest payable – related party, $1,431,084 due to related parties, and $30,618 for dividends payable. Of these liabilities, $12,571,896 is due within 12 months. The increase in liabilities compared to December 31, 2022 is due to an increase in related party payables from unpaid salaries and fees, an increase in interest payable and convertible interest payable – related party, an increase in notes payable and notes payable – related party and an increase in the fair market value of the notes payable in gold. Total assets and its components did not experience significant changes, with the exception of an increase in cash and a decrease in prepaid expenses during the nine months ended September 30, 2023.

On September 30, 2023, we had negative working capital of $12,534,571 and a stockholders’ deficit of $12,163,829 compared to negative working capital of $11,520,440 and stockholders’ deficit of $11,214,436 for the year ended December 31, 2022. Working capital decreased during the nine months ended September 30, 2023 due to the accruals of accounts and trade payables that exceeded cash proceeds from Notes payable and Notes payable – related party. Stockholders’ equity decreased due to an operating loss for the period ended September 30, 2023.

During the three months ended September 30, 2023, the Company reported total operating expense of $152,407, compared to $148,515 for the three months ended September 30, 2022. With the exception of management fees and salaries, professional services, general and administrative expenses, and directors’ fees, all operating expenses are lower year over year. Total other (income) expense for the three months ended September 30, 2023 was $216,986 compared to $179,935 for the same period of 2022, due to an increase in all other expenses in 2023.

During the nine months ended September 30, 2023, the Company reported total operating expense of $502,998, compared to $524,754 for the nine months ended September 30, 2022. With the exception of management fees and salaries, professional services, arbitration expenses, and directors’ fees, all operating expenses are lower year over year. Total other (income) expense for the nine months ended September 30, 2023 was $679,062 compared to $625,875 for the same period of 2022, due to an increase in the fair value of notes payable in gold, interest expense related party and miscellaneous income in 2023.

During the nine months ended September 30, 2023, we used cash from operating activities of $293,530 compared to $248,711 for the period ended September 30, 2022. Net losses were slightly higher year over year due to an increase in interest expense and interest expense related party and an increase in the fair value of notes payable in gold. Net losses were $1,182,060 and $1,150,629 for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023 and 2022 respectively, we used no cash in investing activities.

During the nine months ended September 30, 2023, cash of $315,167 was provided by financing activities, compared to $247,137 provided during the same period of 2022.

Private Placement Offerings and Warrant Exercises

During the year ended December 31, 2021, the Company received an additional $40,000 for the exercise of Class T warrants which are included in stock subscription payable at December 31, 2022. During the nine months ended September 30, 2023, the exercise was complete, and the Company issued 1,333,333 common shares for the exercise.

During the year ended December 31, 2022, the Company raised $30,000 from investors for a private placement of common stock at a price of $0.01 per share, and is included in stock subscription payable at December 31, 2022. During the nine months ended September 30, 2023, stock subscription payable was reduced by $30,000 and the Company issued 3,000,000 shares of common stock. No private placement offerings occurred during the nine months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company received $162,667 cash as a result of the exercise of Class R warrants at an exercise price of $0.024 per common share, resulting in the issuance of 6,777,778 common shares. These shares were originally owned by Mr. Gallagher and were transferred to unrelated parties. During the nine months ended September 30, 2022, the Company received $133,157 cash as a result of the exercise of Class R warrants at an exercise price of $0.03 and $0.045 and T warrants at an exercise price of $0.03 per common share, resulting in the issuance of 3,660,817 common shares. Of that amount, 2,555,555 of the warrants exercised were owned by Mr. Gallagher and were transferred to unrelated parties. The unrelated parties then exercised the warrants for cash.

Notes Payable in Gold, Convertible Notes Payable, Notes Payable & Notes Payable – Related Party

At September 30, 2023, we owed $499,028 for notes payable in Gold, $105,263 for convertible notes payable, $1,276,485 for notes payable and $4,224,927 for notes payable – related party. Interest payable on these borrowings totaled $3,527,182. These borrowings have matured beyond their original due dates and have been amended to be due upon demand.

Effective November 1, 2019, we entered into an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) and effective August 25, 2021, we entered into First Amendment to the Amended and Restated Loan, Security, and Intercreditor Agreement dated November 1, 2019 (“First Amendment”) with Nicholas Gallagher, a related party and member of our Board of Directors, in his capacity as agent for and on behalf of the holders of the Notes payable.

As a result of the borrowings under the notes payable in gold, convertible notes payable, notes payable and notes payable – related party (collectively, the “Notes”), we are faced with a significant hurdle in financing the Company going forward, whether to conduct exploration programs or initiate a mining program at the Chandalar mine. Our near-term cash requirements are greater than the assets we have available to satisfy them, and the holders of the Notes could choose to exercise their rights to demand payment, which would result in a default situation relative to the Notes. Mr. Gallagher is secured in his lending to the Company by means of the Amended Agreement, and if he were to demand payment, the Company would not be able to pay him the amounts due and he would be entitled to sell the assets secured under his deed of trust in order to pay his debt. We believe these holders to be friendly to the Company and that they will refrain from demanding payment, but the Company cannot control the potential demands nor the consequences that would be extracted as a result of default on the Notes.

Subsequent Events

Not Applicable.

Mining Permit and Future Mining Activities

The recent upward movements in the price of gold to a range of $1,800 to $2,000 per ounce or higher during the past few years have created renewed interest in gold mining, gold exploration and investments in companies engaging in those activities, including the junior mining/exploration sector in which we participate. Additionally, the fact that we own a mine that has produced over 44,000 ounces in recent years along an annual increasing trend has caught the interest of placer mining companies and investors who support placer mining operations. We believe we have the fundamentals to raise capital and continue our primary strategy of exploration and secondarily placer mining.

If we can attract sufficient financing to reinstate the placer mining operation, we may have a viable and productive path forward toward obtaining financing in the short-term to achieve long-term profitability. To effectively pursue this strategy, we have negotiated the option agreement described above to provide for facilities, equipment and mining permit to commence work, while taking on the reclamation liability for the Chandalar placer mine. While the GRE Revised and Amended Initial Assessment Report reflects ample resources to justify a mining activity at the Chandalar placer mine, the option would only be exercised if we were able to secure financing sufficient to start up a mining operation or secure a mining partner to economically extract the gold in a mining operation.

We also believe there are investors motivated to provide funding for exploration programs to locate and exploit the hard rock deposits from which the placer mineralization is coming from. This strategy can be pursued independent of any mining activities.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Inflation

We do not believe that inflation has had a significant impact on our condensed consolidated results of operations or financial condition.

Contractual Obligations

Not Applicable.

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:

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of, and with the participation of, our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our 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 (the “Exchange Act”)). 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 Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective due to the size of our staff and the resulting inability to segregate duties; however, material information required to be disclosed by the Company in 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 three months ended September 30, 2023, 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.

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

In 2018, we filed a claim before an Arbitration panel consisting of 3 independent arbitrators against our joint venture partner to obtain relief from certain accounting practices employed by the manager of the joint venture. In response to our filing, the managing partner, NyacAU LLC, filed an Arbitration Counter Claim against us, naming the officers and directors of the Company as they were constituted in 2012, at the time the JV’s Operating Agreement was signed by the respective partners. On March 31, 2023, the Company signed a settlement agreement between the Company, NyacAU, LLC (“NyacAU”), Goldrich Placer, LLC (“GP”), Goldrich NyacAU Placer, LLC (“GNP”), Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).

Goldrich made a payment of $105,000 to NyacAU by April 30, 2023, and the settlement agreement, among other things, resolved all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminates and supersedes all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of fifty percent (50%) of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.

Item 1A.  Risk Factors

There have been no changes to our risk factors as reported in our annual report on Form 10-K for the year ended December 31, 2022.

Item 2.  Unregistered Sales of Equity Securities and Use Of Proceeds

See full disclosure in section entitled “Sale of Unregistered Securities” above, which is incorporated by reference to this Item 2.

Item 3.  Defaults upon Senior Securities

None.

Item 4.  Mine Safety Disclosure

Our exploration properties are subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (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 three months ended September 30, 2023, we 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 our United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.

Item 5.  Other Information

None.

Item 6. Exhibits

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 13, 2023

In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 13, 2023