corvf20211130

corvf20211130_10q.htm

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, 2021
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: 001-39437

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 (Address of principal executive offices)	V6C 1G8 (Zip Code)

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

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

Title of each class:		Trading Symbol		Name of each exchange on which registered:
Common Shares, no par value		KOR		Nasdaq Capital Market

Securities registered pursuant to Section 12(g) 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 14, 2022, the registrant had 127,003,470 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	27
ITEM 4	CONTROLS AND PROCEDURES	28

PART II	OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	29
ITEM 1A	RISK FACTORS	29
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	29
ITEM 4	MINE SAFETY DISCLOSURES	29
ITEM 5	OTHER INFORMATION	29
ITEM 6	EXHIBITS	30

SIGNATURES

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(Expressed in Canadian dollars)


	November 30, 2021			May 31, 2021
	(Unaudited)
ASSETS

Current assets
Cash and cash equivalents	$	6,547,311		$	5,121,495
Accounts receivable		115,582			11,741
Prepaid expenses		93,161			499,747

Total current assets		6,756,054			5,632,983

Property and equipment		176,078			73,457
Right-of-use assets		59,545			88,996
Capitalized acquisition costs (note 4)		5,765,398			5,268,783

Total assets	$	12,757,075		$	11,064,219

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable and accrued liabilities (note 7)	$	886,698		$	1,835,240
Lease liabilities		64,025			67,287
Note payable (note 5)		18,706,453			5,742,007

Total current liabilities		19,657,176			7,644,534

Asset retirement obligations (note 4)		346,176			326,691
Lease liabilities		5,730			32,600

Total liabilities		20,009,082			8,003,825

Shareholders’ equity (deficit)
Share capital (note 6)		125,012,169			124,919,558
Contributed surplus (note 5)		20,694,371			17,769,880
Accumulated other comprehensive income - cumulative translation differences		748,186			826,016
Deficit accumulated during the exploration stage		(153,706,733	)		(140,455,060	)

Total shareholders’ equity (deficit)		(7,252,007	)		3,060,394

Total liabilities and shareholders’ equity (deficit)	$	12,757,075		$	11,064,219

Nature and continuance of operations (note 2)

Subsequent events (notes 1, 7, and 11)

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)


	Three months ended November 30,						Six months ended November 30,
	2021			2020			2021			2020

Operating expenses
Administration	$	-		$	106		$	-		$	212
Consulting fees (notes 6 and 7)		615,123			536,082			1,427,285			1,039,046
Depreciation		17,593			18,678			35,094			32,959
Exploration expenditures (notes 4 and 6)		1,355,224			2,712,435			5,781,487			7,145,669
Insurance		165,198			60,872			333,717			123,431
Investor relations (note 6)		300,711			739,979			759,160			1,056,405
Office and miscellaneous		33,924			28,637			62,493			66,570
Professional fees (note 6)		62,996			117,629			189,570			275,814
Regulatory		30,757			58,580			113,217			212,892
Rent		909			1,351			2,039			8,754
Transaction costs (note 1)		1,676,644			-			1,852,414			-
Travel		32,103			38,136			117,633			53,612
Wages and benefits (notes 6 and 7)		498,647			873,248			2,052,614			1,379,701

Total operating expenses		(4,789,829	)		(5,185,733	)		(12,726,723	)		(11,395,065	)

Other income (loss)
Interest income		1,352			20,447			2,735			62,146
Interest expense (note 5)		(321,932	)		(3,921	)		(504,122	)		(6,716	)
Foreign exchange gain (loss)		(21,967	)		43,180			(23,563	)		(296,996	)

Total other income (loss)		(342,547	)		59,706			(524,950	)		(241,566	)

Net loss for the period		(5,132,376	)		(5,126,027	)		(13,251,673	)		(11,636,631	)

Other comprehensive loss
Exchange difference on translating foreign operations		(100,875	)		(44,537	)		(77,830	)		(403,019	)

Comprehensive loss for the period	$	(5,233,251	)	$	(5,170,564	)	$	(13,329,503	)	$	(12,039,650	)

Basic and diluted net loss per share	$	(0.04	)	$	(0.04	)	$	(0.10	)	$	(0.09	)

Weighted average number of shares outstanding		127,003,470			125,178,230			126,992,131			124,579,785

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,


	2021			2020

Operating activities
Net loss for the period	$	(13,251,673	)	$	(11,636,631	)
Add items not affecting cash:
Depreciation		35,094			32,959
Stock-based compensation (note 6)		2,265,307			1,769,660
Interest expense (note 5)		504,122			6,716
Foreign exchange loss		23,563			296,996
Changes in non-cash items:
Accounts receivable		(103,841	)		114,422
Prepaid expenses		406,586			276,834
Accounts payable and accrued liabilities		(948,542	)		(131,517	)

Cash used in operating activities		(11,069,384	)		(9,270,561	)

Financing activities
Cash received from issuance of shares		-			1,910,950
Share issuance costs		(6,789	)		-
Lease liabilities payments		(38,990	)		(32,803	)
Note payable (note 5)		12,493,000			-

Cash provided by financing activities		12,447,221			1,878,147

Investing activities
Expenditures on property and equipment		(99,176	)		-
Capitalized acquisition costs		(80,589	)		(103,819	)

Cash used in investing activities		(179,765	)		(103,819	)

Effect of foreign exchange on cash		227,744			(367,640	)

Increase (decrease) in cash and cash equivalents		1,425,816			(7,863,873	)

Cash and cash equivalents, beginning of the period		5,121,495			14,913,158

Cash and cash equivalents, end of the period	$	6,547,311		$	7,049,285

Supplemental cash flow information (note 10)

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 (DEFICIT)

(Unaudited)

(Expressed in Canadian dollars)

SIX MONTHS ENDED NOVEMBER 30, 2021


	Number of shares		Amount			Contributed Surplus			Accumulated Other Comprehensive Income – Cumulative Translation Differences			Deficit			Total

Balance, May 31, 2020		123,987,845	$	120,960,869		$	14,857,390		$	1,578,326		$	(117,334,583	)	$	20,062,002

Net loss for the period		-		-			-			-			(11,636,631	)		(11,636,631	)
Shares issued for cash
Exercise of stock options		2,520,000		1,910,950			-			-			-			1,910,950
Share issued for capitalized acquisition costs		25,000		75,750			-			-			-			75,750
Other comprehensive income
Exchange difference on translating foreign operations		-		-			-			(403,019	)		-			(403,019	)
Reclassification of contributed surplus on exercise of stock options		-		1,062,918			(1,062,918	)		-			-			-
Stock-based compensation		-		-			1,769,660			-			-			1,769,660

Balance, November 30, 2020		126,532,845	$	124,010,487		$	15,564,132		$	1,175,307		$	(128,971,214	)	$	11,778,712

Net loss for the period		-		-			-			-			(11,483,846	)		(11,483,846	)
Shares issued
At-the-market offering		119,125		340,762			-			-			-			340,762
Exercise of stock options		326,500		445,890			-			-			-			445,890
Other comprehensive income
Exchange difference on translating foreign operations		-		-			-			(349,291	)		-			(349,291	)
Share issuance costs		-		(194,869	)		-			-			-			(194,869	)
Reclassification of contributed surplus on exercise of stock options		-		317,288			(317,288	)		-			-			-
Contributed surplus on note payable (note 5)		-		-			314,016			-			-			314,016
Stock-based compensation		-		-			2,209,020			-			-			2,209,020

Balance, May 31, 2021		126,978,470	$	124,919,558		$	17,769,880		$	826,016		$	(140,455,060	)	$	3,060,394

Net loss for the period		-		-			-			-			(13,251,673	)		(13,251,673	)
Other comprehensive income
Exchange difference on translating foreign operations		-		-			-			(77,830	)		-			(77,830	)
Share issued for capitalized acquisition costs (notes 4(a)(ii)(1) and 6)		25,000		99,400			-			-			-			99,400
Share issuance costs		-		(6,789	)		-			-			-			(6,789	)
Contributed surplus on note payable (note 5)		-		-			659,184			-			-			659,184
Stock-based compensation		-		-			2,265,307			-			-			2,265,307

Balance, November 30, 2021		127,003,470	$	125,012,169		$	20,694,371		$	748,186		$	(153,706,733	)	$	(7,252,007	)

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

CORVUS GOLD INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	THE TRANSACTION

On September 13, 2021, the Company announced that the Company and AngloGold Ashanti Limited (“AngloGold Ashanti”) have entered into a definitive arrangement agreement pursuant to which AngloGold Ashanti has agreed to acquire the remaining 80.5% of common shares of the Company (“Common Shares”) not already owned by AngloGold Ashanti at a price of C$4.10 per Common Share (the “Consideration”) in cash (the “Transaction”). The Transaction was subject to the approval of: (a) 66 2/3% of the votes cast by (i) the holders of Common Shares (the “Shareholders”), including votes attached to Common Shares held by AngloGold Ashanti, present in person or represented by proxy at the special meeting relating to the Transaction; and (ii) the Shareholders and the holders of options, voting together as a single class, present in person or represented by proxy at the special meeting relating to the Transaction; and (b) a simple majority of the votes cast by the Shareholders present in person or represented by proxy at the special meeting relating to the Transaction, excluding votes attached to Common Shares held by AngloGold Ashanti and its affiliates and any other person as required to be excluded under section 8.1(2) of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. In addition to securityholder approval, the Transaction was subject to the receipt of court approval and other customary closing conditions for transactions of this nature.

For the period ended November 30, 2021, the Company has incurred $1,852,414 (2020 - $nil) in transaction costs consisting of consulting fees, investor relations expenses, office and miscellaneous, professional fees, regulatory fees and travel expenses related to the Transaction.

A special meeting of Shareholders and optionholders of the Company was held on January 6, 2022 where the requisite approvals of the Shareholders and optionholders noted above were received. On January 11, 2022 the Company obtained the final court order from the Supreme Court of British Columbia with respect to the Transaction. The completion of the Transaction is anticipated to occur on or about January 18, 2022.

2.	NATURE AND CONTINUANCE OF OPERATIONS

On August 25, 2010, International Tower Hill Mines Ltd. (“ITH”) completed a Plan of Arrangement (the “Arrangement”) whereby its existing Alaska mineral properties (other than the Livengood project) and related assets and the North Bullfrog mineral property and related assets in Nevada (collectively, the “Nevada and Other Alaska Business”) were indirectly spun out into a new public company, being Corvus Gold Inc. (“Corvus” or the “Company”). As part of the Arrangement, ITH transferred its wholly-owned subsidiary Corvus Gold Nevada Inc. (“Corvus Nevada”) (which held the North Bullfrog property), to Corvus and a wholly-owned Alaskan subsidiary of ITH, Talon Gold Alaska, Inc. sold to Raven Gold Alaska Inc. (“Raven Gold”), the Terra, Chisna, LMS and West Pogo properties. As a consequence of the completion of the Arrangement, the Terra, Chisna, LMS, West Pogo and North Bullfrog properties were transferred to Corvus.

The Company was incorporated on April 13, 2010 under the Business Corporations Act (British Columbia). These condensed interim consolidated financial statements reflect the cumulative operating results of the predecessor, as related to the mineral properties that were transferred to the Company from June 1, 2006.

The Company is engaged in the business of acquiring, exploring and evaluating mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. At November 30, 2021, the Company had interests in properties in Nevada, U.S.A.

The business of mining and exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to meet its administrative overhead and maintain its mineral property interests. The recoverability of amounts shown for mineral properties is dependent on several factors. These include the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these properties, and future profitable production or proceeds from disposition of mineral properties. The carrying value of the Company’s mineral properties does not reflect current or future values.

These 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 in the following paragraphs.

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. As at November 30, 2021, the Company had working capital deficit of $12,901,122 compared to working capital deficit of $2,011,551 as at May 31, 2021. The Company entered into a loan agreement with AngloGold Ashanti North America Inc. (“AngloGold North America”) to fund up to USD 20,000,000 towards the ongoing permitting and pre-development work at the Company’s properties (note 5). As at November 30, 2021, the Company has drawn $18,541,000 (USD 15,000,000) from the loan agreement. On September 13, 2021, the Company announced that the Company and AngloGold Ashanti have entered into the Transaction (note 1). Based on its current plans, budgeted expenditures, and cash requirements, the Company does not have sufficient cash to finance its current plans for at least 12 months from the date the condensed interim consolidated financial statements are issued.

The Company expects that it will need to raise substantial additional capital to accomplish its business plan over the next several years. There is no assurance that additional capital or other types of financing will be available if needed or that these financings will be on terms at least as favourable to the Company as those previously obtained, or at all. As well, there can be no assurance that the Company will not be impacted by adverse consequences that impact the global financial markets as a whole, including any adverse consequences that may be brought about by pandemics, or increased severity of existing pandemics, which may reduce resources, share prices and financial liquidity and which may severely limit the financing capital available in the mineral exploration sector. 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 development activities on its currently anticipated scheduling.

These condensed interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue in business.

All currency amounts are stated in Canadian dollars unless noted otherwise.

3.	SIGNIFICANT ACCOUNTING POLICIES

These condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended May 31, 2021 as filed in our Annual Report on Form 10-K. In the opinion of the Company’s management these condensed interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position at November 30, 2021 and the results of its operations for the six months then ended. Operating results for the six months ended November 30, 2021 are not necessarily indicative of the results that may be expected for the year ending May 31, 2022. The 2021 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

The preparation of these condensed interim consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these condensed interim consolidated financial statements, and the reported amounts of revenues and expenses during the period. These judgments, estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

Basis of consolidation

These condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries (collectively, the “Group”), Corvus Gold (USA) Inc. (“Corvus USA”) (a Nevada corporation), Corvus Nevada (a Nevada corporation), Raven Gold (an Alaska corporation), SoN Land and Water LLC (“SoN”) (a Nevada limited liability company) and Mother Lode Mining Company LLC (a Nevada limited liability company). All intercompany transactions and balances were eliminated upon consolidation.

Earnings (loss) per share

Basic loss per share is calculated using the weighted average number of Common Shares outstanding during the period. The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings (loss) per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to repurchase Common Shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive. For the period ended November 30, 2021, 12,005,000 outstanding stock options (2020 – 9,825,000) were not included in the calculation of diluted earnings (loss) per share as their inclusion was anti-dilutive.

4.	MINERAL PROPERTIES

The Company had the following activity related to capitalized acquisition costs:

North Bullfrog

Mother Lode

Total

(note 4(a))

(note 4(b))

Balance, May 31, 2021

4,503,297

765,486

5,268,783

Acquisition costs

Cash payments (note 4(a)(ii)(1))

80,589

80,589

Shares issued (notes 4(a)(ii)(1) and 6)

99,400

99,400

Currency translation adjustments

270,971

45,655

316,626

Balance, November 30, 2021

4,954,257

811,141

5,765,398

The following table presents costs incurred for exploration and evaluation activities for the six months ended November 30, 2021:


	North Bullfrog		Mother Lode			Total
	(note 4(a))		(note 4(b))

Exploration costs:
Assay	$	69,334	$	234,164		$	303,498
Drilling		1,504,517		611,078			2,115,595
Equipment rental		43,811		58,073			101,884
Field costs		102,295		19,595			121,890
Geological/ Geophysical		463,369		376,788			840,157
Land maintenance & tenure		285,344		116,759			402,103
Permits		913,591		18,609			932,200
Studies		721,278		397,257			1,118,535
Travel		40,329		25,378			65,707

		4,143,868		1,857,701			6,001,569
Cost recovery		-		(220,082	)		(220,082	)

Total expenditures for the period	$	4,143,868	$	1,637,619		$	5,781,487

The following table presents costs incurred for exploration and evaluation activities for the six months ended November 30, 2020:


	North Bullfrog		Mother Lode		Total
	(note 4(a))		(note 4(b))

Exploration costs:
Assay	$	148,430	$	487,267	$	635,697
Drilling		236,471		3,360,791		3,597,262
Equipment rental		17,398		111,913		129,311
Field costs		16,813		478,557		495,370
Geological/ Geophysical		288,565		685,619		974,184
Land maintenance & tenure		303,861		133,519		437,380
Permits		18,094

SEC Form 10-Q filed by Corvus Gold Inc.