|
New Jersey Mining
Company
Consolidated Statements of Cash Flows (Unaudited)
For
the Nine Month Periods Ended September 30, 2020 and 2019
|
|
|
September 30,
|
|
|
|
2020
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net
income (loss)
|
$
|
(382,028)
|
$
|
(357,240)
|
|
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
425,641
|
|
429,626
|
|
Loss on write off of equipment
|
|
9,537
|
|
-
|
|
Adjustment of inventory to net realizable value
|
|
32,098
|
|
-
|
|
Accretion of asset retirement obligation
|
|
7,170
|
|
6,757
|
|
Stock based compensation
|
|
-
|
|
190,019
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
Gold sales receivable
|
|
13,762
|
|
(107,931)
|
|
Inventories
|
|
(27,019)
|
|
15,060
|
|
Joint venture receivable
|
|
(420)
|
|
(4,351)
|
|
Other current assets
|
|
19,401
|
|
(46,091)
|
|
Accounts payable and other accrued liabilities
|
|
(7,738)
|
|
(6,154)
|
|
Accrued payroll and related payroll expenses
|
|
31,333
|
|
19,372
|
|
Interest payable to related parties
|
|
-
|
|
1,688
|
|
Net
cash provided (used) by operating activities
|
|
121,737
|
|
140,755
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Payment received on note receivable
|
|
-
|
|
150,000
|
|
Proceeds from sale of mineral property
|
|
|
|
50,000
|
|
Purchases of property, plant and equipment
|
|
(286,889)
|
|
(71,655)
|
|
Purchase of mineral property
|
|
(798,088)
|
|
-
|
|
Additions to mineral property
|
|
(64,692)
|
|
-
|
|
Net
cash provided (used) by investing activities
|
|
(1,149,669)
|
|
128,345
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Exercise of stock purchase warrants
|
|
208,334
|
|
-
|
|
Proceeds from sale of common stock and warrants net of issuance
cost
|
|
2,906,896
|
|
-
|
|
Principal payments on notes payable
|
|
(360,640)
|
|
(226,232)
|
|
Principal payments on notes payable, related parties
|
|
(53,434)
|
|
(39,180)
|
|
Issuance of convertible debt
|
|
1,085,000
|
|
-
|
|
Proceeds from Small Business Administration loan
|
|
149,900
|
|
-
|
|
Contributions from non-controlling interest
|
|
24,892
|
|
28,212
|
|
Net
cash provided (used) by financing activities
|
|
3,960,948
|
|
(237,200)
|
|
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
|
2,933,016
|
|
31,900
|
|
Cash and cash
equivalents, beginning of period
|
|
217,796
|
|
248,766
|
|
Cash and cash
equivalents, end of period
|
$
|
3,150,812
|
$
|
280,666
|
|
|
|
|
|
|
|
Non-cash investing and
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Deposit on property applied to purchase of mineral property
|
$
|
25,000
|
$
|
-
|
|
Note
payable for equipment purchase
|
|
217,000
|
|
858,223
|
|
Conversion of convertible debt to common stock
|
|
50,000
|
|
-
|
|
Note
from related party for equipment purchase
|
|
-
|
|
50,000
|
The accompanying notes are an
integral part of these consolidated financial
statements.
6
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
1.
The Company and Significant Accounting Policies
These
unaudited interim consolidated financial statements have been
prepared by the management of New Jersey Mining Company (the
“Company”) in accordance with accounting principles generally
accepted in the United States of America for interim financial
information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements. 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 consolidated financial statements have
been included.
The
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities known to exist as of the date the
financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties
with respect to such estimates and assumptions are inherent in the
preparation of the Company's financial statements; accordingly, it
is possible that the actual results could differ from these
estimates and assumptions, which could have a material effect on
the reported amounts of the Company's financial position and
results of operations. Operating results for the three and nine
month periods ended September 30, 2020 are not necessarily
indicative of the results that may be expected for the full year
ending December 31, 2020.
For
further information refer to the financial statements and footnotes
thereto in the Company’s audited consolidated financial statements
for the year ended December 31, 2019 as filed with the Securities
and Exchange Commission.
Principles of
Consolidation
The
consolidated financial statements include the accounts of the
Company and its majority-owned subsidiary, the New Jersey Mill
Joint Venture (“NJMJV”). Intercompany accounts and transactions are
eliminated. The portion of entities owned by other investors is
presented as non-controlling interests on the consolidated balance
sheets and statements of operations.
Revenue
Recognition
Gold Revenue Recognition and Receivables-Sales of gold sold
directly to customers are recorded as revenues and receivables upon
completion of the performance obligations and transfer of control
of the product to the customer. For concentrate sales, the
performance obligation is met, the transaction price can be
reasonably estimated, and revenue is recognized generally at the
time of shipment at estimated forward prices for the anticipated
month of settlement. Due to the time elapsed from shipment to the
customer and the final settlement with the customer, prices at
which sales of our concentrates will be settled are estimated.
Previously recorded sales and accounts receivable are adjusted to
estimated settlement metals prices until final settlement by the
customer. For sales of dore’ and metals from doré, the performance
obligation is met, the transaction price is known, and revenue is
recognized at the time of transfer of control of the agreed-upon
metal quantities to the customer by the refiner.
Sales and accounts receivable for concentrate shipments are
recorded net of charges by the customer for treatment, refining,
smelting losses, and other charges negotiated with the customers.
Charges are estimated upon shipment of concentrates based on
contractual terms, and actual charges typically do not vary
materially from estimates. Costs charged by customers include fixed
costs per ton of concentrate and price escalators. Refining,
selling and shipping costs related to sales of doré and metals from
doré are recorded to cost of sales as incurred. See Note 4 for more
information on our sales of products.
Other Revenue
Recognition-Revenue from harvest of raw timber is recognized
when the performance obligation under a contract and transfer of
control of the timber have both been completed. Sales of timber
found on the Company’s mineral properties are not a part of normal
operations.
Inventories
Inventories are stated at the lower of full cost of production or
estimated net realizable value based on current metal prices. Costs
consist of mining, transportation, and milling costs including
applicable overhead, depreciation, depletion and amortization
relating to the operations. Costs are allocated based on the stage
at which the ore is in the production process. Supplies inventory
is stated at the lower of cost or estimated net realizable
value.
7
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
1.
The Company and Significant Accounting Policies,
Continued
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 that
are included in earnings are attributable to the change in
unrealized gains or losses relating to those assets and liabilities
still held at the reporting date.
At
September 30, 2020 and December 31, 2019, the Company determined
they had no assets or liabilities that required measurement at fair
value on a recurring basis.
Reclassifications
Certain prior period amounts have been reclassified to conform to
the 2020 financial statement presentation. Reclassifications had no
effect on net income (loss), stockholders’ equity, or cash flows as
previously reported.
New Accounting
Pronouncement
Accounting Standards Updates Adopted
In August 2018, the Financial Accounting Standards Board (“FASB”)
issued Auditing Standards Update (“ASU”) No. 2018-13 Fair Value
Measurement (Topic 820): Disclosure Framework-Changes to the
Disclosure Requirements for Fair Value Measurement. The update
removes, modifies and makes additions to the disclosure
requirements on fair value measurements. The update was adopted as
of January 1, 2020, and its adoption did not have a material impact
on the Company’s consolidated financial statements.
Accounting Standards Updates to Become Effective in Future
Periods
In December 2019, the FASB issued ASU No. 2019-12 Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes. The
update contains a number of provisions intended to simplify the
accounting for income taxes. The update is effective for fiscal
years beginning after December 15, 2020, with early adoption
permitted. Management is evaluating the impact of this update on
the Company’s consolidated financial statements.
In August 2020, the FASB issued ASU No. 2020-06 Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity. The update is to address issues identified as a result
of the complexity associated with applying generally accepted
accounting principles for certain financial instruments with
characteristics of liabilities and equity. The update is effective
for fiscal years beginning after December 15, 2021, including
interim periods within those fiscal years and with early adoption
permitted. Management is evaluating the impact of this update on
the Company’s consolidated financial statements.
2.Going
Concern
The Company is currently producing from both the open-pit and
underground at the Golden Chest Mine. In the past, the Company has
been successful in raising required capital from sale of common
stock, forward gold contracts, and debt. As a result of its planned
production, equity sales and potential debt borrowings or
restructurings, management believes cash flows from operations and
existing cash are sufficient to conduct planned operations and meet
contractual obligations for the next 12 months.
3.
Inventories
At
September 30, 2020 and December 31, 2019, the Company’s inventories
consisted of the following:
|
|
|
September 30,
2020
|
|
December 31, 2019
|
|
|
|
|
|
|
|
Gold concentrate
|
$
|
164,455
|
$
|
197,862
|
|
Materials and
supplies
|
|
55,612
|
|
27,284
|
|
Total
|
$
|
220,067
|
$
|
225,146
|
The carrying value of inventory is determined each period based on
the lower of cost or net realizable value. At September 30, 2020
gold concentrate is carried at net realizable value. At December
31, 2019, gold concentrate inventory is carried at allocated
production costs.
8
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
4.
Sales of Products
Our products consist of both gold flotation concentrates which we
sell to a single broker (H&H Metal), and an unrefined
gold-silver product known as doré which we sell to a precious metal
refinery. Revenue is recognized upon the completion of the
performance obligations and transfer of control of the product to
the customer, and the transaction price can be determined or
reasonably estimated.
For
gold flotation concentrate sales, the performance obligation is met
when the transaction price can be reasonably estimated and revenue
is recognized generally at the time when risk is transferred to
H&H Metal based on contractual terms. Based on contractual
terms, we have determined the performance obligation is met and
title is transferred to H&H Metal when the Company receives its
first provisional payment on the concentrate because, at that time,
1) legal title is transferred to the customer, 2) the customer has
accepted the concentrate lot and obtained the ability to realize
all of the benefits from the product, 3) the concentrate content
specifications are known, have been communicated to H&H Metal,
and H&H Metal has the significant risks and rewards of
ownership to it, 4) it is very unlikely a concentrate will be
rejected by H&H Metal upon physical receipt, and 5) we have the
right to payment for the concentrate. Concentrates lots that have
been sold are held at our mill from 30 to 60 days, until H&H
Metal provides shipping instructions.
Our concentrate sales sometimes involve variable consideration, as
they can be subject to changes in metals prices between the time of
shipment and their final settlement. However, we are able to
reasonably estimate the transaction price for the concentrate sales
at the time of shipment using forward prices for the estimated
month of settlement, and previously recorded sales and accounts
receivable are adjusted to estimated settlement metals prices until
final settlement for financial reporting purposes. The embedded
derivative contained in our concentrate sales is adjusted to fair
value through earnings each period prior to final settlement. Also,
it is unlikely a significant reversal of revenue for any one
concentrate lot will occur. As such, we use the expected value
method to price the concentrate until the final settlement date
occurs, at which time the final transaction price is known. At
September 30, 2020, metals that had been sold but not final settled
thus exposed to future price changes totaled 1,415 ounces of gold.
The Company has received provisional payments on the sale of these
ounces with the remaining amount due reflected in gold sales
receivable.
Sales and accounts receivable for concentrate shipments are
recorded net of charges for treatment and other charges negotiated
by us with H&H Metal, which represent components of the
transaction price. Charges are estimated by us upon transfer of
risk of the concentrates based on contractual terms, and actual
charges typically do not vary materially from our estimates. Costs
charged by the customer include fixed treatment, refining and costs
per ton of concentrate and may include penalty charges for arsenic,
lead and zinc content above a negotiated baseline as well as
excessive moisture.
For sales of metals from doré and of metals from doré, the
performance obligation is met, the transaction price is known, and
revenue is recognized at the time of transfer of control of the
agreed-upon metal quantities to the customer.
Sales of products by
metal for the three and nine month periods ended September 30, 2020
and 2019 were as follows:
|
|
September 30, 2020
|
September 30, 2019
|
|
|
Three
Months
|
Nine
Months
|
Three
Months
|
Nine
Months
|
|
Gold
|
$
|
1,654,334
|
$
|
4,629,816
|
$
|
1,979,595
|
$
|
4,870,402
|
|
Silver
|
|
2,593
|
|
6,881
|
|
6,899
|
|
14,556
|
|
Less: Smelter and
refining charges
|
|
(100,857)
|
|
(355,296)
|
|
(133,858)
|
|
(339,994)
|
|
Total
|
$
|
1,556,070
|
$
|
4,281,401
|
|
1,852,636
|
$
|
4,544,964
|
Sales
by significant product type for the three and nine month periods
ended September 30, 2020 and 2019 were as follows:
|
|
September 30, 2020
|
September 30, 2019
|
|
|
Three
Months
|
Nine
Months
|
Three
Months
|
Nine
Months
|
|
Concentrate sales to
H&H Metal
|
$
|
1,476,395
|
$
|
4,144,583
|
$
|
1,788,031
|
$
|
4,390,686
|
|
Dore sales to
refinery
|
|
79,675
|
|
136,818
|
|
64,605
|
|
154,278
|
|
Total
|
$
|
1,556,070
|
$
|
4,281,401
|
$
|
1,852,636
|
$
|
4,544,964
|
At September 30, 2020 and December 31, 2019, our gold sales
receivable balance related to contracts with customers of $292,162
and $305,924, respectively, consist only of amounts due from
H&H Metal. There is no allowance for doubtful accounts.
We
have determined our contracts do not include a significant
financing component. For doré sales, payment is received at the
time the performance obligation is satisfied. Consideration for
concentrate sales is variable, and we receive payment for a
significant portion of the estimated value of concentrate parcels
at the time the performance obligation is satisfied.
9
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
5.Related
Party Transactions
At September 30, 2020
and December 31, 2019, the Company had the following notes and
interest payable to related parties:
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
Ophir Holdings LLC, a
company owned by two officers and one former officer of the
Company, 6% interest, monthly payments of $3,777 with a balloon
payment of $110,835 in February 2022
|
$
|
163,240
|
$
|
189,236
|
|
H&H Metals,
shareholder and concentrate broker, 8% interest, balance due April
2021
|
|
-
|
|
27,438
|
|
Total
|
|
163,240
|
|
216,674
|
|
Current portion
|
|
(36,528)
|
|
(34,924)
|
|
Long term portion
|
$
|
126,712
|
$
|
181,750
|
As of September 30,
2020 and December 31, 2019, there was no accrued interest payable
to related parties. Related party interest expense for the three
and nine months ended September 30, 2020 and 2019 is as
follows.
|
2020
|
2019
|
|
Three
Months
|
Nine
Months
|
Three
Months
|
Nine
Months
|
|
$
|
2,537
|
$
|
8,588
|
$
|
4,068
|
$
|
11,497
|
During
2019, the Company made three $3,000 payments for a total of $9,000
to the Company’s chairman of the board, Del Steiner for consulting
purposes. Mr. Steiner retired in July 2019.
All
sales of concentrate and the Company’s gold sales receivable are
with H&H Metals, owner of 4.5% of the Company’s outstanding
common stock. See Note 4.
In
February 2020, the Company’s corporate secretary, Monique Hayes,
participated in the Company’s convertible debt offering for
$25,000. During the three and nine month periods ended September
30, 2020, interest expense on her note was $504 and $1,238,
respectively. See Note 16.
The
Company leases office space from certain related parties on a month
to month basis. Payments under these short-term lease arrangements
are included in general and administrative expenses on the
Consolidated Statement of Operations and are as follows:
|
2020
|
2019
|
|
Three Months
|
Nine Months
|
Three Months
|
Nine Months
|
|
$
|
6,210
|
$
|
18,630
|
$
|
6,151
|
$
|
18,395
|
6.
Joint Ventures
New Jersey Mill
Joint Venture Agreement
The
Company owns 65% of the New Jersey Mill Joint Venture and has
significant influence in its operations. Thus the venture is
included in the consolidated financial statements along with
presentation of the non-controlling interest. At September 30, 2020
and December 31, 2019, an account receivable existed with Crescent
Silver, LLC, the other joint venture participant (“Crescent”), for
$2,830 and $2,410, respectively, for shared operating costs as
defined in the JV agreement.
Butte Highlands
JV, LLC (“BHJV”)
On January 29, 2016, the Company purchased a 50% interest in Butte
Highlands JV, LLC (“BHJV”) from Timberline Resources Corporation
for $225,000 in cash and 3,000,000 restricted shares of the
Company’s common stock valued at $210,000 for a total consideration
of $435,000. Highland Mining, LLC (“Highland”) is the other 50%
owner and manager of the joint venture. Under the agreement,
Highland will fund all future project exploration and mine
development costs. The agreement stipulates that Highland is
manager of BHJV and will manage BHJV until such time as all mine
development costs, less $2 million are distributed to Highland out
of the proceeds from future mine production. The Company has
determined that because it does not currently have significant
influence over the joint venture’s activities, it accounts for its
investment on a cost basis. The Company purchased the interest in
the BHJV to provide additional opportunities for exploration and
development and expand the Company’s mineral property portfolio.
10
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
7.Earnings
per Share
Net income (loss) per share is computed by dividing the net amount
excluding net income (loss) attributable to a non-controlling
interest by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share
reflects the potential dilution that could occur from common shares
issuable through stock options, warrants, and other convertible
securities. Such common stock equivalents are included or excluded
from the calculation of diluted net income (loss) per share for
each period as follows:
|
|
September 30, 2020
|
September 30, 2019
|
|
|
Three
Months
|
Nine
Months
|
Three
Months
|
Nine
Months
|
|
Incremental shares
included in diluted net income (loss) per share
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
2,669,034
|
|
-
|
|
974,484
|
|
-
|
|
Stock purchase warrants
|
|
1,029,486
|
|
-
|
|
-
|
|
-
|
|
|
|
3,698,520
|
|
-
|
|
974,484
|
|
-
|
|
Excluded in diluted
net income (loss) per share as inclusion would have an antidilutive
effect:
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
5,138,889
|
|
5,138,889
|
|
-
|
|
-
|
|
Stock options
|
|
-
|
|
4,612,500
|
|
262,500
|
|
8,404,500
|
|
Stock purchase warrants
|
|
4,859,286
|
|
6,641,694
|
|
12,900,123
|
|
12,900,123
|
|
|
|
9,998,175
|
|
16,393,083
|
|
13,162,623
|
|
21,304,623
|
8.
Property, Plant, and Equipment
Property, plant and equipment at September 30, 2020 and December
31, 2019 consisted of the following:
|
|
|
September
30,
2020
|
|
December
31, 2019
|
|
Mill
|
|
|
|
|
|
Land
|
$
|
225,289
|
$
|
225,289
|
|
Building
|
|
536,193
|
|
536,193
|
|
Equipment
|
|
4,192,940
|
|
4,192,940
|
|
|
|
4,954,422
|
|
4,954,422
|
|
Less accumulated depreciation
|
|
(880,175)
|
|
(759,617)
|
|
Total mill
|
|
4,074,247
|
|
4,194,805
|
|
|
|
|
|
|
|
Building and equipment
|
|
|
|
|
|
Buildings
|
|
153,265
|
|
143,725
|
|
Equipment
|
|
3,113,073
|
|
2,628,261
|
|
|
|
3,266,338
|
|
2,771,986
|
|
Less accumulated depreciation
|
|
(1,115,637)
|
|
(818,527)
|
|
Total building and equipment
|
|
2,150,701
|
|
1,953,459
|
|
|
|
|
|
|
|
Land
|
|
|
|
|
|
Bear Creek
|
|
266,934
|
|
266,934
|
|
BOW
|
|
230,449
|
|
230,449
|
|
Eastern Star
|
|
250,817
|
|
250,817
|
|
Gillig
|
|
79,137
|
|
79,137
|
|
Highwater
|
|
40,133
|
|
40,133
|
|
Total land
|
|
867,470
|
|
867,470
|
|
Total
|
$
|
7,092,418
|
$
|
7,015,734
|
11
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
9.Mineral
Properties
Mineral properties at
September 30, 2020 and December 31, 2019 consisted of the
following:
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
Golden Chest
|
|
|
|
|
|
Mineral Property
|
$
|
1,539,002
|
$
|
1,524,002
|
|
Infrastructure
|
|
253,649
|
|
153,970
|
|
Total Golden Chest
|
|
1,792,651
|
|
1,677,972
|
|
New Jersey
|
|
248,289
|
|
248,289
|
|
McKinley
|
|
200,000
|
|
200,000
|
|
Butte Potosi
|
|
274,440
|
|
274,440
|
|
Alder Gulch
|
|
773,101
|
|
-
|
|
Less accumulated amortization
|
|
(45,658)
|
|
(37,683)
|
|
Total
|
$
|
3,242,823
|
$
|
2,363,018
|
The
Company received a non-refundable down payment of $50,000 toward
the sale of the McKinley property in the third quarter of 2019
which was deducted from the carrying value of the mineral property.
As of September 30, 2020, negotiations with the interested parties
involving this sale continue.
In
December of 2019, the Company abandoned its Crown Point property
and recognized a loss of $333,333.
In February 2020, the Company purchased property located in Alder
Gulch in Shoshone County, Idaho which consists of 368 acres of real property, including
patented mining claims with both surface and mineral
rights.
10.
Notes Payable
At
September 30, 2020 and December 31, 2019, notes payable are as
follows:
|
|
|
September 30, 2020
|
|
December 31, 2019
|
|
Paus 2 yrd. LHD, 48 month note payable, 3.45% interest rate payable
through September 2024, monthly payments of $5,181
|
$
|
230,197
|
$
|
267,820
|
|
Paus 2 yrd. LHD, 60 month note payable, 4.78% interest rate payable
through July 2024, monthly payments of $4,847
|
|
208,544
|
|
-
|
|
Compressor, 48 month note payable, 5.25% interest rate payable
monthly through November 2021, monthly payments of $813
|
|
12,268
|
|
19,018
|
|
Caterpillar excavator and skid steer, 48 month note payable, 6.8%
interest rate payable monthly through June 2022, monthly payments
of $2,392
|
|
-
|
|
65,835
|
|
Atlas Copco loader, 60 month note payable, 10.5% interest rate
payable monthly through June 2023, monthly payments of $3,550
|
|
101,316
|
|
124,238
|
|
2018 pick-up, 72 month note payable, 9.0% interest rate payable
monthly through June 2024, monthly payments of $701
|
|
-
|
|
30,863
|
|
Property with shop, 48 month note payable, 6.49% interest rate
payable monthly through August 2023, monthly payments of $707
|
|
-
|
|
27,624
|
|
2008 pick-up, 60 month note payable, 9.0% interest rate payable
monthly through June 2023, monthly payments of $562
|
|
-
|
|
20,088
|
|
Caterpillar 938 loader, 60 month note payable, 6.8% interest rate
payable monthly through August 2023, monthly payments of $3,751
|
|
118,778
|
|
145,709
|
|
MultiQuip DCA70 Generator, 48 month note payable, 7.25% interest
rate payable through August 2022, monthly payments of $635
|
|
-
|
|
18,433
|
|
CaterpillarAD22 underground truck, 48 month note payable, 6.45%
interest rate payable through June 2023, monthly payments of
$12,979
|
|
390,781
|
|
485,896
|
|
Total notes payable
|
|
1,061,884
|
|
1,205,524
|
|
Due within one year
|
|
319,294
|
|
303,987
|
|
Due after one year
|
$
|
742,590
|
$
|
901,537
|
12
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
10.
Notes Payable, continued
All notes are
collateralized by the property or equipment purchased in connection
with each note. Future principal payments of notes payable at
September 30, 2020 are as follows:
|
12
months ended September 30,
|
|
|
|
2021
|
$
|
319,294
|
|
2022
|
|
332,496
|
|
2023
|
|
296,891
|
|
2024
|
|
108,063
|
|
2025
|
|
5,140
|
|
Total
|
$
|
1,061,884
|
11.
Small Business Administration Loans and Grant
On April 10, 2020, the Company received a loan of $358,346 pursuant
to the Paycheck Protection Program (the “PPP”) under Division A,
Title I of the CARES Act, which was enacted March 27, 2020. The
loan, which was in the form of a Note dated April 10, 2020 matures
on April 9, 2022 and bears interest at a rate of 1% per annum,
payable monthly commencing on October 9, 2020. The Note may be
prepaid by the Company at any time prior to maturity with no
prepayment penalties. This loan was forgiven after being used for
qualifying expenses under the provisions of the CARES Act prior to
the filing of this quarterly financial statement. Qualifying
expenses included payroll costs, costs used to continue group
health care benefits, rent, and utilities. The amount of the loan
that was recognized as grant income in the Company’s consolidated
income statement included the original $358,346 in principal and
$1,708 in accrued interest.
On May 19, 2020 the Company received a loan of $149,900 pursuant to
the Small Business Act Section 7(b). The loan which was in the form
of a Note dated May 16, 2020 matures May 16, 2050 and bears
interest at a rate of 3.75% per annum. Payments of $731 are due
monthly and will begin twelve months from the date of the Note. At
September 30, 2020, total accrued interest on the remaining loan is
$2,078 which is included in the Small Business Administration loan
balance on the consolidated balance sheet.
During
the three months ended June 30, 2020, the Company received $10,000
under Division A, Title I, Section 1110 of the CARES Act. The
Company is not required to pay this amount back and thus recognized
$10,000 as government grant income during the period.
12.
Stockholders’ Equity
The Company closed a private placement in April 2020. Under the
private placement, the Company sold 1,481,481 units at $0.135 per
unit for net proceeds of $200,000. Each unit consisted of one share
of the Company’s stock and one half of one stock purchase warrant
with each whole warrant exercisable for one share of the Company’s
stock at $0.18 for 24 months.
The Company closed a private placement in August 2020. Under the
private placement, the Company sold 9,718,573 units at $0.28 per
unit for net proceeds of $2,706,896. Each unit consisted of one
share of the Company’s stock and one half of one stock purchase
warrant with each whole warrant exercisable for one share of the
Company’s stock at $0.40 for 24 months.
In July 2020, a holder of convertible debt converted $50,000 of
debt to 277,778 shares of common stock.
In the
third quarter of 2020 warrants were exercised whereby 1,041,667
shares of common stock were issued for net proceeds of $208,334. In
the second quarter of 2019, 1,200,000 warrants were exercised in
exchange for 398,575 shares of the Company’s common stock in a
cashless warrant exercise.
Stock Purchase
Warrants Outstanding
The
activity in stock purchase warrants is as follows:
|
|
|
Number
of
Warrants
|
|
Exercise Prices
|
|
Balance December 31,
2018
|
|
14,100,123
|
|
0.10-0.20
|
|
Exercised
|
|
(1,200,000)
|
|
0.10
|
|
Balance December 31,
2019
|
|
12,900,123
|
|
0.18-0.22
|
|
Issued
|
|
5,600,027
|
|
0.18-0.40
|
|
Expired
|
|
(10,816,789)
|
|
0.20-0.22
|
|
Excised
|
|
(1,041,667)
|
|
0.20
|
|
Balance September 30,
2020
|
|
6,641,694
|
|
$0.18-0.40
|
13
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
12.
Stockholders’ Equity, continued
These warrants expire
as follows:
|
Shares
|
Exercise Price
|
Expiration Date
|
|
666,667
|
$0.20
|
November 3, 2020
|
|
375,000
|
$0.18
|
December 14, 2023
|
|
740,741
|
$0.18
|
April
21, 2022
|
|
4,859,286
|
$0.40
|
August
28, 2022
|
|
6,641,694
|
-
|
-
|
13.
Stock Options
No
options were granted in the first nine months of 2020. In June
2019, the board granted 2,100,000 stock options to non-officer
employees. These options vested immediately and are exercisable at
$0.14 for 3 years. Total stock based compensation recognized on
these options was $190,019. The weighted average fair value of
stock option awards granted and the key assumptions used in the
Black-Scholes valuation model to calculate the fair value of the
options are as follows: volatility of 98.6%, risk-free interest
rate of 1.81%, and an expected term of three years.
Activity in the Company’s stock options is as follows:
|
|
Number
of Options
|
|
Exercise Prices
|
|
Balance December 31,
2018
|
7,054,500
|
$
|
0.10-0.18
|
|
Granted
|
2,100,000
|
|
0.14
|
|
Expired
|
(3,892,000)
|
|
0.10-0.15
|
|
Balance December 31,
2019
|
5,262,500
|
|
0.10-0.18
|
|
Expired
|
(650,000)
|
|
0.15
|
|
Balance September 30,
2020
|
4,612,500
|
|
0.10-0.18
|
|
Exercisable at
September 30, 2020
|
4,612,500
|
$
|
0.10-0.18
|
At
September 30, 2020, outstanding stock options have a weighted
average remaining term of approximately 1.06 years and an intrinsic
value of approximately $780,000.
14.
Asset Retirement Obligation
The
Company has established asset retirement obligations associated
with the ultimate closing of its mineral properties where there has
been or currently are operations. Activity for the nine months
ended September 30, 2020 and 2019 is as follows:
|
|
Nine Months
Ended
September
30,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Balance
at beginning of period
|
$
|
163,369
|
$
|
154,292
|
|
Accretion expense
|
|
7,170
|
|
6,757
|
|
Balance
at end of period
|
$
|
170,539
|
$
|
161,049
|
15.
Note Receivable
On June 6, 2018, the Company loaned $250,000 to West Materials,
Inc. and William J. West (collectively “West”) which bore interest
at 8% if the loan went into default and had a term of fifteen
months. Five equal payments were due quarterly with the first two
payments received in cash during 2018 and the remaining outstanding
$150,000 received in 2019. The note receivable was collateralized
by a mortgage on the Butte Gulch real property and a related net
smelter royalty rights.
14
New Jersey Mining
Company
Notes to
Consolidated Financial Statements (Unaudited)
16.
Convertible Debt
In
February 2020, the Company issued convertible promissory notes with
an aggregate principal value of $885,000 from which funds were
utilized for the purchase of the Alder Gulch property (Note 9). The
notes are collateralized by the Alder Gulch property as well as
other unencumbered real property that the Company currently owns.
The outstanding principal amount of the notes bears interest at an
annual rate of 8.0% with interest payments due monthly and the
principal due in February 2023. The principal amount of the notes
is convertible at the option of the note holders into shares of the
Company’s common stock at a price of $0.18 per share (4,916,667
shares) prior to the maturity date of the notes. In July 2020, one
of the participants converted $50,000 in debt for 277,778 shares of
the Company’s common stock.
The
Company’s corporate secretary, Monique Hayes, participated in the
Company’s convertible debt offering for $25,000. During the three
and nine month periods ended September 30, 2020, interest expense
on her note was $504 and $1,238, respectively.
In
July 2020, a current participant was issued a new promissory note
for a principal balance of $200,000 which funds were utilized for
the purchase of a new jumbo underground drill. The note is
collateralized by the drill. The outstanding principal amount of
the note bears interest at an annual rate of 6.0% with interest
payments due monthly and the unpaid principal due in June 2023. The
principal amount of the note is convertible at the option of the
note holder into shares of the Company’s common stock at a price of
$0.40 per share (500,000 shares) prior to the maturity date of the
note.
17.Subsequent
Events
In October 2020, holders exercised 666,667 warrants at $0.20 per
share of the Company’s common with net proceeds of $133,333.
in November 2020 the Company was notified that the PPP loan funded
on April 10, 2020 for $358,346 had been forgiven for qualifying
expenses under the provisions of the CARES Act. (Note 11)
15
ITEM 2: MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Plan of
Operation
New
Jersey Mining Company is a gold producer focused on diversifying
and building its asset base and cash flows through a portfolio of
mineral properties located in historic producing gold districts in
Idaho and Montana.
The Company’s plan of operation is to generate positive cash flow,
while reducing debt and growing its production and asset base over
time while being mindful of corporate overhead. The Companies
management is focused on utilizing its in-house skills to build a
portfolio of producing mines and milling operations with a primary
focus on gold and secondary focus on silver and base metals.
The Company’s properties include: the Golden Chest Mine (currently
in production), the New Jersey Mill (majority ownership interest),
and a 50% carried to production interest in the past producing
Butte Highlands Mine located in Montana. In addition to its
producing and near-term production projects, New Jersey Mining
Company has additional exploration prospects, including the
McKinley and Eastern Star located in Central Idaho, and additional
holdings near the Golden Chest in the Murray Gold Belt including
the 368 acres of patented claims in Alder Gulch purchased in the
first quarter of 2020. The Company also added the Roberts Rare
Earth project in Lemhi county Idaho in the third quarter of
2020.
COVID-19
Coronavirus Pandemic Response and Impact
Following the outbreak of the COVID-19 coronavirus global pandemic
("COVID-19") in early 2020, in March 2020 the U.S. Centers for
Disease Control issued guidelines to mitigate the spread and health
consequences of COVID-19. The Company implemented changes to its
operations and business practices to follow the guidelines and
minimize physical interaction, including using technology to allow
employees to work from home when possible and altering production
procedures and schedules, asset maintenance, and limiting
discretionary spending. As long as they are required, the
operational practices implemented could have an adverse impact on
our operating results due to deferred production and revenues or
additional costs. The negative impact of COVID-19 remains
uncertain, including on overall business and market conditions.
There is uncertainty related to the potential additional impacts
COVID-19 could have on our operations and financial results for the
year.
Highlights during the third quarter of 2020 include:
·The quarter was a largely a transitional
time for operations at the Golden Chest. Production from the lower
portion of the Idaho Pit had concluded in the 2nd
quarter and subsequent development and production began from a
nearby area. In addition to moving waste material prior to mining,
as anticipated, this portion of the pit was comprised of lower
grade material. Typically lower grade ore is combined with higher
grade underground ore, however the underground were focused on
backfill and new development - and instead of mostly mining ore, a
significant amount of time was spent by the underground crews
placing cemented rock fill (CRF) in mined out stopes to prepare for
mining the lower cuts on those stopes. To better illustrate,
a total of 2,920 cubic meters of CRF were placed which was
2.4 times more CRF than was placed in the prior quarter. And the
underground mining rate has increased considerably since that work
was completed.
·As
part of our pivot toward increased underground mining and
development, a second crew of underground miners were hired to
increase the production rate of the underground mine. Furthermore,
additional mining equipment such as a loader and jumbo drill were
acquired to facilitate the increased mining rate. A night shift was
added just after Labor Day and a significant increase in production
has been observed since that time. A total of 5,750 tonnes were
mined (mineralized material and waste) in the quarter doubling the
previous quarter as well as increasing the backfilling rate as
mentioned above. Deepening of the Main Access Ramp (MAR) also
started with the addition of the second mining crew. Focus on the
Main Access Ramp is critical to underground expansion and given the
ongoing potential impact of Covid and development costs we chose
this quarter as the time to increase backfill rates while also
conducting development on the surface and underground.
·During the quarter, the Company hired a
driller and drill helper as its designated in-house drill crew. One
of the Company drills is now focusing on the lower reaches of the
Katie Dora and Klondike shoots and will expand its focus toward
step-out exploration drilling in the coming
months.
·For the
quarter ending September 30, 2020 a total of 11,440 dry metric
tonnes (dmt) were processed at the Company’s New Jersey mill with a
flotation feed head grade of 2.18 grams gold per tonne (gpt) with
gold recovery of 84.3%. Interestingly, the ball mill feed grade for
the quarter was 3.05 gpt gold indicating there may a
16
significant quantity of gold trapped in the grinding circuit. It is
planned to clean out the ball mill in the fourth quarter to
determine how much gold is trapped in the mill. Gold sales for the
quarter were 836 ounces.
·Open
pit mining progressed from the 1056 bench to the 1044 bench as
production averaged 1,785 tonnes per day.
·As
part of its dual-pronged approach, the Company further expanded its
strategic Critical Minerals focus with the addition of the Roberts
Rare Earth Element (REE) Project, located near its Diamond Creek
Project in central Idaho. The Roberts REE Project is comprised of
12 unpatented mining claims covering an area of approximately 89
hectares (219acres). This Project is located within the Mineral
Hill Mining District, approximately 48 kilometers (30 miles)
northwest of the town of Salmon, Idaho. Recent sampling by Company
geologists returned grades in excess of 12% combined rare earths
elements. Similarly, as with NJMC’s Diamond Creek project, REE’s
are not the only valuable commodities found on the properties; gold
and niobium are also present according to historic information and
NJMC sampling, and both may prove to be desirable by-products if
these properties advance to production. Recently collected samples
from the Roberts property show assays with gold values up to 8.8
grams per tonne (0.25 ounce per ton) and niobium as high as
0.50%.
Results of
Operations
Our
financial performance during the quarter is summarized below:
·The
Company had a gross loss for the three and a gross profit for the
nine month periods ending September 30, 2020 of ($107,237) and
$24,033 respectively, compared to a gross profit of $447,185 and
$584,649 for the comparable periods in 2019. Gross profit decreased
as a result of expected lower gold grades and development of the
new open pit area and the transition of underground operations
focused on development and expansion.
·Cash
costs and all in sustaining costs per ounce increased for the
periods ending September 30, 2020 compared to 2019. Cash cost per
ounce increased to $1,856 and $1,373 in the three and nine month
periods ending September 30, 2020 compared to $927 and $984 in
2019. The all in sustaining costs increased to $2,368 and $1,629
for the periods ending September 30, 2020 compared to $1,071 and
$1,146 in 2019 per ounce for the same periods ending September 30,
2019. The increase in per ounce costs in 2020 was the result of
expected lower gold grades and development of the new open pit area
and the transition of underground operations focused on development
and expansion.
·Revenue
was $1,556,070 and $4,281,401 for the three and nine month periods
ending September 30, 2020 compared to $1,852,636 and $4,544,964 for
the comparable periods of 2019. The 2020 decrease was a result of
expected lower gold grades and development of the new open pit area
and the transition of underground operations focused on development
and expansion.
·An
operating loss of $342,132 and $686,418 for the three month and
nine periods ending September 30, 2020 compared to operating income
of $191,852 and loss of $340,741 in the comparable periods of
2019.
·Net
loss of $7,327 and $382,028 for the three and nine month periods
ending September 30, 2020, respectively, compared to net income of
$165,242 and net loss of $357,240 for the three and nine month
periods ending September 30, 2019 was the result of expected lower
gold grades and development of the new open pit area and the
transition of underground operations focused on development and
expansion.
·The
Company was able to secure Small Business Administration grant
income from the CARES Act in 2020 that was not available in 2019
resulting in grant income of $360,054 and $370,054 for the three
and nine months periods ending September 30, 2020, respectively,
compared to non in 2019.
·Timber
revenue increased in 2020 from sale of timber at the Company’s
Alder Gulch property.
·Interest
expense increased in 2020 compared to 2019 due to greater
outstanding debt in 2020 compared to the same period in 2019, in
particular new convertible debt and the new Caterpillar haul
truck.
·The
consolidated net loss for the nine months ended September 30, 2020
and 2019 included non-cash charges as follows: depreciation and
amortization of $425,641 ($429,626 in 2019), write off of equipment
of $9,537 (none in 2019), accretion of asset retirement obligation
of $7,170 ($6,757 in 2019), and stock based compensation of $0 in
2020 ($190,019 in 2019).
Cash Costs and All In Sustaining Costs Reconciliation to
GAAP-Reconciliation of cost of sales and other direct
production costs and depreciation, depletion and amortization
(GAAP) to cash cost per ounce and all-in sustaining costs (AISC)
per ounce (non-GAAP).
The table below presents reconciliations between the most
comparable GAAP measure of cost of sales and other direct
production costs and depreciation, depletion and amortization to
the non-GAAP measures of cash cost per ounce and all in
17
sustaining costs per ounce for the Company’s gold production in the
three month periods ending September 30, 2020 and 2019.
Cash cost per ounce is an important operating measure that we
utilize to measure operating performance. AISC per ounce is an
important measure that we utilize to assess net cash flow after
costs for pre-development, exploration, reclamation, and sustaining
capital. Current GAAP measures used in the mining industry, such as
cost of goods sold do not capture all of the expenditures incurred
to discover, develop, and sustain gold production.
|
|
2020
|
2019
|
|
|
Three
Months
|
Nine Months
|
Three Months
|
Nine Months
|
|
Cost of
sales and other direct production costs and depreciation and
amortization
|
$
|
1,663,306
|
$
|
4,257,368
|
$
|
1,405,451
|
$
|
3,960,315
|
|
Depreciation and amortization
|
|
(156,324)
|
|
(425,641)
|
|
(158,768)
|
|
(429,626)
|
|
Change
in concentrate inventory
|
|
64,526
|
|
33,407
|
|
49,781
|
|
(2,185)
|
|
Cash
Cost
|
$
|
1,571,508
|
$
|
3,865,134
|
$
|
1,296,464
|
$
|
3,528,504
|
|
Pre-development expense
|
|
-
|
|
-
|
|
51,873
|
|
117,440
|
|
Exploration
|
|
44,613
|
|
133,529
|
|
55,625
|
|
182,830
|
|
Sustaining capital
|
|
274,199
|
|
286,889
|
|
19,660
|
|
83,612
|
|
General
and administrative
|
|
117,762
|
|
308,233
|
|
75,971
|
|
396,316
|
|
Less stock based compensation and other non cash items
|
|
(2,426)
|
|
(7,170)
|
|
(2,286)
|
|
(196,776)
|
|
All in
sustaining costs
|
$
|
2,005,657
|
$
|
4,586,614
|
$
|
1,497,307
|
$
|
4,111,926
|
|
Divided
by ounces produced
|
|
847
|
|
2,816
|
|
1,398
|
|
3,586
|
|
Cash
cost per ounce
|
$
|
1,855.58
|
$
|
1,372.68
|
$
|
927.37
|
$
|
983.97
|
|
All in
sustaining cost (AISC) per ounce
|
$
|
2,368.21
|
$
|
1,628.91
|
$
|
1,071.05
|
$
|
1,146.66
|
Financial Condition and Liquidity
|
|
For
the Nine Months Ended September 30,
|
|
Net cash provided
(used) by:
|
|
2020
|
|
2019
|
|
Operating
activities
|
$
|
121,737
|
$
|
140,755
|
|
Investing
activities
|
|
(1,149,669)
|
|
128,345
|
|
Financing
activities
|
|
3,960,948
|
|
(237,200)
|
|
Net change in cash
and cash equivalents
|
|
2,933,016
|
|
31,900
|
|
Cash and cash
equivalents, beginning of period
|
|
217,796
|
|
248,766
|
|
Cash and cash
equivalents, end of period
|
$
|
3,150,812
|
$
|
280,666
|
The Company is currently producing from both the open-pit and
underground at the Golden Chest Mine. In the past, the Company has
been successful in raising required capital from sale of common
stock, forward gold contracts, and debt. As a result of its planned
production, equity sales and potential debt borrowings or
restructurings, management believes cash flows from operations and
existing cash are sufficient to conduct planned operations and meet
contractual obligations for the next 12 months.
On April 10, 2020, the Company received a loan of $358,346 pursuant
to the Paycheck Protection Program (the “PPP”) under Division A,
Title I of the CARES Act, which was enacted March 27, 2020. The
loan, which was in the form of a Note dated April 10, 2020 matures
on April 9, 2022 and bears interest at a rate of 1% per annum,
payable monthly commencing on October 9, 2020. The Note may be
prepaid by the Company at any time prior to maturity with no
prepayment penalties. This loan was forgiven after being used for
qualifying expenses under the provisions of the CARES Act prior to
the filing of this quarterly financial statement. Qualifying
expenses included payroll costs, costs used to continue group
health care benefits, rent, and utilities. The amount of the loan
that was recognized as such in the Company’s income statement
included the original $358,346 in principal and $1,708 in accrued
interest that was recognized at June 30, 2020.
On May 19, 2020 the Company received a loan of $149,900 pursuant to
the Small Business Act Section 7(b). The loan which was in the form
of a Note dated May 16, 2020 matures May 16, 2050 and bears
interest at a rate of 3.75% per annum. Payments of $731 are due
monthly and will begin twelve months from the date of the Note.
At September 30, 2020, total accrued interest on the remaining loan
is $2,078 which is included in the Small Business Administration
loan balance of the consolidated balance on the consolidated
balance sheet.
During
the three months ended September 30, 2020, the Company received
$10,000 under Division A, Title I, Section 1110 of the CARES Act.
The Company is not required to pay this amount back and thus
recognized $10,000 as grant income during the period.
18
ITEM 3: QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for
small reporting companies.
ITEM
4: CONTROLS AND PROCEDURES
Disclosure
Controls and Procedures
At
September 30, 2020, our Vice President who also serves as our Chief
Accounting Officer evaluated the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to
Rule 13a-15(e) of the Securities Exchange Act of 1934 (the
“Exchange Act”), which disclosure controls and procedures are
designed to insure that information required to be disclosed by a
company in the reports that it files under the Exchange Act is
recorded, processed, summarized, and reported within required time
periods specified by the Securities & Exchange Commission rules
and forms.
Based
upon that evaluation, it was concluded that our disclosure controls
were effective as of September 30, 2020, to ensure timely reporting
with the Securities and Exchange Commission. Specifically, the
Company’s corporate governance and disclosure controls and
procedures provided reasonable assurance that required reports were
timely and accurately reported in our periodic reports filed with
the Securities and Exchange Commission.
Changes in internal control
over financial reporting
There was no material
change in internal control over financial reporting in the quarter
ended September 30, 2020.
PART II - OTHER
INFORMATION
ITEM
1. LEGAL
PROCEEDINGS
None.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
Neither the
constituent instruments defining the rights of the Company’s
securities filers nor the rights evidenced by the Company’s
outstanding common stock have been modified, limited or
qualified.
The
Company closed a private placement in April 2020. Under the private
placement, the Company sold 1,481,481 units at $0.135 per unit for
net proceeds of $200,000. Each unit consisted of one share of the
Company’s stock and one half of one stock purchase warrant with
each whole warrant exercisable for one share of the Company’s stock
at $0.18 for 24 months. The Company closed a private placement in
August 2020. Under the private placement, the Company sold
9,718,572 units at $0.28 per unit for net proceeds of $2,706,896.
Each unit consisted of one share of the Company’s stock and one
half of one stock purchase warrant with each whole warrant
exercisable for one share of the Company’s stock at $0.18 for 24
months. In July of 2020 277,778 shares of the Company’s stock were
issued by a holder of convertible debt at a rate of $0.18 per share
in exchange for $50,000 in debt. In the third quarter of 2020
1,041,667 shares were issued in exchange for outstanding warrants
for net proceeds of $208,334. In the second quarter of 2019,
1,200,000 warrants were exercised in exchange for 398,575 shares of
the Company’s common stock in a cashless warrant exercise.
The Company relied on
the transaction exemption afforded by Section 4(a)(2) of the
Securities Act of 1933, as amended, and Regulation D Rule 506(b).
The common shares are restricted securities which may not be
publicly sold unless registered for resale with the Securities and
Exchange Commission or exempt from the registration requirements of
the Securities Act of 1933, as amended.
ITEM
3. DEFAULTS
UPON SENIOR SECURITIES
The Company has no
outstanding senior securities.
ITEM
4. MINE SAFETY
DISCLOSURES
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
quarter
19
ended September 30,
2020, the Company had no citations for a violation of mandatory
health or safety standards that could significantly and
substantially (S&S citation) contribute to the cause and effect
a mine safety or health hazard under section 104 of the Federal
Mine Safety and Health Act of 1977. There were no legal actions,
mining-related fatalities, or similar events in relation to the
Company’s United States operations requiring disclosure pursuant to
Section 1503(a) of the Dodd-Frank Act.
ITEM
5. OTHER
INFORMATION
None.
ITEM
6. EXHIBITS
3.0*Articles of
Incorporation of New Jersey Mining Company filed July 18,
1996
3.1*Articles of
Amendment filed September 29, 2003
3.2*Articles of
Amendment filed November 10, 2011
3.3*Bylaws of New
Jersey Mining Company
10.1*Venture Agreement
with United Mine Services, Inc. dated January 7,
2011.
10.2*Idaho Champion
Resources Lease with Cox dated September 4,
2013
10.3**Rupp Mining Lease
dated May 3, 2013
10.4**Mining Lease with
Hecla Silver Valley, Inc. Little Baldy prospect dated September 12,
2012
10.5***Consent, Waiver and
Assumption of Venture Agreement by Crescent dated February 14,
2014
10.6Form of Forward
Gold Purchase Agreement dated July 13, 2016 between the Registrant
and Ophir Holdings LLC and incorporated by reference to the
Company’s Form 8-K as filed with the Securities and Exchange
Commission on July 18, 2016.
10.7Form of Forward
Gold Purchase Agreement dated July 29, 2016 between the Registrant
and Investors and incorporated by reference to the Company’s Form
8-K as filed with the Securities and Exchange Commission on August
2, 2016.
10.8Registrant’s Grant
of Options to Directors and Officers dated December 30, 2016,
incorporated by reference to the Company’s Form 8-K as filed with
the Securities and Exchange Commission on January 4,
2017.
10.9Form of Agreement
to Purchase the “Four Square Property Group” of Patented and
Un-Patented Mining Claims dated March 2, 2018, incorporated by
reference to the Company’s Form 8-K as filed with the Securities
and exchange Commission on March 7, 2018
10.10Asset Purchase
Agreement with Hecla Silver Valley, Inc. to Sell Patented and
Un-Patented Mining Claims dated May 18th, 2018 and reported on the
Company’s Form 8-K filed with the Securities and Exchange
Commission on May 24, 2018.
14*Code of Ethical
Conduct.
21*Subsidiaries of the
Registrant
31.1****Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2****Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1****Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2****Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
99(i)Audit Committee
Pre-Approval Policies-Filed as an exhibit to the registrant’s
annual report on Form 10-KSB for the year ended December 31, 2003
and incorporated by reference herein.
101.INS****XBRL
Instance Document
101.SCH****XBRL
Taxonomy Extension Schema Document
101.CAL****XBRL
Taxonomy Extension Calculation Linkbase Document
101.DEF****XBRL
Taxonomy Extension Definition Linkbase Document
101.LAB****XBRL
Taxonomy Extension Label Linkbase Document
101.PRE****XBRL
Taxonomy Extension Presentation Linkbase Document
*
Filed with the Registrant’s Form 10 on June 4, 2014.
**Filed
July 2, 2014
***Filed
March 31, 2015.
****Filed
herewith.
20
SIGNATURES
Pursuant to the
requirements 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.
NEW JERSEY MINING
COMPANY
By:
/s/ John
Swallow
John
Swallow,
its: President and
Chief Executive Officer
Date November 16,
2020
By:
/s/ Grant
Brackebusch
Grant
Brackebusch,
its: Vice President
and Chief Financial Officer
Date: November 16,
2020
21
