ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with our unaudited condensed interim consolidated financial statements for the six months ended November 30, 2017, and the related
notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.
GAAP”). This discussion and analysis contains forward-looking statements and forward-looking information that involve risks,
uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements
and information as a result of many factors. See section heading “Note Regarding Forward-Looking Statements” below.
All currency amounts are stated in Canadian dollars unless noted otherwise.
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING ESTIMATES OF MEASURED, INDICATED
AND INFERRED RESOURCES AND PROVEN AND PROBABLE RESERVES
Corvus Gold Inc. (“we”, “us”, “our,”
“Corvus” or the “Company”) is a mineral exploration company engaged in the acquisition and exploration
of mineral properties. The mineral estimates in the Technical Report (as defined below) referenced in this Quarterly Report on
Form 10-Q have been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from
the requirements of United States securities laws. As used in the Technical Report referenced in this Quarterly Report on Form 10-Q,
the terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian
mining terms as defined in accordance with Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects”
(“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards
on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ materially from the
definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 (“SEC Industry Guide
7”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required
to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves,
and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured
mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and
required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all
or any part of a mineral deposit in these categories will ever be converted into reserves. “Inferred Mineral Resources”
have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all, or any part, of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC
standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this report and the Technical
Report referenced in this report contain descriptions of our mineral deposits that may not be comparable to similar information
made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws
and the rules and regulations thereunder.
CAUTIONARY NOTE TO ALL INVESTORS CONCERNING ECONOMIC ASSESSMENTS
THAT INCLUDE INFERRED RESOURCES AND HISTORICAL ESTIMATES
The Company currently holds or has the right to acquire interests
in an advanced stage exploration project in Nye County, Nevada referred to as the North Bullfrog Project (the “NBP”)
and interests in the Mother Lode Property. Mineral resources that are not mineral reserves have no demonstrated economic viability.
The preliminary economic assessment included in the Technical Report on the NBP is preliminary in nature and includes “inferred
Mineral Resources” that have a great amount of uncertainty as to their existence, and are considered too speculative geologically
to have economic considerations applied to them that would enable them to be categorized as mineral reserves. It cannot be assumed
that all, or any part, of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates
of inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies. There is no certainty that such
inferred Mineral Resources at the NBP will ever be realized. Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically
or legally mineable. Readers should refer to the Technical Report for additional information.
The historic estimates (Inter-Rock Gold Inc. Annual Report 1996,
subsequently changed to Inter-Rock Minerals Inc. available on www.sedar.com) for the Mother Lode Property contained in this report
should not be relied upon. These estimates are not NI 43-101 compliant. While the Company considers these historical estimates
to be relevant to investors as it may indicate the presence of mineralization, a qualified person for the Company has not done
sufficient work to classify the historical estimates as current Mineral Resources as defined by NI 43-101 and the Company is not
treating these historical estimates as a current mineral resource.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and the exhibits
attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995, as amended, and “forward-looking information” within the meaning of applicable Canadian securities
legislation, collectively “forward-looking statements”. Such forward-looking statements concern our anticipated results
and developments in the operations of the Company in future periods, planned exploration activities, the adequacy of the Company’s
financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but
not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,”
“estimates,” “potential,” “possible” and similar expressions, or statements that events, conditions
or results “will,” “may,” “could” or “should” (or the negative and grammatical
variations of any of these terms) occur or be achieved. These forward-looking statements may include, but are not limited to, statements
concerning:
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the Company’s strategies and objectives, both generally and in respect of its specific mineral
properties;
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the timing of decisions regarding the timing and costs of exploration programs with respect to,
and the issuance of the necessary permits and authorizations required for, the Company’s exploration programs, including
for the NBP and the Mother Lode Property;
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the Company’s estimates of the quality and quantity of the Mineral Resources at its mineral
properties;
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the timing and cost of planned exploration programs of the Company, and the timing of the receipt
of results therefrom;
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the Company’s future cash requirements and use of proceeds of sales;
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general business and economic conditions;
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the Company’s ability to meet its financial obligations as they come due, and the ability
to raise the necessary funds to continue operations;
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the Company’s expectation that it will be able to add additional mineral projects of merit
to its assets;
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the potential for the existence or location of additional high-grade veins at the NBP, or high-grade
mineralization at the Mother Lode Property;
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the potential to expand Company’s existing deposits and discover new deposits;
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the potential for any delineation of higher grade mineralization at the NBP or Mother Lode Property;
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the potential for there to be one or more additional vein zones;
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the potential discovery and delineation of mineral deposits/resources/reserves and any expansion
thereof beyond the current estimate;
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the potential for the NBP or the Mother Lode Property mineralization systems to continue to grow
and/or to develop into a major new higher-grade, bulk tonnage, Nevada gold discovery;
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the Company’s expectation that it will be able to build itself into a non-operator gold producer
with significant carried interests and royalty exposure;
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that the Company will operate at a loss
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that the Company will need to scale back anticipated costs and activities or raise additional funds;
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that the Company will have to raise substantial additional capital to accomplish its business plan
over the next couple of years;
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the historic estimates of the Mother Lode Property as an indication of the presence of mineralization;
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the estimated reclamation and asset retirement costs;
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the plans related to the development of the Mother Lode Property and the NBP; and
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the Mother Lode Property work plan and mine development plan/program.
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Such forward-looking statements reflect the Company’s current
views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions. Many factors
could cause actual results, performance or achievements to be materially different from any future results, performance or achievements
that may be expressed or implied by such forward-looking statements, including, among others, risks related to:
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our requirement of significant additional capital;
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our limited operating history;
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cost increases for our exploration and, if warranted, development projects;
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our properties being in the exploration stage;
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mineral exploration and production activities;
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our lack of mineral production from our properties;
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estimates of Mineral Resources;
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changes in mineral resource estimates;
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differences in United States and Canadian mineral reserve and mineral resource reporting;
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our exploration activities being unsuccessful;
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fluctuations in gold, silver and other metal prices;
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our ability to obtain permits and licenses for production;
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government and environmental regulations that may increase our costs of doing business or restrict
our operations;
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proposed legislation that may significantly affect the mining industry;
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land reclamation requirements;
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competition in the mining industry;
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equipment and supply shortages;
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current and future joint ventures and partnerships;
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our ability to attract qualified management;
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the ability to enforce judgment against certain of our Directors;
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claims on the title to our properties;
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surface access on our properties;
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potential future litigation;
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our lack of insurance covering all our operations;
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our status as a “passive foreign investment company” under US federal tax code; and
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Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is
not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements
are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties
and other factors, including without limitation those discussed in Part I, Item 1A, Risk Factors, of our Annual Report on Form
10-K, as filed with the SEC on June 29, 2017, which are incorporated herein by reference, as well as other factors described elsewhere
in this report and the Company’s other reports filed with the SEC.
The Company’s forward-looking statements contained in this
Quarterly Report on Form 10-Q are based on the beliefs, expectations and opinions of management as of the date of this report.
The Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs,
expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not attribute
undue certainty to or place undue reliance on forward-looking statements.
Current Business Activities
General
The Company’s material mineral property is the NBP, an advanced
exploration stage project in Nevada which has a number of high-priority, bulk tonnage and high-grade vein targets (held through
Corvus Nevada, a Nevada subsidiary). In addition to the NBP, the Company has acquired the Mother Lode Property which is located
approximately 12 miles to the south east of the NBP. The Mother Lode Property was mined in the late 1980s and has substantial gold
mineralization remaining unexploited extending to the north of the existing open pit mine.
The primary focus of the Company will be to leverage its exploration
expertise to expand its existing deposits and discover major new gold deposits. Other than with respect to the ongoing exploration
of the NBP, the Company’s strategy is to leverage its other non-core assets by maintaining a retained royalty.
Highlights of activities during the period and to the date of this
MD&A include:
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A technical report prepared in accordance with NI 43-101 titled, “Technical Report and Preliminary
Economic Assessment for Combined Mill and Heap Leach Processing at the North Bullfrog Project, Bullfrog Mining District, Nye County,
Nevada” (the “Technical Report”) with an effective date of October 31, 2017 was filed on SEDAR on December 15,
2017.
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The Technical Report expanded the Measured and Indicated Mineral Resource categories of the NBP
by 30% as compared to the Mineral Resource reported in 2015.
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The updated Mineral Resource identified a Phase I Measured and Indicated Mineral Resource portion
with 35 million tonnes containing 904 thousand ounces (“k-ozs”) of gold at an average grade of 0.8 grams per tonne
(“g/t”) and 5,459 k-ozs of silver at an average grade of 4.86 g/t, targeted for processing by an oxide mill circuit
and a heap leach.
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A maiden sulphide Measured and Indicated Mineral Resource estimation was defined for the Phase I project
with 89,000 ounces of gold and 343,000 ounces of silver at a grade of 1.46 g/t gold and 5.64 g/t silver in 1.89 million tonnes
utilizing Ambient Atmospherics Oxidation (AAO) processing in the proposed mill facility.
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A total Phase II Measured and Indicated Mineral Resource estimation of 855,000 ounces of gold and
2,565,000 ounces of silver at 0.22 g/t gold and 0.65 g/t silver in 123 million tonnes of mineralized material was included.
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The initial drilling program at the Mother Lode Property began in September 2017, and is designed
for 13,000 metres of core and Reverse Circulation drilling.
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Early drill results at Mother Lode Property have confirmed the existence of higher grade gold mineralization
in an upper and lower zone with multiple holes penetrating intervals of +50 metres of greater than 2 g/t gold.
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The Annual General Meeting of the Company was held on October 12, 2017 in Vancouver, BC, and Steven
Aaker, Anton Drescher, Catherine Gignac, Edward Yarrow, Rowland Perkins and the Company’s CEO & President, Jeffrey Pontius
were present.
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A private placement was completed in December 2017 in which Corvus issued 2,829,130 common shares
at $1.15 per share and 1,574,803 common shares at $1.27 per share raising a total of $5,253,500.
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In mid-December, Corvus reported a drill hole intercept of 94.5 metres with average gold grade
of 1.2 g/t, and extended the Mother Lode Property sediment hosted gold system at least 450 metres along strike.
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Baseline characterization activities at NBP continued with the water quality sampling of monitor
wells and springs, and meteorological monitoring reports, which are submitted to the Nevada Department of Environmental Protection
quarterly.
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Corporate Financial Activities
The Company announced the completion of a $5,253,500 private placement
on December 7, 2017, where the Company issued 2,829,130 common shares at a price of $1.15 each to institutional shareholders and
1,574,803 common shares at a price of $1.27 each to a key strategic shareholder. No warrants were issued. The Company expects that
the proceeds of the financing will fully fund the Company’s planned 2018 exploration program at its new Mother Lode Property.
Nevada Properties
North Bullfrog Project
Our principal mineral property is the NBP, a gold exploration project
located in northwestern Nye County, Nevada, in the Northern Bullfrog Hills about 10 kilometres north of the town of Beatty. The
NBP does not have any known proven or probable reserves under SEC Industry Guide 7 and the project is exploratory in nature. The
Technical Report is available under Corvus’ SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. The Technical
Report is referred to herein for informational purposes only and is not incorporated herein by reference. The Technical Report
contains disclosure regarding Mineral Resources that are not Guide 7 compliant proven or probable reserves. See “Cautionary
Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves”
above.
The NBP is located in the Bullfrog Hills of northwestern Nye County,
Nevada (Figure 1). The NBP covers about 7,223 hectares of patented and unpatented mining claims in Sections 20, 21, 25, 26, 27,
28, 29, 32, 33, 34, 35, and 36 of T10S, R46E; sections 1, 2, 11, 12, 13, and 14 of T11S, R46E; section 31 of T10S, R47E; and sections
6, 9, 15, 16, and 17 T11S, R47E, MDBM. We have a total of nine option/lease agreements in place that give us control of an aggregate
of 51 patented lode mining claims (Figure 2). Corvus Nevada owns an additional five patented claims (the Millman claims) and a
430 acre property with 1600 acre-feet of water rights located north of NBP in the Sacrobatus hydrographic basin (Basin 146).
Figure 1. Property Map showing the Location of the North Bullfrog
Project.
Figure 2. Property Map of the North Bullfrog Project, Blue
outline shows the NBP boundary
and red areas are the Leased Private Land (UTm NAD 27 Zone 11).
Updated NBP Mineral Resources
Corvus announced an updated Mineral Resource estimation incorporating
all drill results through to 2017 at the Company’s 100% owned NBP. The updated Mineral Resource estimation utilizes a two
phase approach. “Phase I” is an early stage, higher grade mix of predominantly oxide mill processing and oxide heap
leach processing while “Phase II” includes mainly heap leach mineralization. The Mineral Resources estimates (Measured,
Indicated and Inferred) are based on economic constraints using Whittle
TM
software (see Table 4) and assumes open pit
mining and a gold price of USD 1,250 per ounce and a silver price of USD 16.50 per ounce. Figure 3 shows the locations of the projected
open pits at the NBP and displays the mineralization areas in the defined Phase I & II.
Figure 3. Locations of pit constrained, Phase I & II NBP
Resources
The new Mineral Resource estimation reflect the benefits of the
drilling conducted during 2016 and 2017, which expanded and improved the definition of the YellowJacket vein/stockwork zone, allowing
the mine plan to deliver higher average grade mineralization from the YellowJacket zone in Phase I with high gold and silver recoveries.
This new Mineral Resource has been estimated in accordance with NI 43-101 using a gold price of USD 1,250 per ounce and silver
price of USD 16.50 per ounce. The Mineral Resources are tabulated for Phase I, Phase II and Total Mineral Resources in Tables 1,
2 and 3, where they are also subdivided by mill or heap leach process.
Table 1
Phase I, Measured, Indicated, and Inferred Mineral Resource
Estimations for the NBP constrained by Whittle
TM
pit volumes, including both the YellowJacket Vein/Stockwork and Disseminated
Oxide Mineralization at a gold price of USD 1,250 per ounce and a silver price of USD 16.50 per ounce
Table 1a - Phase I, Total Mineral Resource
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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10,415
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1.08
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362
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7.59
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2,540
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Indicated
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24,557
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0.69
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542
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3.70
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2,919
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Total M&I
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34,972
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0.80
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904
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4.86
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5,459
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Inferred
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5,908
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0.31
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59
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0.74
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140
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Table 1b - Phase I, Mill Mineral Resource (oxide and sulfide)
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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5,221
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1.79
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300
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12.72
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2,136
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Indicated
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5,582
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1.75
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314
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11.86
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2,128
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Total M&I
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10,803
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1.77
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614
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12.28
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4,264
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Inferred
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49
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1.90
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3
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18.41
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29
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Table 1c - Phase I, Mill Mineral Resource (sulfide)
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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756
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1.32
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32
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5.35
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130
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Indicated
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1,137
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1.56
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57
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5.83
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213
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Total M&I
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1,893
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1.46
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89
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5.64
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343
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Inferred
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15
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2.07
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1
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16.59
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8
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Table 1d - Phase I, Heap Leach Mineral Resource
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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5,194
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0.37
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62
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2.42
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404
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Indicated
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18,975
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0.37
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228
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1.30
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791
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Total M&I
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24,169
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0.37
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290
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1.54
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1,195
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Inferred
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5,859
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0.30
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56
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0.59
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111
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*See Cautionary Note to US Investors below
**The Mineral Resources above are effective as of
October 31, 2017
***Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability
****Includes Sulfide Mineral Resources discussed below
Table 2
Phase II, Measured, Indicated, and Inferred Mineral Resource
Estimate for the NBP constrained by Whittle
TM
pit volumes, including both the YellowJacket Vein/Stockwork and Disseminated
Oxide Mineralization at a gold price of USD 1,250 per ounce and a silver price of USD 16.50 per ounce
Table 2a - Phase II, Total Mineral Resource
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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10,129
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0.26
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84
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1.04
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338
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Indicated
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113,009
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0.21
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771
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0.61
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2,227
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Total M&I
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123,138
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0.22
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855
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0.65
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2,565
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Inferred
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58,877
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0.19
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367
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0.48
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902
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Table 2b - Phase II, Mill Mineral Resource (oxide & sulfide)
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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798
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1.01
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26
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3.27
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84
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Indicated
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2,733
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1.04
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91
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2.96
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260
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Total M&I
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3,531
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1.03
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117
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3.03
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344
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Inferred
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67
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1.39
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3
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2.32
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5
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Table 2c - Phase II, Mill Mineral Resource (sulfide)
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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401
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1.24
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16
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2.48
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32
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Indicated
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1,402
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1.18
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53
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1.82
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82
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Total M&I
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1,803
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1.19
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69
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1.97
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114
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Inferred
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61
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1.53
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3
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2.04
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4
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Table 2d - Phase II, Heap Leach Mineral Resource
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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9,331
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0.19
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58
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0.85
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254
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Indicated
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110,276
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0.19
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680
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0.55
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1,967
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Total M&I
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119,607
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0.19
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738
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0.58
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2,221
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Inferred
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58,810
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0.19
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364
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0.47
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897
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*See Cautionary Note to US Investors below
**The Mineral Resources above are effective as of
October 31, 2017
***Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability
****Includes Sulfide Mineral Resources discussed below
Table 3
Measured, Indicated, and Inferred Total Mineral Resource Estimate
for the NBP constrained by Whittle
TM
pit volumes, including both the YellowJacket Vein/Stockwork and Disseminated Oxide
Mineralization at a gold price of USD 1,250 per ounce and a silver price of USD 16.50 per ounce
Table 3a - Total Mineral Resource, Phase I & II
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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20,544
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0.68
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446
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4.36
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2,878
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Indicated
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137,566
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0.30
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1,314
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1.16
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5,146
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Total M&I
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158,110
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0.35
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1,760
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1.58
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8,024
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Inferred
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64,785
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0.20
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426
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0.50
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1,042
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Table 3b - Total Mill Mineral Resource (oxide and sulfide), Phase I & II
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tonnes (k)
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Grade (g/t Au)
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k-Ounces Au
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Grade (g/t Ag)
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k-Ounces Ag
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Measured
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6,019
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1.68
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326
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11.47
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2,220
|
Indicated
|
8,315
|
1.51
|
405
|
8.93
|
2,388
|
Total M&I
|
14,334
|
1.59
|
731
|
10.00
|
4,608
|
Inferred
|
116
|
1.61
|
6
|
9.12
|
34
|
Table 3c - Total Mill Mineral Resource (sulfide), Phase I & II
|
|
tonnes (k)
|
Grade (g/t Au)
|
k-Ounces Au
|
Grade (g/t Ag)
|
k-Ounces Ag
|
Measured
|
1,157
|
1.29
|
48
|
4.35
|
162
|
Indicated
|
2,539
|
1.35
|
110
|
3.61
|
295
|
Total M&I
|
3,696
|
1.33
|
158
|
3.85
|
457
|
Inferred
|
76
|
1.64
|
4
|
4.91
|
12
|
Table 3d - Total Heap Leach Resource, Phase I & II
|
|
tonnes (k)
|
Grade (g/t Au)
|
k-Ounces Au
|
Grade (g/t Ag)
|
k-Ounces Ag
|
Measured
|
14,525
|
0.26
|
120
|
1.41
|
658
|
Indicated
|
129,251
|
0.22
|
909
|
0.66
|
2,758
|
Total M&I
|
143,776
|
0.22
|
1,029
|
0.74
|
3,416
|
Inferred
|
64,669
|
0.20
|
420
|
0.48
|
1,008
|
*See Cautionary Note to US Investors below
**The Mineral Resources above are effective as of
October 31, 2017
***Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability
****Includes Sulfide Mineral Resources discussed below
The Mineral Resource estimation is based on 766 drill holes with
27,729 gold composites. Geologic volumes were defined by geologic interpretations and used to constrain the estimation. Heap leach
resources were estimated by Ordinary Kriging. The YellowJacket vein and stockworks were estimated using Inverse Distance estimations.
To estimate the reasonable prospects of eventual economic extraction, Metal Mining Consultants Inc. confined the resources to mining
volumes defined by Whittle
TM
analysis using the input parameters defined in Table 4. There are no known legal, political
or environmental risks that could materially affect the potential development of the Mineral Resources.
Table 4
Whittle
TM
Input Parameters used for the NBP Mineral Resource Estimation
Parameter
|
Unit
|
Mayflower
1
|
Jolly Jane
1
|
Sierra Blanca
1
|
YellowJacket
2
|
Sulfide
3
|
Mining
Cost
|
USD/total
tonne
|
1.64
|
1.42
|
1.54
|
1.54
|
1.54
|
Au
Cut-Off
4
|
g/t
|
0.1
|
0.1
|
0.1
|
0.35
|
0.71
|
Processing
Cost
|
USD/process
tonne
|
1.72
|
1.72
|
1.15
|
11.84
|
25.6
|
Au
Recovery
|
%
|
70.0
|
72.0
|
73.8
|
86.6
|
91.0
|
Ag
Recovery
|
%
|
8.0
|
8.0
|
6.3
|
74.3
|
57.2
|
Admin
Cost
|
USD/process
tonne
|
0.5
|
0.5
|
0.45
|
0.45
|
0.45
|
Refining &
Sales
|
USD/tonne
|
0.07
|
0.04
|
0.02
|
0.11
|
0.11
|
Au Selling
Price
|
USD/oz
|
1,250
|
1,250
|
1,250
|
1,250
|
1,250
|
Slope
Angle
|
Degrees
|
50
|
50
|
50
|
50
|
50
|
1
assumes heap leach processing of disseminated
mineralization
2
assumes Gravity - CIL mill processing
of YellowJacket mineralization
3
assumes Ambient Atmospheric Oxidation
mill processing of Sulfide mineralization
4
break-even grade derived from Whittle
input parameters at USD 1,250 per ounce gold price, and USD 16.50 per ounce silver price
Sulfide Mineral Resource
Sulfide Mineral Resources have been added to the NBP Mineral Resources
based on previously identified materials that lie within the YellowJacket zone and 2017 drilling in the Swale and Liberator areas.
The majority of the identified sulfide mineralization is along the YellowJacket zone and was previously identified as waste material.
Metallurgical test work on sulfide mineralization from the Sierra Blanca, Pioneer Tuff, Rhyolite and Dacite rock types in the YellowJacket
area indicate high gold and silver recoveries possible using flotation to produce a concentrate, fine grinding of the concentrate,
oxidation of the concentrate using the AAO method followed by cyanide leaching of the resulting filter cake. Gold recoveries with
this processing approach ranged between 87% and 94% as indicated in Table 5, which lists the gold recovery to the concentrate,
the concentration ratio and the overall gold recovery from the testing (NR 17-9, June 21, 2017). Both Soda Ash and Trona were used
in the tests as the neutralizing agent and the tests were conducted by Hazen Research Inc., based in Golden, Colorado.
Table 5
NBP Concentrate AAO Testing
Sample Unit
|
Gold Recovery to Concentrate
|
Concentration Ratio
(mineralized tonne to concentrate)
|
Post AAO CN Gold Recovery
(from concentrate)
|
Overall Gold Recovery
(from mineralized tonne)
|
Soda Ash
|
Sierra Blanca
|
94%
|
9:1
|
99%
|
93%
|
Pioneer Tuff
|
94%
|
14:1
|
100%
|
94%
|
Rhyolite
|
89%
|
14:1
|
100%
|
89%
|
Dacite
|
88%
|
5:1
|
100%
|
88%
|
Trona
|
Sierra Blanca
|
94%
|
9:1
|
97%
|
91%
|
Pioneer Tuff
|
94%
|
14:1
|
99%
|
93%
|
Rhyolite
|
89%
|
14:1
|
98%
|
87%
|
Dacite
|
88%
|
5:1
|
99%
|
87%
|
The sulfide Mineral Resources within the Whittle
TM
pit
shells have been included in the Mill Mineral Resource tables presented earlier. Operating costs and gold recoveries have been
developed for use in the Whittle
TM
analysis and are included in Table 4. The breakdown of the Sulfide Mineral Resource
are listed in Tables 1, 2 and 3.
NBP Project Development Activities
Monitoring programs to develop baseline characterization data for
support of future permitting activities continued during the period. Water quality monitoring wells and surface springs were sampled
in November 2017.
The Company operates a meteorological monitoring station at NBP
and submitted its quarterly report to NBP in September 2017.
Mother Lode Property, Nevada
On June 9, 2017, the Company acquired the Mother Lode Property (Figure
4), which is located approximately six kilometres east of Beatty, Nevada, in Nye County. The Mother Lode Property is in the Bare
Mountain District, and was previously mined by Gold Search Inc. The Company acquired the 13 Federal mining claims comprising the
Mother Lode Property from Goldcorp USA. The Company has also staked an additional 105 claims (the MN claim group) to the northwest
of the Mother Lode Property claims and an additional 22 claims (the ME claim group) to the east of the Mother Lode Property claims.
With the acquisition of the Mother Lode Property, the Company initiated
an exploration program to verify historic results and evaluate the resource expansion potential of the asset. The Company does
not currently consider the Mother Lode Property to be a material property to the Company. The Mother Lode Property does not have
any known proven or probable reserves under SEC Industry Guide 7 and is exploratory in nature.
The Mother Lode Property is located in Nye County, Nevada in the
Bare Mountain District, south and east of the community of Beatty, Nevada. The Mother Lode Property covers about 1,147 hectares
of Federal mining claims in Sections 1, 12 and 13 of T12S, R47E and Sections 6, 7, 8, 9, 16 and 18 of T12S, R48E, MDBM.
Figure 4. Map showing new Mother Lode Property location and
property layout; including map showing the location of Mother Lode Property with respect to the NBP and the community of Beatty,
NV
The Company began its Phase I, Mother Lode Property drill program
which utilized up to three drill rigs (two reverse circulation and one core), in September 2017. The initial program completed
13,000 metres of drilling and focused on confirming the existing 172-hole database consisting of drilling results developed by
previous exploration companies and mine operators at the Mother Lode site. The initial program addressed resource expansion and
exploration targets in four main zones of historic mineralization. Phase I of the Company’s drilling program was completed
in December 2017 and Phase II of the drilling program is scheduled to begin in early January 2018.
The drilling results to date have verified and expanded on historic
drill data and have deliniated the mineralization into two zones (an upper and lower zone). Preliminary results for 15 holes were
released between October 15 and December 12, 2017.
Refer to news releases NR17-13 (October 11, 2017), NR17-15 (October
25, 2017), NR17-17 (November 7, 2017) and NR-17-19 (December 12, 2017) for additional information on data verification, drilling
parameters and location of drill holes.
Qualified Person and Quality Control/Quality Assurance
Jeffrey A. Pontius (CPG 11044), a qualified person as defined by
NI 43-101, has supervised the preparation of the scientific and technical information that forms the basis for the disclosure in
this Quarterly Report on Form Q-10, and has approved the disclosure herein. Mr. Pontius is not independent of Corvus, as he is
the Company’s Chief Executive Officer & President and holds common shares and incentive stock options in Corvus.
Carl E. Brechtel, (Nevada PE 008744 and Registered Member 353000
of SME), a qualified person as defined by NI 43-101, has coordinated execution of the work outlined in this Quarterly Report on
Form Q-10, and has approved the disclosure herein. Mr. Brechtel is not independent of Corvus, as he is the Company’s Chief
Operating Officer and holds common shares and incentive stock options in Corvus.
The work program at the Mother Lode Property was designed and supervised
by Mark Reischman, Corvus Gold’s Nevada Exploration Manager, who is responsible for all aspects of the work, including the
quality control/quality assurance program. On-site personnel at the project log and track all samples prior to sealing and shipping.
Quality control is monitored by the insertion of blind certified standard reference materials and blanks into each sample shipment.
All resource sample shipments are sealed and shipped to American Assay Laboratories (“AAL”) in Reno, Nevada, for preparation
and assaying. AAL is independent of the Company. AAL’s quality control system complies with the requirements for the International
Standards ISO 9001:2000 and ISO 17025:1999. Analytical accuracy and precision are monitored by the analysis of reagent blanks,
reference material and replicate samples. Carl Brechtel, a Qualified Person, has verified the data underlying the information disclosed
herein by reviewing the report of AAL and all procedures undertaken for QA/QC and all matters were consistent and accurate accordingly
to his professional judgment. There were no limitations on the verification process.
For additional information on the NBP project, including information
relating to exploration, data verification and the mineral resource estimates, see the Technical Report, which is available under
Corvus’ SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. The Technical Report is referred to herein for informational
purposes only and is not incorporated herein by reference. The Technical Report contains disclosure regarding Mineral Resources
that are not Guide 7 compliant proven or probable reserves, see “Cautionary Note to U.S. Investors Regarding Estimates of
Measured, Indicated and Inferred Resources and Proven and Probable Reserves” above.
Results of
Operations
Six months ended November 30, 2017 Compared to Six months ended
November 30, 2016
For the six months ended November 30, 2017, the Company had a net
loss of $4,182,047 compared to a net loss of $2,834,160 in the comparative period of the prior year. Included in net loss was $348,070
(2016 - $314,083) in stock-based compensation charges which is a result of stock options granted and vested during the current
period and previously granted stock options which vested during the period. The increase in loss of $1,347,887 in the six month
period of the current year was due to a combination of factors discussed below. Management expects increases in exploration costs
over prior periods are likely to continue in the immediate future periods.
The primary factor for the increase in the net loss was the exploration
expenditures of $2,451,948 incurred in the current period compared to $1,229,669 in the comparative period of the prior year. The
exploration activities of the Company increased mainly due to increased stock-based compensation charges of $27,179 during the
current year compared to $13,521 in the prior year and an increase of $1,208,621 incurred in the exploration in the current period
compared with the comparative period of the prior year as the Company secured additional financing in July 2017 and focused its
exploration efforts on the two Nevada properties.
Insurance expenses increased to $98,128 (2016 - $58,316) mainly
due to increased insurance premiums as a result of increased Director and Officer Liability coverage during the current period
compared with the comparative period of the prior year.
Investor relations expenses increased to $389,925 (2016 - $340,023)
and travel expenses increased to $132,538 (2016 - $84,318) mainly due to increase in investor relations-related travels, advertising,
marketing and conference attended during the current period as part of the Company’s efforts to secure additional financing.
Investor relations expenses also increase in part due to increased stock-based compensation charges of $47,772 during the current
period compared to $37,743 in the comparative period of the prior year.
Office expenses and rent expenses increased mainly due to the Company
moving its Denver office location in October 2017, while continuing to pay rent for the month of October at the old office location
as part of the lease termination of the old office. No further payments are required in connection with the Company’s old
office.
Professional fees decreased to $99,825 (2016 - $123,923) due to
the adjustment of prior years’ audit overaccrual offset by increased stock-based compensation charges of $3,732 during the
current period compared to $3,486 in the comparative period of the prior year.
Wages and benefits decreased to $462,170 (2016 - $563,008) mainly
due to a decrease of $119,796 in wages and benefits in the current period mainly as a result of adjustment in wages of several
senior executive officers and the severance pay to a former employee in the comparative period of the prior year offset by increased
stock-based compensation charges of $112,129 during the current period compared to $93,171 in the comparative period of the prior
year.
Other expense categories that reflected only moderate changes period
over period were administration expenses of $211 (2016 - $453), consulting expenses of $285,758 (2016 - $291,662), depreciation
expenses of $9,009 (2016 - $11,007), and regulatory expenses of $38,533 (2016 - $31,855).
Other items amounted to a loss of $73,775 compared to an income
of $14,535 in the comparative period of the prior year. There was an increase in foreign exchange loss of $79,897 (2016 - $3,795),
which is the result of factors outside of the Company’s control and a decrease in interest income of $6,122 (2016 - $18,330)
as a result of less investment in cashable GIC’s during the current period.
Three Months Ended November 30, 2017 Compared to Three Months
Ended November 30, 2016
For the three months ended November 30, 2017, the Company had a
net loss of $2,555,882 compared to a net loss of $1,328,223 in the comparative period of the prior year. Included in net loss was
$189,432 (2016 - $137,845) in stock-based compensation charges which is a result of previously granted stock options vesting during
the period. The increased loss of $1,227,659 in the three month period of the current year was due to a combination of factors
discussed below.
The primary factor for the increase in the net loss was the exploration
expenditures of $1,723,609 incurred in the current period compared to $576,163 in the comparative period of the prior year. The
exploration activities of the Company increased mainly due to increased stock-based compensation charges of $14,919 during the
current year compared to $8,886 in the prior year and an increase of $1,141,413 incurred in the exploration in the current period
compared with the comparative period of the prior year as the Company secured additional financing in July 2017 and focused its
exploration efforts on the two Nevada properties. Management expects increases in exploration costs over prior periods are likely
to continue in the immediate future periods.
Consulting fees increased to $150,051 (2016 - $130,396) mainly due
to increased stock-based compensation charges of $87,301 during the current period compared to $67,646 in the prior period.
Insurance expenses increased to $48,280 (2016 - $28,834) mainly
due to increased insurance premiums as a result of increased Director and Officer Liability coverage during the current period
compared with the prior period.
Investor relations expenses increased to $242,944 (2016- $194,543)
and travel expenses increased to $106,394 (2016 - $65,489) mainly due to increase in investor relations-related travels, advertising,
marketing and conference attended during the current period as part of the Company’s efforts to secure additional financing.
Investor relations expenses also increase in part due to increased stock-based compensation charges of $26,034 during the current
period compared to $17,209 in the comparative period of the prior year.
Office expenses and rent expenses increased mainly due to the Company
moving its Denver office location in October 2017 while continuing to pay rent for the month of October at the old office location
as part of the lease termination of the old office. No further payments are required in connection with the old office.
Professional fees decreased to $42,570 (2016 - $58,761) due to the
adjustment of prior years’ audit overaccrual offset by increased stock-based compensation charges of $1,848 during the current
period compared to $1,578 in the comparative period of the prior year.
Other expense categories that reflected only moderate changes period
over period were administration expenses of $106 (2016 - $92), depreciation expenses of $4,695 (2016 - $5,685), regulatory expenses
of $13,063 (2016 - $9,026), and wages and benefits of $223,945 (2016 - $222,922).
Other items amounted to an income of $70,933 compared to an income
of $20,381 in the comparative period of the prior year. There was an increase in foreign exchange gain of $65,252 (2016 - $10,815),
which is the result of factors outside of the Company’s control and a decrease in interest income of $5,681 (2016 - $9,566)
as a result of less investment in cashable GIC’s during the current period.
Liquidity and Capital Resources
The Company has no revenue generating operations from which it can
internally generate funds. To date, the Company’s ongoing operations have been financed by the sale of its equity securities
by way of public offerings, private placements and the exercise of incentive stock options and share purchase warrants. The Company
believes that it will be able to secure additional private placements and public financings in the future, although it cannot predict
the size or pricing of any such financings. In addition, the Company can raise funds through the sale of interests in its mineral
properties, although current market conditions have substantially reduced the number of potential buyers/acquirers of any such
interest(s). This situation is unlikely to change until such time as the Company can develop a bankable feasibility study on one
of its projects. When acquiring an interest in mineral properties through purchase or option, the Company will sometimes issue
common shares to the vendor or optionee of the property as partial or full consideration for the property interest in order to
conserve its cash.
The condensed interim consolidated financial statements have been
prepared on a going concern basis, which presume the realization of assets and discharge of liabilities in the normal course of
business for the foreseeable future. The Company’s ability to continue as a going concern is dependent upon achieving profitable
operations and/or obtaining additional financing.
In assessing whether the going concern assumption is appropriate,
management takes into account all available information about the future within one year from the date the condensed interim consolidated
financial statements are issued. There is substantial doubt upon the Company’s ability to continue as going concern,
as explained below and in the financial statements.
The Company has sustained significant losses from operations, has
negative cash flows, and has an ongoing requirement for capital investment to explore its mineral properties. Based on its
current plans, budgeted expenditures, and cash requirements, the Company has sufficient cash to finance its current plans for the
12 months from the date the condensed interim consolidated financial statement.
The Company reported cash and cash equivalents of $6,276,927 as
at November 30, 2017 compared to $1,300,553 as at May 31, 2017. The change in cash position was the net result of $3,672,481
used for operating activities, $7,710 used on property and equipment, $38,384 used on capitalized acquisition costs, $4,797,371
received from the private placements of common shares in July 2017 (net of share issue costs), issuance of common shares for the
NBP in June 2017 and exercise of stock options during the period ended November 30, 2017, and $3,999,999 received in advance from
the private placements of common shares in December 2017.
As at November 30, 2017, the Company had working capital of $6,173,952
compared to working capital of $1,270,168 as at May 31, 2017. On July 6, 2017, the Company closed a non-brokered private placement
equity financing and issued 6,200,000 common shares at a price of $0.75 per share for gross proceeds of $4,650,000. On December
7, 2017, the Company closed a non-brokered private placement equity financing and issued 2,829,130 common shares at a price of
$1.15 per share for gross proceeds of $3,253,500 and 1,574,803 common shares at a price of $1.27 per common share for gross proceeds
of $2,000,000. The Company expects that it will operate at a loss for the foreseeable future and believes the current cash and
cash equivalents will be sufficient for it to maintain its currently held properties, and fund its currently anticipated general
and administrative costs until May 31, 2019. Following May 31, 2019, the Company will need to scale back anticipated activities
and costs or raise additional financing to fund operations through the year ending May 31, 2020. The Company’s current anticipated
operating expenses are $3,317,000 until May 31, 2018 and $4,536,000 until November 30, 2018. The Company’s anticipated monthly
burn rate averages approximately $553,000 for December 2017 to May 2018, where approximately $258,000 is budgeted for administrative
purposes and approximately $295,000 is for planned exploration expenditures related to the completion of the ongoing exploration
programs at the NBP and the Mother Lode Property. From December 2017 to November 2018, the Company’s anticipated monthly
burn rate averages approximately $378,000, of which $231,000 is budgeted for administrative purposes and approximately $147,000
is for planned exploration expenditures related to the ongoing exploration programs at the NBP and the Mother Lode Property. In
any event, the Company will be required to raise additional funds, again through public or private equity financings, prior to
the end of September 2019 in order to continue in business. Should such financing not be available in that time-frame, the Company
will be required to reduce its activities and will not be able to carry out all of its presently planned exploration and development
activities at the NBP and the Mother Lode Property on its currently anticipated scheduling.
Despite the Company’s success to date in raising significant
equity financing to fund its operations, there is significant uncertainty that the Company will be able to secure any additional
financing in the current or future equity markets. See “Risk Factors – We will require additional financing to fund
exploration and, if warranted, development and production” in the Company’s Annual Report on Form 10-K as filed with
the SEC on June 30, 2017. Failure to obtain additional financing could have a material adverse effect on our financial condition
and results of operation and could cast uncertainty on our ability to continue as a going concern. The quantity of funds to be
raised and the terms of any proposed equity financing that may be undertaken will be negotiated by management as opportunities
to raise funds arise. Specific plans related to the use of proceeds will be devised once any financing has been completed and management
knows what funds will be available for these purposes. Due to this uncertainty, if the Company is unable to secure additional financing,
it may be required to reduce all discretionary activities at the NBP and the Mother Lode Property to preserve its working capital
to fund anticipated non-discretionary expenditures beyond the 2019 fiscal year.
The Company has no exposure to any asset-backed commercial paper.
Other than cash held by its subsidiaries for their immediate operating needs in Alaska and Nevada, all of the Company’s cash
reserves are on deposit with a major Canadian chartered bank. The Company does not believe that the credit, liquidity or market
risks with respect thereto have increased as a result of the current market conditions. However, in order to achieve greater security
for the preservation of its capital, the Company has, of necessity, been required to accept lower rates of interest, which has
also lowered its potential interest income.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Environmental Regulations
The operations of the Company may in the future be affected from
time to time in varying degrees by changes in environmental regulations, including those for future removal and site restoration
costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The
Company’s policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically
proven and economically feasible measures.
Certain U.S. Federal Income Tax Considerations for U.S. Holders
The Company has been a “passive foreign investment company”
(“PFIC”) for U.S. federal income tax purposes in recent years and expects to continue to be a PFIC in the future. Current
and prospective U.S. shareholders should consult their tax advisors as to the tax consequences of PFIC classification and the U.S.
federal tax treatment of PFICs. Additional information on this matter is included in the Company’s Annual Report on Form
10-K as filed with the SEC on June 29, 2017, under “Certain United States Federal Income Tax Considerations”.
Emerging Growth Company Status
We qualify as an “emerging growth company” as defined
in Section 101 of the Jumpstart our Business Startups Act as we do not have more than $1,000,000,000 in annual gross revenue and
did not have such amount as of May 31, 2017, being the last day of our last fiscal year.
We may lose our status as an emerging growth company on the last
day of our fiscal year during which (i) our annual gross revenue exceeds $1,000,000,000 or (ii) we issue more than $1,000,000,000
in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at any time we are deemed
to be a large accelerated filer. We will lose our status as an emerging growth company on the last day of our fiscal year following
the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement
(August 28, 2019).
As an emerging growth company, we are exempt from Section 404(b)
of the Sarbanes-Oxley Act of 2002 and Section 14A (a) and (b) of the Securities Exchange Act of 1934. Such sections are provided
below:
|
•
|
Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public company’s auditor to attest to, and report on, management's assessment of its internal controls.
|
|
•
|
Sections 14A(a) and (b) of the Securities and Exchange Act, implemented by Section 951 of the Dodd-Frank Act, require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
|
As long as we qualify as an emerging growth company, we will not
be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the
Securities Exchange Act of 1934, we may however determine to voluntarily comply with such requirements in our discretion.