tango ORE(CTGO) - 2021 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements Presents unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, equity, and detailed explanatory notes Condensed Consolidated Balance Sheets The balance sheets show a significant increase in cash and total assets, primarily driven by the Kinross Transactions, and a corresponding rise in shareholders' equity and certain liabilities Condensed Consolidated Balance Sheets | Item | September 30, 2020 (Unaudited) ($) | June 30, 2020 ($) | | :--- | :--- | :--- | | ASSETS | | | | Cash | $36,389,609 | $3,011,918 | | Total current assets | $36,562,128 | $3,084,162 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total current liabilities | $4,309,813 | $1,089,395 | | Non-current liabilities (Advance royalty reimbursement) | $1,200,000 | — | | Total liabilities | $5,509,813 | $1,089,395 | | Total Shareholders' Equity | $31,052,315 | $1,994,767 | | Total Liabilities and Shareholders' Equity | $36,562,128 | $3,084,162 | Condensed Consolidated Statements of Operations The statements of operations reflect a substantial net income for the three months ended September 30, 2020, primarily due to a significant gain on the sale of a portion of the equity investment in Peak Gold, LLC, contrasting with a net loss in the prior year period Condensed Consolidated Statements of Operations | Item | Three Months Ended September 30, 2020 ($) | Three Months Ended September 30, 2019 ($) | | :--- | :--- | :--- | | Exploration expense | $(20,828) | $— | | General and administrative expense | $(3,524,992) | $(990,990) | | Total expenses | $(3,545,820) | $(990,990) | | Interest income | $214 | $39,656 | | Loss from equity investment in Peak Gold, LLC | $(247,800) | $(900,000) | | Gain on sale of a portion of the equity investment in Peak Gold, LLC | $39,642,857 | $— | | Total other income/(expense) | $39,395,271 | $(860,344) | | INCOME/(LOSS) BEFORE TAXES | $35,849,451 | $(1,851,334) | | Income tax expense | $(2,406,826) | $— | | NET INCOME/(LOSS) | $33,442,625 | $(1,851,334) | | NET INCOME/(LOSS) PER SHARE (Basic and diluted) | $5.09 | $(0.29) | Condensed Consolidated Statements of Cash Flows The cash flow statements show a substantial net increase in cash for the three months ended September 30, 2020, primarily driven by significant cash proceeds from the sale of a portion of the equity investment in Peak Gold, LLC and cash from a capital raise, offsetting cash used in operating activities Condensed Consolidated Statements of Cash Flows | Item | Three Months Ended September 30, 2020 ($) | Three Months Ended September 30, 2019 ($) | | :--- | :--- | :--- | | Net income/(loss) | $33,442,625 | $(1,851,334) | | Net cash used in operating activities | $(740,131) | $(90,307) | | Net cash provided/(used) by investing activities | $30,952,200 | $(900,000) | | Net cash provided by financing activities | $3,165,622 | $— | | NET INCREASE/(DECREASE) IN CASH | $33,377,691 | $(990,307) | | CASH, BEGINNING OF PERIOD | $3,011,918 | $8,600,658 | | CASH, END OF PERIOD | $36,389,609 | $7,610,351 | Condensed Consolidated Statement of Shareholders' Equity Shareholders' equity significantly increased from June 30, 2020, to September 30, 2020, primarily due to net income for the period and issuance of common stock, partially offset by the retirement of treasury stock Condensed Consolidated Statement of Shareholders' Equity | Item | Balance at June 30, 2020 ($) | Balance at September 30, 2020 ($) | | :--- | :--- | :--- | | Common Shares | 6,590,113 | 5,994,667 | | Common Stock Amount | $65,901 | $59,947 | | Additional Paid-In Capital | $61,302,249 | $56,446,454 | | Treasury Stock | $(476,672) | $— | | Accumulated Deficit | $(58,896,711) | $(25,454,086) | | Total Shareholders' Equity | $1,994,767 | $31,052,315 | Changes during the three months ended September 30, 2020: * Stock-based compensation: $892,158 * Issuance of common stock: $3,275,004 * Cost of common stock issuance: $(109,382) * Shares received from partial sale of Peak Gold, LLC investment and retired: $(8,442,457) * Net income for the period: $33,442,625 Notes to the Unaudited Condensed Consolidated Financial Statements Provides detailed disclosures on business operations, accounting policies, JV investment, related party transactions, stock-based compensation, and subsequent events Note 1. Organization and Business CORE explores for gold in Alaska through its 30% interest in Peak Gold, LLC, with Kinross now holding 70% and managing the JV after recent transactions - CORE engages in gold exploration in Alaska through a 30% membership interest in Peak Gold, LLC and its wholly-owned subsidiary, Contango Minerals Alaska, LLC, which leases approximately 168,000 acres for exploration[24] - On September 29, 2020, CORE sold a 30% membership interest in the Joint Venture Company to KG Mining (a Kinross Gold subsidiary) for $32.4 million in cash and 809,744 shares of CORE common stock, which were subsequently canceled[27] - Post-transaction, CORE Alaska retains a 30% interest, and KG Mining holds a 70% interest in the Joint Venture Company, with KG Mining now serving as manager and operator[28] - The Joint Venture Company formed Contango Minerals and contributed approximately 168,000 acres of Alaska State mining claims to it, which were then assigned to CORE Alaska, making Contango Minerals a wholly-owned subsidiary of CORE[29] - The Joint Venture Company has an option to purchase approximately 13,000 acres of the Alaska state mining claims from Contango Minerals for $50,000, expiring 18 months after the Option Agreement date or upon termination[31][32] - The Joint Venture Company plans to mine ore from the Peak and North Peak deposits and process it at the Fort Knox mining and milling complex, expecting accelerated development, reduced upfront capital costs, and a shorter timeline[33] - Due to COVID-19, new exploration was temporarily postponed, with the Joint Venture Company's 2020 budget primarily for care and maintenance. CORE funded $1.3 million in 2020 and anticipates contributing $1.1 million for Q4 2020 cash needs[34] Note 2. Basis of Presentation Unaudited condensed consolidated financial statements are prepared under GAAP and SEC regulations, with interim results not indicative of full fiscal year performance - Financial statements are prepared in conformity with GAAP for interim information and SEC rules, including Form 10-Q and Article 8 of Regulation S-X[37] - All adjustments deemed necessary for fair statement are included and are of a normal recurring nature[37] - Results for the three months ended September 30, 2020, are not necessarily indicative of the fiscal year ending June 30, 2021[37] Note 3. Summary of Significant Accounting Policies Outlines key accounting policies including management estimates, stock-based compensation, income taxes, JV investment, and fair value measurement - Management makes estimates and assumptions affecting reported amounts,