DEBT OBLIGATIONS

3 Months Ended

Mar. 31, 2023

Debt at March 31, 2023 and December 31, 2022 consisted of the following:


	March 31, 2023		December 31, 2022
GHF Secured Promissory Note – 6% interest, due December 15, 2024	$	4,290,000	$	4,290,000
Alvin Fund LLC Promissory Note - 9% interest, due October 25, 2023	2,000,000		2,000,000
Ionic Unsecured Convertible Promissory Note - 8% interest, due March 16, 2024	2,054,236		3,150,000
Total debt	8,344,236		9,440,000
Less: debt discounts and issuance costs	(1,270,297)		(1,522,667)
Total debt, net of discounts	7,073,939		7,917,333
Less: current maturities	(3,431,419)		(1,795,890)
Long-term debt, net of discounts and issuance costs	$	3,642,520	$	6,121,443

GHF, Inc. Unsecured Promissory Note

We entered into a long-term promissory note ("GHF 2021 Note") with GHF, Inc. on December 15, 2021, with a principal amount of $5,000,000, of which $4,550,000 was funded and $450,000 was an original issue discount ("OID"). The full principal is due on December 15, 2024. Interest is payable monthly at a rate of 6% annually. Prepayment is allowed in full or in part at any time without premium or penalty. The loan is secured by all non-mining related assets of the Company, Silver Springs land and water rights, excluding the Lucerne and Dayton properties. The Company is required to prepay the promissory note with any net cash proceeds received in the sale of any collateral.

On August 22, 2022, the Company amended the GHF promissory note’s prepayment provision to reduce the amount required to be paid from the Daney Ranch sale to $710,000 of the net cash proceeds. As consideration for the amendment, the Company issued GHF, Inc. warrants to purchase 200,000 common shares exercisable at a price of $1.00 per share for a two-year term. The warrants had a fair value of $18,975 on the date of issuance and was recorded as an additional debt discount with a corresponding increase in additional paid-in capital.

During the three months ended March 31, 2023 and 2022, we recognized interest expense of $156,705 and $86,301, respectively, which includes OID amortization of $93,237 and $42,812, respectively, in connection with the GHF 2021 Note.

Alvin Fund Note

We entered into a short-term promissory note ("Alvin Fund 2022 Note") with Alvin Fund LLC on October 25, 2022 with a principal amount of $2,000,000. In consideration of the lender providing the financing, the Company issued $250,000 in shares

to the lender which was recognized as a discount on the loan. The full principal is due on October 25, 2023. Interest is payable monthly at a rate of 9% annually. Prepayment is allowed in full or in part at any time without premium or penalty. The loan is secured by all the property commonly referred to as the Dayton properties. During the three months ended March 31, 2023 and 2022, we recognized interest expense of $106,028 and $0, respectively, which includes amortization of discount of $61,644 and $0, respectively, in connection with the Alvin Fund 2022 Note.

Ionic Ventures LLC Unsecured Convertible Note

On December 16, 2022, the Company entered into a securities purchase agreement for an unsecured convertible promissory note ("Convertible Note") with Ionic Ventures, LLC. with a principal amount of $3,150,000, of which $2,975,000 was funded and $175,000 was an original issue discount ("OID") and issued with a 5% OID. The full principal is due on March 16, 2024. Interest is payable monthly at a rate of 8% annually. We used the net proceeds from this offering for strategic development programs and other general corporate purposes. The Convertible Note contains conversion terms that are based on percentages of trading price and volumes over defined measurement periods. The terms require the conversion option to be bifurcated as a derivative. At March 31, 2023 and December 31, 2022, the Company bifurcated the conversion feature and recorded a derivative liability of $24,000 and $420,000, respectively, reflected in our condensed consolidated balance sheet. During the three months ended March 31, 2023 and 2022, we recognized interest expense of $59,244 and $0, respectively and amortization of discount of $97,489 and $0, respectively, in connection with the Convertible Note.

During the first quarter of 2023, the Company delivered 4,539,413 shares of common stock with a fair value of $1,662,723 at an average alternate conversion price per share of $0.37 with a principal balance of $1,300,000 and accrued interest of $19,310. Total carrying value of the converted debt was $2,054,236. In addition, the converted debt has a total derivative liability balance of $156,000 which was reversed upon conversion. As of March 31, 2023, the Company recorded a loss on conversion of debt of $270,456. The conversion terms require a measurement period of five days within which the number of share initially converted are adjusted for changes in trading volume during the period. Under this provision, on April 6, 2023, Ionic returned 327,529 excess shares of its common stock held in treasury shares in anticipation of future debt to equity conversions.