# Thunder Mountain Gold Inc: Form 10-K for the period ended Dec 31, 2021

- Company: [Thunder Mountain Gold Inc](/companies/thmg.md) (CIK 711034)
- Form: 10-K
- Filed: 2022-03-22
- Accepted by EDGAR: Mar 22, 2022, 17:08 ET
- Period: 2021-12-31
- Accession: 0001062993-22-008328
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/711034/000106299322008328/form10k.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/711034/000106299322008328/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 12 months, 2021-01-01 to 2021-12-31 | $800.0k | us-gaap:Revenues |
| Operating income | 12 months, 2021-01-01 to 2021-12-31 | $273.0k | us-gaap:OperatingIncomeLoss |
| Income tax | 12 months, 2021-01-01 to 2021-12-31 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 12 months, 2021-01-01 to 2021-12-31 | −$566.8k | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 12 months, 2021-01-01 to 2021-12-31 | 60,384,839 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2021-01-01 to 2021-12-31 | −$257.8k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2021-12-31 | $1.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-12-31 | $1.2m | us-gaap:AssetsCurrent |
| Total assets | at 2021-12-31 | $3.0m | us-gaap:Assets |
| Current liabilities | at 2021-12-31 | $1.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-12-31 | $1.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2021-12-31 | $1.3m | us-gaap:StockholdersEquity |

## Business

As filed, 8,795 characters.

### Company History

The Company was originally incorporated under the laws of the State of Idaho on November 9, 1935, under the name of Montgomery Mines, Inc. In April 1978 controlling interest in the Montgomery Mines Corporation was obtained by a group of the Thunder Mountain property holders who then changed the corporate name to Thunder Mountain Gold, Inc. with the primary goal to further develop their holdings in the Thunder Mountain Mining District, Valley County, Idaho.

### Change in Situs and Authorized Capital

The Company moved its situs from Idaho to Nevada, but maintains its corporate offices in Boise, Idaho. On December 10, 2007, articles of incorporation were filed with the Secretary of State in Nevada for Thunder Mountain Gold, Inc., a Nevada Corporation. The Directors of Thunder Mountain Gold, Inc. (Nevada) were the same as for Thunder Mountain Gold, Inc. (Idaho).

On January 25, 2008, the shareholders approved the merger of Thunder Mountain Gold, Inc. (Idaho) with Thunder Mountain Gold, Inc. (Nevada), which was completed by a share for share exchange of common stock. The terms of the merger were such that the Nevada Corporation was the surviving entity. The number of authorized shares for the Nevada Corporation is 200,000,000 shares of common stock with a par value of $0.001 per share and 5,000,000 shares of preferred stock with a par value of $0.0001 per share.

The Company is structured as follows: The Company owns 100% of the outstanding stock of Thunder Mountain Resources, Inc. (TMRI), a Nevada Corporation. Thunder Mountain Resources, Inc. owns 100% of the outstanding stock of South Mountain Mines, Inc., an Idaho Corporation. South Mountain Mines, Inc. owns 75% of Owyhee Gold Territory, LLC.

We have no patents, licenses, franchises or concessions which are considered by the Company to be of importance. The business is not of a seasonal nature. Since the potential products are traded in the open market, we have no control over the competitive conditions in the industry. There is no backlog of orders.

There are numerous Federal and State laws and regulation related to environmental protection, which have direct application to mining and milling activities. The more significant of these laws deal with mined land reclamation and wastewater discharge from mines and milling operations. We do not believe that these laws and regulations as presently enacted will have a direct material adverse effect on our operations.

### Subsidiary Companies

On May 21, 2007, the Company filed Articles of Incorporation with the Secretary of State in Nevada for Thunder Mountain Resources, Inc., a wholly owned subsidiary of Thunder Mountain Gold, Inc. The financial information for the new subsidiary is included in the consolidated financial statements.

On September 27, 2007, Thunder Mountain Resources, Inc. (TMRI), a wholly owned subsidiary of Thunder Mountain Gold, Inc. (THMG), completed the purchase of all the outstanding stock of South Mountain Mines, Inc., an Idaho corporation. On November 8, 2012, South Mountain Mines, Inc., ("SMMI") a wholly owned subsidiary of Thunder Mountain Resources, Inc., which in turn is a wholly owned subsidiary of the Company, and Idaho State Gold Company II LLC ("ISGC") formed Owyhee Gold Territory LLC ("OGT") (aka Owyhee Gold Trust, LLC) a limited liability company (LLC).

On November 4, 2016, SMMI was granted Managing Member and controlling Member of OGT, through a judicially ratified settlement with ISGC II.

### Current Operations

Thunder Mountain Gold is a mineral exploration stage company with no producing mines. The Company intends to remain in the business of exploring for mining properties that have the potential to produce gold, silver, base metals and other commodities.

On February 27, 2019, the Company entered into an Option Agreement, (the "BeMetals Option Agreement") with BeMetals Corp., a British Columbia corporation ("BeMetals"), and BeMetals USA Corp., a Delaware corporation ("BMET USA"), a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of SMMI from TMRI, both wholly owned subsidiaries of the Company. SMMI is the Company's subsidiary that holds the Company's investment in the South Mountain project mineral interest. The original term of the agreement is for two years with BeMetals completing a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. On May 18, 2020, the Company extended the BMET Option Agreement by three months from the existing BeMetals Option Agreement date, due to the COVID-19 pandemic, and business conditions surrounding restricted international travel, and corresponding access to capital markets.

On September 14, 2021, the BeMetals Option Agreement was amended, prompting BeMetals to complete the Tranche 6 payment to the Company, with the addition of Tranches 7 and 8. The option period has been extended to December 31, 2022, unless agreed to be extended by all Parties.

Pursuant to the amended BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the outstanding shares of SMMI from TMRI if the following obligations are satisfied:

Tranche 1: cash payment of $100,000 to TMRI within 1 business day of delivery of voting support agreements from shareholders of THMG who hold or control shares carrying more than 50% of the voting rights attached to all outstanding THMG Shares. Payment was received on March 5, 2019 and is nonrefundable.

Tranche 2: Tranche 2 conditions were completed on June 10, 2019, with the issuance of 10 million common shares of BMET USA to TMRI having a fair value of $1,883,875; and BMET USA's purchase of 2.5 million shares of THMG common stock at a price of $0.10 per share, for an aggregate purchase price of $250,000, on a private placement basis (received June 2019).

Tranche 3: Cash payment of $250,000 on or before the 6-month anniversary of the Tranche 2. Payment was received on December 10, 2019.

Tranche 4: Cash payment of $250,000 on or before the 15-month anniversary of the Tranche 2, was received on September 10, 2020, and was recognized as a gain on sale of mineral interest during the year ended December 31, 2020.

Tranche 5: Cash payment of $250,000 on or before the 21-month anniversary of the Tranche 2, was received on March 5, 2021, and recognized as a gain on sale of mineral interest for the period ended March 31, 2021.

Tranche 6: Cash payment of $250,000 on or before September 30, 2021, which was received on September 10, 2021, and fulfilled the cash option payment requirement per the original agreement.

Tranche 7: Commencing from September 10, 2021, BeMetals shall fund and complete a surface drilling exploration program with a minimum of 7,000 feet. Including but not limited to corresponding sampling and analysis.

Tranche 8: Upon BeMetal's intention to exercise their option, and completion of Tranches 1 through 7. An additional payment of an amount equal to the lesser of 50% of the market capitalization of BeMetals at the time, and the greater of either $10 million; or 20% the net present value of the South Mountain Project as calculated in the PEA and discounted at 8%. Less the sum of:

US$850,000 being the total cash payments made by BMET USA.

The Tranche 2 Shares Value $1,883,875.

The aggregate value of the South Mountain Project Liabilities, excluding reclamation and environmental liabilities.

Concurrent with the BeMetals Option Agreement, BMET USA and SMMI entered a management contract whereby BeMetals will pay $25,000 monthly to SMMI for management services to enable BMET to perform exploration and development work with respect to the South Mountain Project. Management service income of $ 300,000 was recognized for the year ended December 31, 2021, and 2020, respectively. Management Service income for the three months ended December 31, 2021, and 2020 was $ 75,000, respectively.

BeMetals provides funding to SMMI for ongoing project expenses, including office lease payments. Under the terms of the Option Agreement, SMMI's management provides BeMetals a request for funds monthly to cover the upcoming month's expenses. For the years ended December 31, 2021, and 2020 BeMetals spent respectively $1,472,076 and $1,732,027 on exploration of the South Mountain Mines property.

### Reports to Security Holders

The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the SEC. Electronically filed reports may be accessed at www.sec.gov. Information may be obtained on the operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330.

## Risk factors

As filed, 17,151 characters.

#### COVID-19

Thunder Mountain Gold, Inc. is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the future impact of the COVID-19 pandemic on Thunder Mountain Gold's business is uncertain and difficult to predict. The rapid spread of the outbreak caused significant disruptions in the U.S. and global economies and capital markets during 2020, and the impact is expected to continue to be significant during 2021. Such economic disruptions could have a material adverse effect on Thunder Mountain Gold business due to the negative financial impact.

The severity of the impact of the COVID-19 pandemic, and related government responses could have disruptions to the "BeMetals Option Agreement. If BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments. The COVID-19 outbreak could have a variety of adverse impacts to the Company, including their ability to continue operations of their exploration under the BeMetals Operation Agreement. As of December 31, 2021, there were no material adverse impacts to the Company's' operations due to COVID-19.

Our business, operations, and financial condition are subject to various risks. This is particularly true since we are in the business of conducting exploration for mineral properties that have the potential for discovery of economic mineral resources. We urge you to consider the following risk factors in addition to the other information contained in, or incorporated by reference into, this Annual Report on Form 10-K.

### We have limited income and resources.

The Company has historically incurred losses, however, under the BeMetals Option Agreement, the Company now has a recurring source of revenue, and recorded net income in 2020, and 2019. The Company\`s ability to continue as a going concern is no longer just dependent on equity capital raises and borrowings. In 2019 in connection with the BeMetals Option Agreement (see Note 3), the Company received 10,000,000 shares of BeMetals Corp. common stock that had a fair value of $1,883,875. At December 31, 2021, the fair value of the shares is $1,520,684, and the shares are unrestricted. The Company does have the option of selling these shares. The Company continues to have the ability to raise capital in order to fund its future exploration and working capital requirements. The Company's plans for the long-term continuation as a going concern may include financing the Company's future operations through sales of its common stock and/or debt and the eventual profitable exploitation of its mining properties.

There is no guarantee that funds would be available from either source. If we are unsuccessful in raising additional funds, we will not be able to develop our properties and will be forced to liquidate assets.

### We have no proven reserves.

We have no proven reserves at any of our properties. We only have measured, indicated and inferred, along with assay samples at South Mountain; and assay samples at some of our other exploration properties.

### We believe we have the ability to continue as a going concern.

The liquidity of the Company was enhanced on February 27, 2019, when the Company entered the BeMetals Option Agreement with BeMetals Corp., and BMET USA, a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of SMMI from TMRI, both wholly owned subsidiaries of the Company. The term of the agreement is for two years with BeMetals completing a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Through December 31, 2021, cash proceeds of $1,100,000 and $250,000 in exchange for shares of the Company's common stock have been received. BeMetals also agreed to pay the Company $25,000 per month for management services. In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.

Additional sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of our stock, or alternative methods such as mergers or sale of our assets. The Company received 10,000,000 shares of BeMetals Corp. common stock in connection with the BeMetals Option Agreement. On May 17, 2021, the Company received US $649,557 from the sale of 2,000,000 shares of BeMetals common stock in an arranged transaction through Canaccord Genuity at a price of US $0.325 ($CAD 0.40) per share. Currently, there remains 8,000,000 of BeMetals common stock shares being held at Canaccord Genuity in connection with the BeMetals Option Agreement. (See South Mountain Project above), This sale meets the requirements for sale under the terms of the BeMetals Option Agreement.

Based upon current plans, Thunder Mountain Gold management is confident that the Company will have the financial strength and opportunities to meet its financial obligations for the next 12 months. Factors considered substantiating this conclusion include:

A. The Option Agreement for the South Mountain Project with BeMetals Corp. positions the Company for cash infusions, as well as equity considerations, that will more than cover the Company\`s financial obligations for the next 12 months, and

B. The ability to raise additional equity capital based upon the success of the exploration and development conducted by BeMetals during this option period, and

C. The Officers of the Company and their willingness to fund any liabilities not currently covered by the Company, and finally,

D. In 2019 in connection with the BeMetals Option Agreement (see Note 3), the Company received 10,000,000 shares of BeMetals Corp. common stock that had a fair value of $1,883,875. At December 31, 2021, the fair value of the shares is $1,520,684.

While there is much work to do, it is important to note that if BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments. In that event, we will immediately commence with marketing the Project to other groups that have an interest in the Project.

We believe we have the ability to continue as a going concern, even though our total accumulated deficit of $5,106,642 as of December 31, 2021. Our plans for the long-term continuation as a going concern include financing our future operations through sales of our common stock and/or debt and the eventual profitable exploitation of our mining properties. The Company does have the option of selling BeMetals common stock shares. If we are not successful with our plans, equity holders could then lose all or a substantial portion of their investment.

At December 31, 2021, we had current assets of $1,175,012. For the year ended December 31, 2021, net cash used for operating activities was $257,816. Our future liquidity and capital requirements will depend on many factors, including timing, cost and progress of our exploration efforts, our evaluation of, and decisions with respect to, our strategic alternatives, and costs associated with the regulatory approvals. If it turns out that we do not have enough cash to complete our exploration programs, we will make every effort to raise additional funds from public offerings, sale of liquid stock or loans.

**Our exploration efforts may be adversely affected by metals price volatility causing us to cease exploration efforts.**

The success of any exploration efforts is derived from the price of metal prices that are affected by numerous factors including: 1) expectations for inflation; 2) investor speculative activities; 3) relative exchange rate of the U.S. dollar to other currencies; 4) global and regional demand and production; 5) global and regional political and economic conditions; and 6) production costs in major producing regions. These factors are beyond our control and are impossible for us to predict.

There is no guarantee that current favorable prices for metals and other commodities will be sustained. If the market prices for these commodities weaken, we will temporarily suspend or cease exploration efforts.

**The BeMetals Option Agreement may be adversely affected by exploration results, or adversely affected by metals price volatility causing us to cease exploration efforts. Consideration to be received by the Company is highly contingent upon future events.**

There is no guarantee that the BeMetals Option Agreement will be exercised. This Agreement, and associated payments to the Company, are a contingent consideration, and may be terminated at any time by BeMetals during the Option period. The completion and exercise of the BeMetals Option Agreement is affected by the success of BeMetals exploration efforts and is contingent upon 1) certain conditions precedent; 2) the price of metals that are affected by numerous factors including inflation, investor speculative activities, relative exchange rate of the U.S. dollar to other currencies, global and regional demand and production, global and regional political and economic conditions, and production costs in major producing regions. These factors are beyond our control and are impossible for us to predict.

There is no guarantee that the BeMetals consideration shares, in the event BeMetals Corp. elects to use its shares as consideration, that may be issued to the Company will be tradeable or liquid, and the future valuation is subject to significant uncertainty and cannot be determined at this time. The amount of consideration shares is dependent upon the results of BeMetals Corp. exploration results, and the corresponding Preliminary Economic Analysis (PEA) that BeMetals Corp. will produce. The Company will provide additional information to shareholders of the Company regarding the BeMetals Option Agreement in either a Schedule 14A proxy circular or a Schedule 14C information statement to be prepared in connection with obtaining the required shareholder approval to the BeMetals Option Agreement.

There is no guarantee that current prices for metals and other commodities will be sustained. If the market prices for these commodities weaken, then the BeMetals Option Agreement may not be exercised.

### Our mineral exploration efforts may not be successful.

Mineral exploration is highly speculative. It involves many risks and often does not produce positive results. Even if we find a valuable mineral deposit, it may take many additional years or more before production is possible because of the need for additional detailed exploration, pre-production studies, permitting, financing, construction and start up.

During that time, it may not be economically feasible to produce those minerals. Establishing ore reserves requires us to make substantial capital expenditures and, in the case of new properties, to construct mining and processing facilities. As a result of these costs and uncertainties, we will not be able to develop any potentially economic mineral deposits.

**We face strong competition from other mining companies for the acquisition of new properties.**

If we do find an economic mineral reserve, and it is put into production, it should be noted that mines have limited lives and as a result, we need to continually seek to find new properties. In addition, there is a limited supply of desirable mineral lands available in the United States or elsewhere where we would consider conducting exploration activities. Because we face strong competition for new properties from other exploration and mining companies, some of whom have greater financial resources than we do, we may be unable to acquire attractive new mining properties on terms that we consider acceptable.

**Mining operations may be adversely affected by risks and hazards associated with the mining industry.**

Mining operations involve a number of risks and hazards including: 1) environmental hazards; 2) political and country risks; 3) industrial accidents; 4) labor disputes; 5) unusual or unexpected geologic formations; 6) high wall failures, cave-ins or explosive rock failures, and; 7) flooding and periodic interruptions due to inclement or hazardous weather conditions. Such risks could result in: 1) damage to or destruction of mineral properties or producing facilities; 2) personal injury; 3) environmental damage; 4) delays in exploration efforts; 5) monetary losses, and; 6) legal liability.

We have no insurance against any of these risks. To the extent we are subject to environmental liabilities, we would have to pay for these liabilities. Moreover, in the event that we ever become an operator of a mine, and unable to fully pay for the cost of remedying an environmental problem, should it occur, we might be required to suspend operations or enter into other interim compliance measures.

**Because we are small and do not have much capital, we must limit our exploration. This may prevent us from realizing any revenues, thus reducing the value of the stock.**

Because our Company is small and does not have much capital, we must limit the time and money we expend on exploration of interests in our properties. In particular, we may not be able to: 1) devote the time we would like to explore our properties; 2) spend as much money as we would like to exploring our properties; 3) rent the quality of equipment or hire the contractors we would like to have for exploration; and 4) have the number of people working on our properties that we would like to have. By limiting our operations, it may take longer to explore our properties. There are other larger exploration companies that could and may spend more time and money exploring the properties that we have acquired.

**We will have to suspend our exploration plans if we do not have access to all the supplies and materials we need.**

Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials after we have conducted preliminary exploration activities on our properties. If we cannot find the products and equipment we need in a timely manner, we will have to delay or suspend our exploration plans until we do find the products and equipment we need.

**We face substantial governmental regulation and environmental risks, which could prevent us from exploring or developing our properties.**

Our business is subject to extensive federal, state and local laws and regulations governing mining exploration development, production, labor standards, occupational health, waste disposal, use of toxic substances, environmental regulations, mine safety and other matters. New legislation and regulations may be adopted at any time that results in additional operating expense, capital expenditures or restrictions and delays in the exploration, mining, production or development of our properties.

The Company has accrued $65,000 Accrued Reclamation costs regarding the South Mountain Mine project. Various laws and permits require that financial assurances be in place for certain environmental and reclamation obligations and other potential liabilities. Once we undertake any trenching or drilling activities, a reclamation bond and a permit will be required under applicable laws. Currently, we have no obligations for financial assurances of any kind, and are unable to undertake any trenching, drilling, or development on any of our properties until we obtain financial assurances pursuant to applicable regulations to cover potential liabilities.

**If we fail to maintain an effective system of internal controls, we may not be able to detect fraud or report our financial results accurately, which could harm our business and we could be subject to regulatory scrutiny.**

Internal control systems provide only reasonable assurance that fraud and errors will be detected within the normal course of operations. The Company's management strives to maintain internal controls that are effective and commensurate for the size and scope of the business being conducted by the Company. The Company realizes the need to be proactive in this area and continues to evaluate ways for improving internal controls that are practical and cost effective for the size, structure, and future existence of our organization. The Company's Chief Financial Officer initiates and records all transactions. The transactions are reviewed and approved by the Company's President and CEO and reviewed by the Company's Vice President and COO. Capital Items and expenditures more than $5,000 must be approved by the Board of Directors, even if it is a line item in a Board Approved Budget. In addition, The Company has a Corporate Code of Business Conduct and Ethics (the "Code") which is acknowledged by officers and directors. This Corporate Governance applies to Thunder Mountain Gold Inc. and its subsidiaries (collectively, the "Company").

## Properties

As filed, 47,897 characters.

The Company, including its subsidiaries, owns mining rights, mining claims, and properties in the mining areas of Nevada and Idaho, which includes its South Mountain Property in Idaho, and its Trout Creek Property in Nevada.

The Company owns 100% of the outstanding stock of Thunder Mountain Resources, Inc., a Nevada Corporation. Thunder Mountain Resources, Inc. owns 100% of the outstanding stock of South Mountain Mines, Inc. (SMMI), an Idaho Corporation., Inc. Thunder Mountain Resources, Inc. completed the direct purchase of 100% ownership of South Mountain Mines, Inc. on September 27, 2007, which consisted of 17 patented mining claims (approximately 327 acres) located in Owyhee County in southwestern Idaho. After the purchase, Thunder Mountain Resources staked 21 unpatented lode mining claims and obtained mineral leases on 545 acres of adjoining private ranch land.

The current land package at South Mountain consists of 17 patented mining claims encompassing approximately 326 acres, 21 unpatented mining lode claims covering approximately 290 acres, and approximately 489 acres of leased private land. In addition, the project owns 360 acres of private land (mill site) not contiguous with the mining claims.

All holdings are in the South Mountain Mining District, Owyhee County, Idaho.

The Company's plan of operation for the next twelve months, subject to business conditions, will be to continue to advance the South Mountain Project under the BeMetals Option Agreement, including continued baseline environmental and engineering work necessary to complete a Preliminary Economic Analysis. As time permits, the Company may work on advancing the Trout Creek gold project, Lander County, Nevada.

### The South Mountain Project

South Mountain is a polymetallic development project focused on high-grade zinc and silver. It is located approximately 70 miles southwest of Boise, Idaho (see Figure 2). The Project was intermittently mined from the late 1800s to the late 1960s and its existing underground workings remain intact and well maintained. Historic production at the Project has largely come from high-grade massive sulfide bodies that remain open at depth and along strike. According to historical smelter records, approximately 53,642 tons of mineralized material has been mined to date. These records also indicate average grades; **14.5% Zn, 11.63 opt Ag, 0.063 opt Au, 2.4% Pb**, and **1.4% Cu** were mined. Thunder Mountain Gold Inc. purchased and advanced the Project from 2007 through 2019 investing approximately US$12M during that period. The current mineral resource estimate of the deposit is detailed in Table 3 below and the Company expects to provide a revised mineral resource update following a phase 2 drilling program in 2020.

The Project is largely on and surrounded by private surface land, and as such, the permitting and environmental aspects of the Project are expected to be straightforward. Permits are currently in place for underground exploration activities.

### Figure 2. Location of South Mountain Project

### South Mountain Project - BeMetals Option Agreement

Under the BeMetals Corporation (TSX-V: BMET) Option Agreement, BeMetals and Thunder Mountain Gold formed a project team early in 2019 that is focused on advancing the South Mountain Project. This Boise Idaho-based team includes key management of Thunder Mountain Gold Inc., who have coordinated re-establishment of the Project site prior to the start of drilling. In addition, BeMetals appointed a project manager and project geologist for this team, along with technical and underground support.

With the help of Thunder Mountain Gold, BeMetals (BMET) commenced drilling at South Mountain in July of 2019 and drilled twenty-one holes totaling 7,517 feet (2,290 meters) from five underground drilling stations within the Sonneman level. The drilling program was designed to test potential down plunge extensions, and overall continuity to the mineralized zones and confirm the grade distribution of the current polymetallic mineral resource. All of the drill core recovered from the drilling was logged on site and assayed by ALS Chemex. Selected intervals and results are summarized in the Company\`s 2020 Form 10K for the year ended December 31, 2020, and in the 2019 Form 10K for the year ended December 31, 2019.

On September 21, 2021, the Company agreed to an extension of the Option Agreement with BeMetals Corp. The Extension is through the 2022 calendar year, with the same terms to acquire up to a 100% interest in the South Mountain Project in southwest Idaho, U.S.A. In exchange for the Extension, BeMetals paid the Company the Tranche 6 Payment of $250,000.

### 2021 PROJECT HIGHLIGHTS - SOUTH MOUNTAIN PROJECT

In May of 2021, BeMetals Corp. completed an updated Mineral Resource Estimate ("MRE"), incorporating results from Phase 1 and 2 underground diamond drilling programs at the South Mountain Project. The updated MRE includes a substantially increased resource for the Project while maintaining the high-grade nature of the mineralization.

The updated Independent MRE, which has an effective date of April 20, 2021, was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI-43-101") by Hard Rock Consulting, LLC, based in the U.S.A. More details are included in Tables 1 & 2 below and a technical report for this MRE was filed with SEDAR, and on the Company's website, within 45 days from the date of this news release.

After signing the Option Agreement Extension, BeMetals Corp. embarked on a phase 3 program at South Mountain with the objective to significantly expand the scale of the current Mineral Resource Estimate ("MRE") at South Mountain (*See Summary of the MRE below*), testing and establishing the down depth extent of mineralization on the DMEA zone. The DMEA Zone is the largest known body of mineralization on the Property, containing the majority of tonnage in the current MRE, and the mineralized zone remains open at depth.

Based on the last two phases of underground drilling and all the historical exploration data available, we are confident that there is strong potential to substantially expand the down-plunge extensions of the mineral resource with this new phase of surface drilling at the Property. The plan is to initially complete approximately 7,000 feet (2,100 meters) of surface core drilling in this phase of exploration. Assuming this exploration program is successful, the plan is to update the current MRE and complete an ongoing Preliminary Economic Assessment for the Project in 2022.

By December of 2021, 2 surface core holes had been drilled for a combined total of 3,600 feet. Results are currently being modeled.

### HIGHLIGHTS OF UPDATED MINERAL RESOURCE

**Measured & Indicated ("M&I"): 206,900 tons grading 9.63% Zinc ("Zn"), 4.41 ounces per ton ("opt") Silver ("Ag"), 0.064 opt Gold ("Au"), 1.01% Lead ("Pb") and 0.63% Copper ("Cu").**

**This represents a 21.8% increase to the M&I tonnage from the historical 2019 MRE with a 20.36% Zn equivalent grade ("ZnEq").**

**Inferred: 833,700 tons grading 7.63% Zn, 5.72 opt Ag, 0.041 opt Au, 0.97% Pb and 0.81% Cu.**

**This represents a 129.5% increase in the Inferred tonnage from the historical 2019 MRE with an 18.10% ZnEq.**

#### Note: See Table 1 and 2 footnotes section 4 for details of the Zn equivalent grade calculation

### MINERAL RESOURCE ESTIMATE

In two phases of drilling completed during 2019 and 2020 a combined total of approximately 16,000 feet of underground core drilling was completed at South Mountain. During these drilling campaigns, our site team also widened and advanced the existing Sonneman level eastwards by 170 feet to establish a new drill station closer to the Texas Zone. All the results of this drilling have now been in incorporated into the updated MRE for the South Mountain deposit.

Tables 1 & 2 below provide the Mineral Resource Statement for the Project in U.S. and Metric units respectively with details of the modelling methodology and cut-off grades applied to the mineral resource. Figure 1 illustrates the principal areas where the South Mountain deposit has been expanded from the historical MRE that was completed in 2019. The historical Technical Report for the Mineral Resource Estimate for the South Mountain Project Owyhee County, Idaho USA Report Date: Dated: April 1, 2019 is filed on SEDAR.

### Table 1. South Mountain Mineral Resource Statement (U.S. Units)

| Ore Type | Classification | Mass thousand sh. ton% | Grades and Contained Metal Zinc | Zinc thousand lb | Silver t. oz/sh. ton | Silver thousand t. oz | Gold t. oz/sh. ton | Gold thousand t. oz% | Lead | Lead thousand lb% | Copper | Copper thousand lb% | ZnEq |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Massive Sulfide | Measured | 53.8 | 11.45 | 12,300 | 3.67 | 197 | 0.069 | 3.7 | 0.79 | 900 | 0.46 | 500 | 20.21 |
| Indicated | 118.9 | 11.36 | 27,000 | 4.77 | 568 | 0.077 | 9.1 | 1.36 | 3,200 | 0.53 | 1,300 | 22.14 |  |
| **Measured + Indicated** | **172.8** | **11.39** | **39,300** | **4.43** | **765** | **0.074** | **12.9** | **1.18** | **4,100** | **0.51** | **1,800** | **21.54** |  |
| Inferred | 777.2 | 8.09 | 125,700 | 5.90 | 4,586 | 0.043 | 33.7 | 1.04 | 16,100 | 0.74 | 11,500 | 18.34 |  |
| Skarn | Measured | 10.6 | 1.25 | 300 | 5.46 | 58 | 0.023 | 0.2 | 0.30 | 100 | 1.26 | 300 | 18.23 |
| Indicated | 23.5 | 0.49 | 200 | 3.78 | 89 | 0.005 | 0.1 | 0.07 | 0 | 1.20 | 600 | 12.63 |  |
| **Measured + Indicated** | **34.1** | **0.72** | **500** | **4.30** | **147** | **0.011** | **0.4** | **0.14** | **100** | **1.21** | **800** | **14.38** |  |
| Inferred | 56.5 | 1.34 | 1,500 | 3.19 | 181 | 0.006 | 0.3 | 0.04 | 100 | 1.66 | 1,900 | 14.92 |  |
| Total | Measured | 64.5 | 9.77 | 12,600 | 3.96 | 255 | 0.062 | 4.0 | 0.71 | 900 | 0.59 | 800 | 19.88 |
| Indicated | 142.4 | 9.57 | 27,200 | 4.61 | 656 | 0.065 | 9.2 | 1.15 | 3,300 | 0.64 | 1,800 | 20.57 |  |
| **Measured + Indicated** | **206.9** | **9.63** | **39,800** | **4.41** | **912** | **0.064** | **13.2** | **1.01** | **4,200** | **0.63** | **2,600** | **20.36** |  |
| Inferred | 833.7 | 7.63 | 127,300 | 5.72 | 4,766 | 0.041 | 34.0 | 0.97 | 16,200 | 0.81 | 13,400 | 18.10 |  |

13

*1.) The effective date of the mineral resource estimate is April 20th, 2021. The QP for the estimate is Mr. Richard A. Schwering, P.G., SME-RM, of Hard Rock Consulting, LLC. and is independent of BeMetals Corp., Thunder Mountain Gold Inc., and South Mountain Mines Inc.*

*2.) Mineral resources are not mineral reserves and do not have demonstrated economic viability such as diluting materials and allowances for losses that may occur when material is mined or extracted; or modifying factors including but not restricted to mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors. Inferred mineral resources may not be converted to mineral reserves. It is reasonably expected, though not guaranteed, that the majority of Inferred mineral resources could be upgraded to Indicated mineral resources with continued exploration.*

*3.) The mineral resource is reported at an underground mining cutoff of $102.5 U.S. Net Smelter Return ("NSR") within coherent wireframe models. The NSR calculation and cut-off is based on the following assumptions: an Au price of $1,750/oz, Ag price of $23.00/oz, Pb price of $1.02/lb., Zn price of $1.20/lb. and Cu price of $3.40/lb.; Massive Sulfide ore type metallurgical recoveries and payables of 52.25% for Au, 71.25% for Ag, 71.40% for Zn, 66.50% for Pb, and 49.00% for Cu and a total smelter cost of $33.29; Skarn ore type metallurgical recoveries and payables of 71.25% for Au, 80.75% for Ag, 51.00% for Zn, 47.50% for Pb, and 87.70% for Cu and a smelter cost of $7.24; assumed mining cost of $70/ton, process costs of $25/ton, and general and administrative costs of $7.5/ton. Based on the stated prices and recoveries the NSR formula is calculated as follows; NSR = (Ag grade \* Ag price \* Ag Recovery and Payable) + (Au grade \* Au price \* Au Recovery and Payable) + (Pb grade \* 20 \* Pb Price \* Pb Recovery and Payable) + (Cu grade \* 20 \* Cu Price \* Cu Recovery and Payable) + (Zn grade \* 20 \* Zn Price \* Zn Recovery and Payable) for each ore type.*

*4.) The zinc equivalent grades were calculated as Zn Grade + (((Pb Price \* Pb Recovery and Payable) / (Zn Price\*Zn Recovery and Payable)) \* Pb Grade) + (((Cu Price \* Cu Recovery and Payable) / (Zn Price \* Zn Recovery and Payable)) \* Cu Grade) + (((Ag Price \* Ag Recovery and Payable) / (Zn Price \* 20 \* Zn Recovery and Payable)) \* Ag Grade) + (((Au Price \* Au Recovery and Payable) / (Zn Price \* 20 \* Zn Recovery and Payable)) \* Au Grade)*

*5.) Rounding may result in apparent differences when summing tons, grade and contained metal content. Tonnage and grade measurements are in U.S. units.*

### Table 2. South Mountain Mineral Resource Statement (Metric Units)

| Ore Type | Classification | Mass kt% | Grades and Contained Metal Zinc | Zinc t | Silver ppm | Silver kg | Gold ppm | Gold g% | Lead | Lead t% | Copper | Copper T% | ZnEq |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Massive Sulfide | Measured | 48.85 | 11.45 | 5,600 | 126 | 6,100 | 2.38 | 116,200 | 0.79 | 400.00 | 0.46 | 200 | 20.21 |
| Indicated | 107.90 | 11.36 | 12,300.0 | 164 | 17,700 | 2.63 | 283,500 | 1.36 | 1,500 | 0.53 | 600 | 22.14 |  |
| **Measured + Indicated** | **156.75** | **11.39** | **17,800.0** | **152** | **23,800** | **2.55** | **399,700** | **1.18** | **1,900** | **0.51** | **800** | **21.54** |  |
| Inferred | 705.03 | 8.09 | 57,000.0 | 202 | 142,600 | 1.49 | 1,049,000 | 1.04 | 7,300 | 0.74 | 5,200 | 18.34 |  |
| Skarn | Measured | 9.62 | 1.25 | 100.0 | 187 | 1,800 | 0.78 | 7,500 | 0.30 | 0 | 1.26 | 100 | 18.23 |
| Indicated | 21.28 | 0.49 | 100.0 | 130 | 2,800 | 0.17 | 3,700 | 0.07 | 0 | 1.20 | 300 | 12.63 |  |
| **Measured + Indicated** | **30.90** | **0.72** | **200.0** | **148** | **4,600** | **0.36** | **11,200** | **0.14** | **0** | **1.21** | **400** | **14.38** |  |
| Inferred | 51.26 | 1.34 | 700.0 | 110 | 5,600 | 0.19 | 9,900 | 0.04 | 0 | 1.66 | 900 | 14.92 |  |
| Total | Measured | 58.47 | 9.77 | 5,700.0 | 136 | 7,900 | 2.12 | 123,700 | 0.71 | 400 | 0.59 | 300 | 19.88 |
| Indicated | 129.18 | 9.57 | 12,400.0 | 158 | 20,400 | 2.22 | 287,300 | 1.15 | 1,500 | 0.64 | 800 | 20.57 |  |
| **Measured + Indicated** | **187.65** | **9.63** | **18,100.0** | **151** | **28,400** | **2.19** | **411,000** | **1.01** | **1,900** | **0.63** | **1,200** | **20.36** |  |
| Inferred | 756.30 | 7.63 | 57,700.0 | 196 | 148,200 | 1.40 | 1,058,900 | 0.97 | 7,300 | 0.81 | 6,100 | 18.10 |  |

*1) The effective date of the mineral resource estimate is April 20th, 2021. The QP for the estimate is Mr. Richard A. Schwering, P.G., SME-RM, of Hard Rock Consulting, LLC. and is independent of BeMetals, Corp., Thunder Mountain Gold Inc., and South Mountain Mines Inc.*

*2) Mineral resources are not mineral reserves and do not have demonstrated economic viability such as diluting materials and allowances for losses that may occur when material is mined or extracted; or modifying factors including but not restricted to mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors. Inferred mineral resources may not be converted to mineral reserves. It is reasonably expected, though not guaranteed, that the majority of Inferred mineral resources could be upgraded to Indicated mineral resources with continued exploration.*

*3) The mineral resource is reported at an underground mining cutoff of $102.5 U.S. Net Smelter Return ("NSR") within coherent wireframe models. The NSR calculation and cut-off is based on the following assumptions: an Au price of $1,750/oz, Ag price of $23.00/oz, Pb price of $1.02/lb., Zn price of $1.20/lb. and Cu price of $3.40/lb.; Massive sulfide ore type metallurgical recoveries and payables of 52.25% for Au, 71.25% for Ag, 71.40% for Zn, 66.50% for Pb, and 49.00% for Cu and a total smelter cost of $33.29; Skarn ore type metallurgical recoveries and payables of 71.25% for Au, 80.75% for Ag, 51.00% for Zn, 47.50% for Pb, and 87.70% for Cu and a smelter cost of $7.24; assumed mining cost of $70/ton, process costs of $25/ton, and general and administrative costs of $7.5/ton. Based on the stated prices and recoveries the NSR formula is calculated as follows; NSR = (Ag grade \* Ag price \* Ag Recovery and Payable) + (Au grade \* Au price \* Au Recovery and Payable) + (Pb grade \* 20 \* Pb Price \* Pb Recovery and Payable) + (Cu grade \* 20 \* Cu Price \* Cu Recovery and Payable) + (Zn grade \* 20 \* Zn Price \* Zn Recovery and Payable) for each ore type.*

*4) The zinc equivalent grades were calculated as Zn Grade + (((Pb Price \* Pb Recovery and Payable) / (Zn Price\*Zn Recovery and Payable)) \* Pb Grade) + (((Cu Price \* Cu Recovery and Payable) / (Zn Price \* Zn Recovery and Payable)) \* Cu Grade) + (((Ag Price \* Ag Recovery and Payable) / (Zn Price \* 20 \* Zn Recovery and Payable)) \* Ag Grade) + (((Au Price \* Au Recovery and Payable) / (Zn Price \* 20 \* Zn Recovery and Payable)) \* Au Grade)*

*5) Rounding may result in apparent differences when summing tons, grade and contained metal content. Tonnage and grade measurements are in U.S. units and converted to metric.*

### PHASE 2 TEXAS ZONE DRILLING - SOUTH MOUNTAIN PROJECT

A total of 8,904 feet (2,714 meters) of underground core drilling was completed during Phase 2, with 30 holes in both the Texas and DMEA zones. During this drilling campaign, our site team widened and advanced the existing Sonneman level eastwards by 170 feet (52 meters) to establish a new drill station closer to the Texas Zone *(See Figure 1)*. With better access to drill the Texas Zone, a total of 24 holes were completed to test this zone of mineralization. Geological logging of the core supported by sampling results indicate that two styles of high-grade mineralization have developed in this area and are now identified as the Texas West and Texas East zones.

Table 1 below illustrates the drilling results received to date from the Texas West Zone. This zone is characterized by skarn-hosted, dominantly copper and silver mineralization. This is demonstrated, for example, in the drilled intercepts:

3.81% Cu with 7.82 opt (244.3 g/t) Ag over 15.7 feet (4.79 meters) in hole SM20-043 (Interval 1),

2.56% Cu with 8.32 opt (260.1 g/t) Ag over 35.6 feet (10.85 meters) in SM20-028, and

2.23% Cu with 10.81 opt (337.9 g/t) Ag over 16.96 feet (5.17 meters) in hole SM20-038.

Important to note that from the geological logging of the core, the higher copper grades over significant drilled widths in Texas West appear to be controlled by the increased abundance of chalcopyrite, which is a common copper sulphide mineral, often extractable through conventional flotation methods. Representative sample material of this and other zones of the deposit have been identified and are being collected for metallurgical test work at the SGS Mineral Services site in Lakefield, Canada. Results from this study will be included with historical test work and incorporated into the planned PEA study later this year.

Table 2 below displays the drill hole intersections from the Texas East Zone where this mineralization is represented by predominantly massive sulphide hosted zinc, silver, and gold mineralization. Examples of this style of mineralization are intercepts:

8.65% Zn, 6.98 opt (218.1 g/t) Ag and 0.078 opt (2.44 g/t) Au over 11 feet (3.37 meters) in hole SM20-043 (Interval 2), and

4.17% Zn, 6.23 opt (194.8 g/t) Ag and 0.130 opt (4.05 g/t) Au over 27.39 feet (8.35 meters) in hole SM20-050.

The gold grades of 0.130 opt (4.05 g/t) over 27.39 feet (8.35 meters); 0.066 opt (2.07 g/t) over 15.45 feet (4.71 meters) and 0.122 opt. (3.82 g/t) over 4.39 feet (1.34 meters) in holes SM20-050, SM20-043, and SM20-029, respectively, are of specific interest from a value potential for the Texas East Zone. These Texas East intersections represent the successful targeting and interpreted extension of mineralization below historical high-grade rib sampling in the Sonneman level from the 1980s *(See Figure 1). (See Thunder Mountain Gold news release, dated; January 27, 2020).*

The 2020 drill program intersected mineralization extending the Texas Zone further down dip of historical drilling and the exposures in the underground development. Texas Zone mineralization is now interpreted to continue from the collar of the old Texas Shaft some 1,150 feet (350 meters) down dip to the SM20-050 intercept. Both the Texas West and East zones remain open to depth *(See Figure 1).* Table 3 further below provides drill hole azimuth, dip, end of hole length and collar coordinates for each of the reported drill holes.

### Table 1. Analytical and Assay Results from Texas West Zone

| Drill Hole ID, Zone & Interval TEXAS WEST ZONE | From (ft) | To (ft) | Core Interval (ft) | Cu % | Ag opt | Au opt | Pb % | Zn % |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **SM20-028** | 198.95 | 234.55 | 35.60 | 2.56 | 7.586 | 0.008 | 0.1 | 0.13 |
| **SM20-030** | 54.89 | 82.09 | 27.20 | 1.13 | 3.649 | 0.003 | 0.02 | 0.26 |
| **SM20-031** | 136.09 | 140.58 | 4.49 | 1.56 | 8.940 | 0.012 | 1.09 | 2.21 |
| **SM20-033** | 110.79 | 119.49 | 8.69 | 2.77 | 7.330 | 0.011 | 0.03 | 0.15 |
| **SM20-036** | 112.40 | 143.70 | 31.30 | 0.99 | 9.243 | 0.007 | 0.39 | 2.15 |
| **SM20-038** | 106.00 | 131.00 | 25.00 | 1.64 | 8.152 | 0.022 | 0.86 | 0.55 |
| INCLUDING: | 106.00 | 122.97 | 16.96 | 2.23 | 9.855 | 0.030 | 1.12 | 0.77 |
| **SM20-041** |  |  |  |  |  |  |  |  |
| INTERVAL 1: | 63.71 | 73.88 | 10.17 | 1.29 | 5.177 | 0.003 | 0.07 | 0.04 |
| INTERVAL 2: | 104.20 | 109.19 | 4.99 | 0.44 | 4.947 | 0.069 | 0.91 | 1.99 |
| **SM20-042** |  |  |  |  |  |  |  |  |
| INTERVAL 1: | 58.99 | 65.19 | 6.20 | 1.92 | 3.004 | 0.002 | 0.01 | 0.03 |
| INTERVAL 2: | 78.08 | 83.99 | 5.91 | 1.06 | 3.325 | 0.002 | 0.03 | 0.1 |
| **SM20-043** | (ft) | (ft) | Interval (ft) |  | opt | opt |  |  |
| INTERVAL 1: | 131.00 | 154.00 | 23.00 | 2.84 | 5.294 | 0.006 | 0.01 | 0.29 |
| INCLUDING: | 131.00 | 146.69 | 15.68 | 3.81 | 7.125 | 0.005 | 0.01 | 0.07 |
| **SM20-049** |  |  |  |  |  |  |  |  |
| INTERVAL 1: | 106.89 | 120.64 | 13.75 | 1.82 | 2.608 | 0.002 | 0.01 | 0.18 |
| INTERVAL 2: | 147.31 | 151.25 | 3.94 | 2.42 | 4.025 | 0.004 | 0.01 | 0.07 |
| Analytical and Assay results are pending for drill holes SM20-32, 34, 35, 37, 39, 40, 44-48 and 51 |  |  |  |  |  |  |  |  |

*Note: Reported widths are drilled core lengths as true widths are unknown at this time. It is estimated based upon current data that true widths might range between 60-80% of the drilled intersection. A nominal cut-off grade of 0.5% Cu has been applied to determine the boundaries of the intersections for this skarn-hosted mineralization with no more than 1.22 meters of internal dilution. \*A nominal cut-off grade of 4.375 opt (150 g/t) Ag has been applied to this intersection. Table 3 below documents; Drill Hole Azimuth, Dip, end of hole length, and Collar Coordinates (Note: See details below in QA/QC section).*

### Table 2. Analytical and Assay Results from Texas East Zone

| Drill Hole ID, Zone & Interval TEXAS EAST ZONE | From (ft) | To (ft) | Core Interval (ft) | Zn % | Ag opt | Au opt | Pb % | Cu % |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **SM20-029** | 202.20 | 206.59 | 4.40 | 19.67 | 6.688 | 0.111 | 3.94 | 0.25 |
| **SM20-043** |  |  |  |  |  |  |  |  |
| INTERVAL 2: | 185.47 | 200.89 | 15.42 | 6.19 | 4.918 | 0.060 | 0.71 | 0.39 |
| INCLUDING: | 185.47 | 196.49 | 11.02 | 8.65 | 6.361 | 0.071 | 0.9 | 0.52 |
| **SM20-050** |  |  |  |  |  |  |  |  |
| INTERVAL 1: | 151.84 | 159.42 | 7.58 | 0.1 | 4.255 | 0.005 | 0.01 | 2.91 |
| INTERVAL 2: | 162.89 | 190.29 | 27.40 | 4.17 | 5.682 | 0.118 | 0.78 | 0.54 |
| Analytical and Assay results are pending for drill holes SM20-32, 34, 35, 37, 39, 40, 44-48 and 51 |  |  |  |  |  |  |  |  |

*Note: Reported widths are drilled core lengths as true widths are unknown at this time. It is estimated based upon current data that true widths might range between 60-80% of the drilled intersection. Intervals cut-offs are based upon visual contacts of massive sulphide units with no more than 0.80 meters of internal skarn. For hole SM20-050 Interval 1. a nominal cut-off grade of 0.5% Cu has been applied to determine the boundaries of the intersections for this skarn-hosted mineralization. Table 3 below documents; Drill Hole Azimuth, Dip, end of hole length, and Collar Coordinates (Note: See details below in QA/QC section).*

### Figure 1: 3D Perspective view inclined 200 looking north-north-east, with hole locations for SM20-028 thru SM20-050

### Table 3: Drill Hole Azimuth, Dip, End of hole length and Collar Coordinates

| Hole ID | Azimuth Degree | Dip Degree | End of hole Length (ft) | East (ft.) | North (ft.) | Elev. (ft.) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| SM20-028 | 90 | 15 | 246 | 2311764 | 393645 | 6866.77 |
| SM20-029 | 126 | -12 | 325 | 2311764 | 393645 | 6866.77 |
| SM20-030 | 95 | -30 | 125 | 2311764 | 393645 | 6866.77 |
| SM20-031 | 110 | -14 | 179 | 2311764 | 393645 | 6866.77 |
| SM20-032\* | 105 | -64 | 144 | 2311764 | 393645 | 6866.77 |
| SM20-033 | 115 | -30 | 205 | 2311764 | 393645 | 6866.77 |
| SM20-034\* | 80 | 15 | 217 | 2311764 | 393645 | 6866.77 |
| SM20-035\* | 105 | 14 | 78 | 2311764 | 393645 | 6866.77 |
| SM20-036 | 105 | -14 | 269 | 2311764 | 393645 | 6866.77 |
| SM20-037\* | 100 | -14 | 225 | 2311764 | 393645 | 6866.77 |
| SM20-038 | 110 | -30 | 185 | 2311764 | 393645 | 6866.77 |
| SM20-039\* | 122 | -8 | 350 | 2311764 | 393645 | 6866.77 |
| SM20-040\* | 105 | -29 | 200 | 2311764 | 393645 | 6866.77 |

18

| Hole ID | Azimuth Degree | Dip Degree | End of hole Length (ft) | East (ft.) | North (ft.) | Elev. (ft.) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| SM20-041 | 110 | -40 | 185 | 2311764 | 393645 | 6866.77 |
| SM20-042 | 87 | -62 | 204 | 2311764 | 393645 | 6866.77 |
| SM20-043 | 124 | -20 | 399 | 2311764 | 393645 | 6866.77 |
| SM20-044 | 124 | -20 | 154 | 2311764 | 393645 | 6866.77 |
| SM20-045\* | 0 | -55 | 108 | 2311764 | 393645 | 6866.77 |
| SM20-046\* | 127 | -37 | 305 | 2311764 | 393645 | 6866.77 |
| SM20-047\* | 60 | -80 | 173 | 2311764 | 393645 | 6866.77 |
| SM20-048\* | 135 | -36 | 275 | 2311764 | 393645 | 6866.77 |
| SM20-049 | 155 | -60 | 205 | 2311764 | 393645 | 6866.77 |
| SM20-050 | 150 | -42 | 276 | 2311764 | 393645 | 6866.77 |
| SM20-051\* | 170 | -49 | 404 | 2311760 | 393643 | 6866.07 |

#### \*The results pending for this drillhole.

### Phase I Drilling at South Mountain under BeMetals Option Agreement

The principal objectives of the Phase 1 work plan at South Mountain were to test for potential extensions of the mineralized zones and confirm the grade distribution of the current polymetallic mineral resource estimate. The Company has now successfully completed the phase 1 program comprised of 20 underground drill holes for a total of approximately 2,290 meters. Geological logging and sampling of all drill holes have now been completed with all analytical results received. These results have been compiled into the Project's geological database and were used to design the phase 2 drilling program for 2020. Following the phase 2 drilling program, all new results were integrated into an updated mineral resource estimation for the Project and announced during the second quarter of 2021.

### Table 1. BeMetal\`s Analytical and Assay Results for the Phase 1 Drilling Program

| Drill Hole ID, Zone & Interval DMEA Zone SM19-002 | From (m) | To (m) | Core Interval (m) | Zn % | Ag g/t | Au g/t | Pb % | Cu % |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Interval 1** | 46.88 | 57.39 | **10.51** | **17.81** | **226** | **2.41** | **1.59** | **0.16** |
| **Interval 2** | 67.85 | 71.63 | **3.78** | **5.45** | **145** | **8.39** | **0.58** | **0.15** |
| **Interval 3** | 85.83 | 96.39 | **10.56** | **11.42** | **123** | **4.43** | **0.36** | **0.52** |
| **SM19-003** |  |  |  |  |  |  |  |  |
| **Interval 1** | 51.18 | 75.35 | **24.17** | **11.12** | **267** | **3.44** | **3.75** | **0.29** |
| Including | 51.18 | 60.78 | **9.60** | **11.74** | **437** | **5.99** | **8.68** | **0.38** |
| Including | 62.09 | 75.35 | **13.26** | **11.77** | **169** | **1.88** | **0.54** | **0.25** |
| **Interval 2** | 77.60 | 81.24 | **3.64** | **9.74** | **331** | **1.94** | **1.11** | **0.34** |

19

|  |  |  |  |  |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **SM19-005** | 75.13 | 86.37 | **11.23** | **7.97** | **128** | **1.20** | **0.91** | **0.24** |
| **SM19-006** | 28.01 | 43.71 | **15.70** | **21.27** | **147** | **8.04** | **0.77** | **0.30** |
| **SM19-007** | 26.97 | 39.17 | **12.20** | **18.16** | **122.6** | **4.41** | **1.55** | **0.16** |
| **SM19-014** |  |  |  |  |  |  |  |  |
| **Interval 1** | 105.31 | 120.40 | **15.09** | **9.59** | **127.1** | **1.50** | **0.69** | **0.28** |
| **Interval 2** | 138.07 | 143.88 | **5.81** | **4.88** | **76.9** | **2.55** | **0.21** | **0.12** |
| **Interval 3** | 155.17 | 158.95 | **3.78** | **14.49** | **145.5** | **0.37** | **0.25** | **0.48** |
| **Interval 4** | 184.40 | 189.56 | **5.15** | **0.28** | **79.9** | **2.08** | **0.15** | **0.06** |
| **Interval 5** | 250.65 | 258.94 | **8.29** | **8.11** | **178.7** | **0.48** | **0.57** | **1.73** |
| **Interval 6** | 266.33 | 268.16 | **1.83** | **1.32** | **158.9** | **2.56** | **0.56** | **0.11** |
| **Texas Zone** |  |  |  |  |  |  |  |  |
| **SM19-010** |  |  |  |  |  |  |  |  |
| **Interval 1** | 24.41 | 31.62 | **7.21** | **4.37** | **155.2** | **0.13** | **0.03** | **2.07** |
| **Interval 2** | 53.11 | 63.15 | **10.04** | **0.40** | **135.1** | **0.07** | **0.01** | **1.75** |

\* Note: 1.00 meter (m) is equal to 3.28 feet (ft). One gram per tonne (g/t) is equal to 0.032 ounces per ton (oz/t, or o.p.t.)

Table 2 below shows the latest results received from holes SM19-016, SM19-017 and SM19-018.

### Table 2. Drill Holes SM19-016, SM19-017 and SM19-018: Analytical and Assay Results

| Drill Hole ID: Zone & Interval DMEA Zone SM19-016 | From (m) | To (m) | Core Interval (m) | Zn % | Ag g/t | Au g/t | Pb % | Cu % |
| --- | ---: | ---: | --- | ---: | ---: | ---: | ---: | ---: |
| **Interval 1** | 112.33 | 132.05 | **19.72†** | **0.07** | **8.39** | **1.52** | **0.01** | **0.002** |
| **Interval 2** | 136.55 | 146.64 | **10.09** | **3.15** | **151.3** | **1.68** | **0.66** | **0.22** |
| **Interval 3** | 158.27 | 163.59 | **5.32†** | **0.59** | **46.8** | **1.81** | **0.11** | **0.04** |
| **Interval 4** | 184.18 | 188.64 | **4.47†** | **5.04** | **482.0** | **4.27** | **5.80** | **0.43** |
| **Interval 5** | 227.32 | 230.83 | **3.51** | **8.85** | **136.2** | **0.17** | **1.25** | **1.67** |
| **MB4 Target Zone** |  |  |  |  |  |  |  |  |
| **SM19-017** |  |  |  |  |  |  |  |  |
| **Interval 1** | 1.37 | 5.23 | **3.86\*** | **12.90** | **314.1** | **0.26** | **0.88** | **1.08** |
| **Interval 2** | 16.32 | 24.08 | **7.76\*** | **10.23** | **91.4** | **0.07** | **0.36** | **0.55** |
| **SM19-018** |  |  |  |  |  |  |  |  |
| **Interval 1** | 0.00 | 18.62 | **18.62\*** | **5.15** | **73.2** | **0.11** | **0.02** | **0.41** |
| Including | 8.53 | 18.62 | **10.09\*** | **8.06** | **97.0** | **0.15** | **0.02** | **0.68** |

*Note: Reported widths in tables 1 & 2 are drilled core lengths as true widths are unknown at this time. It is estimated based upon current data that true widths might range between 60-80% of the drilled intersection. For drill holes SM19-017\* and SM19-018\* true widths are unknown as these are the first drill intersections of the MD4 target. Intervals cut offs are based upon visual contacts of massive sulfide units with no more than 1.75 meters of internal skarn. For SM19-010 a nominal 0.5% copper cut off has been applied to determine the boundaries of the intersections for this skarn hosted mineralization with no more than 1.4m of internal dilution. For SM19-016† (intervals 1, 3 and 4) a nominal 0.46 g/t gold cut off has been applied to determine the boundaries of the intersections with no internal dilution. For SM19-017 & 018 a nominal 2.4% zinc cut off has been applied to determine the boundaries of the intersections for this skarn hosted mineralization with no more than 2m of internal dilution. (Note: See details below in QA/QC section). 1.00 meter (m) is equal to 3.28 feet (ft). One gram per tonne (g/t) is equal to 0.032 ounces per ton (oz/t, or o.p.t.).*

The above drill holes returned significant intersections of both massive sulfide and skarn styles of mineralization. Important sulfide minerals are pyrrhotite, sphalerite, galena, arsenopyrite and chalcopyrite. During the planned phase 3 campaign at South Mountain, the Company will carry out mineralogy and metallurgical test work studies to confirm historical other previous high-grade results, which will be included in the PEA.

**Figure 1:** *3D Perspective View inclined at 20 degrees looking north-north-east, showing locations of rib-sampling, priority target zones, and the phase 1 drill holes and highlighted the recent SM19-016, SM19-017 and SM19-018*

Underground core drilling was conducted to extend and upgrade the South Mountain resource - testing the continuity and down-dip extensions of the high-grade polymetallic massive sulfide zones. The Company and BeMetals completed additional core drilling in the DMEA and Laxey zones to complete the confirmation and extensional drilling in 2021. The Company also retrieved bulk samples for metallurgical test work.

More than 15,000 feet (4,500 meters) have been drilled at South Mountain and included in the model. The South Mountain historic ore zones remain open down-dip on the zones encountered. The successful drilling and development work prove that the South Mountain resource continues to grow with potential to increase the resource substantially.

**Figure 2:** *Plan View of the Sonneman & Laxey Levels, South Mountain Deposit,*

#### showing locations of rib-sampling, priority target zones, and drill holes SM19-016, SM19-017 and SM19-018

### Figure 3: Plan View of Sonneman & Laxey Levels,

### showing locations of previously reported rib sampling

### QUALITY ASSURANCE AND QUALITY CONTROL PROCEDURES

The project employs a rigorous QC/QA program that includes blanks, duplicates and appropriate certified standard reference material. All samples are introduced into the sample stream prior to sample handling/crushing to monitor analytical accuracy and precision. The insertion rate for the combined QA/QC samples is 10 percent or more depending upon batch sizes. ALS Global completed the analytical work with the core samples processed at their preparation facility in Reno, Nevada, U.S.A. All analytical and assay procedures are conducted in the ALS facility in North Vancouver, BC. The samples are processed by the following methods as appropriate to determine the grades; Au-AA23-Au 30g fire assay with AA finish, ME-ICP61-33 element four acid digest with ICP-AES finish, ME-OG62-ore grade elements, four acid with ICP-AES finish, Pb-OG62-ore grade Pb, four acid with ICP-AES finish, Zn-OG62-ore grade Zn, four acid digest with ICP-AES finish, Ag-GRA21-Ag 30g fire assay with gravimetric finish.

### South Mountain Mine History

The limited historic production peaked during World War II when, based on smelter receipts, the production of direct shipped ore totaled as follows:

| Metal | Grade | Total Metal |
| --- | ---: | --- |
| Zinc | 14.5% | 15,593,100 lbs (7,072,900 Kg) |
| Silver | 10.6 opt (363.4 g/t) | 566,440 ozs (17,618,200 grams) |
| Gold | 0.058 opt (1.99 g/t) | 3,120 ozs (96,980 grams) |
| Copper | 1.4% | 1,485,200 lbs (6,320 Kg) |
| Lead | 2.4% | 2,562,300 lbs (1,162,250 Kg) |

#### Anaconda Smelter - Toole Utah - Crude Ore Shipment Head Grades

#### 1941-1953 Total Tons: 53,653 (48,670 tonnes)

In addition to the direct-ship ore, a flotation mill was constructed and operated during the late-1940s and early-1950s. From the 1954 South Mountain Mill report, recoveries were reported as follows:

### 1954 South Mountain Mill Report

| Metal | Head Grades | Recovery |
| --- | ---: | ---: |
| Zinc | 6.7% | 80% |
| Silver | 17.5 opt (600 g/t) | 85% |
| Gold | 0.02 opt (0.7 g/t) | 75% |
| Copper | 3.2% | 90% |
| Lead | 1% | 90% |

#### These are historic grades and recoveries not confirmed by the Company, but reportedly

*mined from a small 39,600-ton (35,900 tonnes) copper rich block in the Texas zone.*

South Mountain Mines Inc. (an Idaho Corporation) owned the patented claims from 1975 to the time the Company purchased the entity in 2007. They conducted extensive exploration work including extending the Sonneman Level by approximately 1,500 feet to intercept the down-dip extension of the Texas sulfide mineralization mined on the Laxey Level approximately 400 feet up-dip from the Sonneman. High grade sulfide mineralization was intercepted and confirmed on the Sonneman Extension. In 1985 South Mountain Mines Inc. completed a feasibility study based on historic and newly developed ore zones exposed in their underground workings and drilling. Although they determined positive economics, and that the resource was still open at depth with a large upside potential, the project was idled and placed into care and maintenance.

In 2008, the Company contracted Kleinfelder, Inc., a nationwide engineering and consulting firm, to complete a technical report "Resources Data Evaluation, South Mountain Property, South Mountain Mining District, Owyhee County, Idaho". The technical report was commissioned by Thunder Mountain Resources, Inc. to evaluate all the existing data available on the South Mountain property. Kleinfelder utilized a panel modeling method using this data to determine potential mineralized material remaining and to make a comparison with the resource determined by South Mountain Mines in the mid-1980s. Kleinfelder's calculations provided a potential resource that is consistent with South Mountain Mines' (Bowes 1985) historic reserve model.

In 2009, the Company contracted a third-party consulting firm that incorporated all the new drill and sampling data into an NI 43-101 Technical Report. This report was completed as part of the Company's dual listing on the TSX Venture Exchange in 2010. The Company is also traded in the U.S. on the OTCQB under ticker THMG.

In January of 2018, the Company engaged Hard Rock Consulting LLC (HRC) from Denver, Colorado to update the South Mountain Project 43-101. HRC concluded that significant potential exists to increase the known mineral resource with additional drilling, as well as to upgrade existing mineral resource classifications with additional infill drilling. HRC also determined that the conceptual geologic model is sound, and, in conjunction with drilling results, indicates that mineralization is essentially open in all directions, and is continuous between underground levels and extends to the surface.

Hard Rock Consulting also noted that:

THMG technical staff has thorough understanding of the geology of the South Mountain Project, and that the appropriate deposit model is being applied for exploration.

Because the Project is largely located on and surrounded by private land, it greatly simplifies Project approvals compared to mining projects involving public lands.

Initial metallurgical testing demonstrates that the South Mountain massive sulfide mineralization is amenable to differential flotation and concentration.

The current mineral resource at the South Mountain Project is more than sufficient to warrant continued planning and development to further advance the Project.

### Gold Breccia

HRC also reviewed the data on the anomalous gold-bearing multi-lithic breccia that was identified by THMG conducting reconnaissance work at South Mountain. In 2010, five holes were drilled in the anomaly for a total footage of 3,530 feet, and 705 total samples taken every five feet of drill hole. Of the 705 samples taken, 686 samples contained anomalous gold, or 97% of the samples. The highest-grade intercept ran 0.038 ounce per ton. HRC reviewed the reports done on the breccia completed by both Kinross and Newmont; of note was Newmont's comparison of the geology to the Battle Mountain Complex in Nevada.

The Technical Report was authored by Ms. J.J. Brown, P.G., SME-RM, Mr. Jeffrey Choquette, P.E., and Mr. Randy Martin, SME-RM, all of Hard Rock Consulting, each of whom is an independent qualified person for the purposes of NI 43-101 The NI 43-101 Technical Report has an effective date of April 7, 2018 and has been filed in Canada on SEDAR in accordance with NI 43-101. The Report can be reviewed on the Company\`s website at www.thundermountaingold.com.

**Note to United States investors concerning estimates of measured, indicated and inferred resources.**

Information concerning our mining properties in this Annual Report on Form 10-K has been prepared in accordance with the requirements of subpart 1300 of Regulation SK, which first became applicable to us for the fiscal year ended December 31, 2021. These requirements differ significantly from the previously applicable disclosure requirements of SEC Industry Guide 7. Among other differences, subpart 1300 of Regulation S-K requires us to disclose our mineral resources, in addition to our mineral reserves, as of the end of our most recently completed fiscal year both in the aggregate and for each of our individually material mining properties. You are cautioned that mineral resources do not have demonstrated economic value. Mineral resources are subject to further exploration and development, are subject to additional risks, and no assurance can be given that they will eventually convert to future reserves. Inferred Resources, in particular, have a great amount of uncertainty as to their existence and their economic and legal feasibility. Investors are cautioned not to assume that any part or all of the Inferred Resource exists or is economically or legally mineable. See Item 1A, Risk Factors.

Disclosure of the NI-43-101 has been prepared in accordance with the requirements of Canadian securities laws, including Canadian National Instrument 43-101 ("NI 43-101"). The Highlights of South Mountain NI-43-101 section refers to "mineral resources," "measured mineral resources," "indicated mineral resources," and "inferred mineral resources."

**Qualified Person** - The technical information in this Form 10K has been reviewed and approved by Larry D. Kornze, Retired, , Qualified Person, and Director of Thunder Mountain Gold Inc., and a "Qualified Person" as defined by National Instrument 43-101 standards.

This property is without known reserves and the proposed program is exploratory in nature according to Instruction 3 to paragraph (b)(5) of the SEC\`s Industry Guide 7. There are currently no permits required for conducting exploration in accordance with the Company\`s current board approved exploration plan.

### Trout Creek Project, Lander County, Nevada

The Trout Creek project is a highly prospective gold exploration target located along the western flank of the Shoshone Mountain Range in the Reese River Valley in Lander County, Nevada. The Project is located approximately 155 air miles northeast of Reno, Nevada, or approximately 20 miles south of Battle Mountain, Nevada, in Sections 10, 11, 14, 16, 21, 22, 27; T.29N.; R.44E. Mount Diablo Baseline & Meridian, Lander County, Nevada. Latitude: 40 23' 36" North, Longitude: 117 00' 58" West. The property is generally accessible year-round by traveling south from Battle Mountain Nevada on state highway 305, which is paved.

For the year ended December 31, 2021, the Company made the decision not to maintain 52 unpatented mining claims (1,067 acres) of the original 87 unpatented mining claims in the Trout Creek area. The Company has retained 26 unpatented mining claims (approximately 520 acres). The Company's 26 unpatented mining claims are situated along a recognizable structural zone in the Eureka-Battle Mountain mineralized gold trend. The Company paid annual fees to BLM of $4,290 and Lander County $324 fees.

The Trout Creek target is anchored by a regional gravity anomaly on a well-defined northwest-southeast trending break in the alluvial fill thickness and underlying bedrock. Previous geophysical work in the 1980s revealed an airborne magnetic anomaly associated with the same structure, and this was further verified and outlined in 2008 by Company personnel, with consultation from Jim Wright - Wright Geophysics using a ground magnetometer. The target is covered by alluvial fan deposits of generally unknown thickness, shed from the adjacent Shoshone Range, a fault block mountain range composed of Paleozoic sediments of both upper and lower plate rocks of the Roberts Mountains thrust.

In addition to the geologic fieldwork, Wright Geophysics conducted a ground gravity survey and CSMAT over the pediment target area and this provided insight into the gravel-bedrock contact as well as defining the favorable structural setting within the buried bedrock. An untested drill target was identified under the gravel pediment along these structures, and the geophysics showed that the bedrock was within 500 feet of the surface, which is reasonable depth for exploration drilling and potential mining if a significant mineralization is encountered.

Because the project is surrounded by Newmont Mining\`s land package, Thunder Mountain signed a joint venture agreement with Newmont Mining on some of their adjoining mineral rights sections and aliquot parcels from 2011 thru 2016. On October 27, 2016 the Company terminated the exploration agreement with Newmont Mining Corporation to concentrate their efforts on the South Mountain Project.

The Company does not plan to conduct any work on the Trout Creek Property in 2022, but instead will focus all of their efforts on their South Mountain Project.

There are currently no environmental permits required for the planned exploration work on the property. In the future, a notice of intent may be required with the Bureau of Land Management. See My Email RE SEC's change to Guide 7.

### Competition

We are an exploration stage company. We compete with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom we compete have greater financial and technical resources than us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.

### Employees

The Company employs three full-time officers. As part of the BeMetals agreement, the Company allowed these officers to work on the South Mountain Project on a consulting arrangement with BeMetals.

## Management's discussion and analysis

As filed, 16,312 characters.

The following Management's Discussion and Analysis of Financial Condition and Results of Operation ("MD&A") is intended to help the reader understand our financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying integral notes ("Notes") thereto. The following statements may be forward-looking in nature and actual results may differ materially.

### Plan of Operation:

*FORWARD LOOKING STATEMENTS: The following discussion may contain forward-looking statements that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include the following: inability to locate property with mineralization, lack of financing for exploration efforts, competition to acquire mining properties; risks inherent in the mining industry, and risk factors that are listed in the Company's reports and registration statements filed with the Securities and Exchange Commission.*

The Company re-started the advancement of the South Mountain Project in 2019 with BeMetals Corp. - Vancouver B.C. (TSX-V: BMET) - under an option agreement to complete the pre-development work and produce a preliminary economic analysis (PEA). The Company's plan of operation for the next twelve months is to continue supporting BeMetals Corp. during their option period and help ensure that the South Mountain PEA is completed on schedule and within budget.

### Results of Operations:

In 2021, the Company recorded a net loss of $571,796, or $0.01 per share compared to a net income of $1,216,682, or $0.02 per share for the same period of 2020. The net loss is primarily due to the unrealized loss on its investment in BeMetals Corp. common stock of $941,079.. During the year ended December 31, 2020, the Company had an unrealized gain of $1,282,804 on its investment in BeMetals Corp. common stock. On May 4, 2021, the Company sold 2,000,000 shares of BeMetals Corp. common stock for US $649,557 ($CAD 800,000) (see Footnote 4).

#### Fourth Quarter comparisons

Total revenue for the quarter ending December 31, 2021 and 2020 was $75,000 in management services income. Total operating expenses for the three months ending December 31, 2021 of $102,320 decreased from the same respective time period in 2020 by $6,530 or 6%. Legal and accounting costs increased in three-month period ended December 31, 2021 compared to 2020 by $6,371 for a total of $16,615. The increase in legal and accounting costs is principally due cost associated with the BeMetals Lease Option Agreement. Management and administrative expense decreased by $7,590 or 7% to $87,884 compared to $95,478 for the same period last year. Exploration, Depreciation expense remained consistent with the prior year.

#### Year end comparisons December 31,2021-2020

Total revenues for the year ended December 31, 2021 increased $250,000, or 45%, to $800,000 compared with $550,000 in the same period last year, While management service income remained consistent at $300,000 for both years, the gain on mineral interest increased to $500,000 as a result of payments receive pursuant to the terms of the Be Metals option agreement.

Total operating expenses for the period ending December 31, 2021 of $526,982 decreased from the year ending December 31, 2020 by $119,700 or 19%. Exploration expenses remained consistent with the prior year while legal and accounting expenses increased. Legal and accounting costs increased $28,966 to $85,309, an increase of 51%, compared with $56,343 in prior year. The increase is the result of additional legal expenses associated with the amendment to the BeMetals option agreement that was executed during the year. Management and administrative expense decreased by $129,089, or 23%, to $428,982 from $558,071 in the prior year due to a reduction in stock compensation expense recognized. The Company has not recognized any stock compensation in the year ending December 31, 2021 compared with $159,740 in 2020 related to the grant of stock options to officers and directors. Depreciation expense continued to decrease as the Company's fixed assets are almost all fully depreciated.

### Liquidity and Capital Resources:

The consolidated financial statements for the year ended December 31, 2021 have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the consolidated financial statements for the year ended December 31, 2021, we have sufficient cash reserves to cover normal operating expenditures for the following 12 months.

The liquidity of the Company was enhanced on February 27, 2019 when the Company entered into the BeMetals Option Agreement with BeMetals Corp., and BMET USA, a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of SMMI from TMRI, both wholly owned subsidiaries of the Company. The term of the agreement is for two years with BeMetals completing a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company's common stock. Through December 31, 2021, cash proceeds of $1,100,000 and $250,000 in exchange for shares of the Company's common stock have been received. BeMetals also agreed to pay the Company $25,000 per month for management services. In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments. For the years ended December 31, 2021 and 2020 BeMetals spent respectively $1,472,076 and $1,732,027on exploration of the South Mountain Mines property.

On July 19,2021, management and certain Directors exercised options for 710,000 common shares at a price of $0.10 per share for total proceeds of $71,000 of which $35.534 was for cash and a $35,466 reduction in current liabilities related to advances from related parties for funds advanced by management and foregone wages.

On May 4, 2021, the Company sold 2,000,000 shares held in BeMetals Corp. for US $649,557 ($CAD 800,000). The shares of common stock were sold through Canaccord Genuity at a price of US $0.325 ($CAD 0.40). This sale meets the requirements under the terms of the BeMetals Option Agreement, record a realized gain of $92,685, on the sale of BeMetals shares (see Footnote 4).

In April 2020, the Company received a loan of $48,000 pursuant to the Paycheck Protection Program (the "PPP") under Division A, Title I, Section 1102 and 1106 of the CARES Act. The loan, which was in the form of a promissory note, as amended, dated April 21, 2020 issued by the Company (the "Note"); the Note matures on April 13, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on August 13, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses.

On October 21, 2020, the Company completed its Paycheck Protection Program (PPP) loan forgiveness application with Washington Trust Bank. On November 07, 2020, the Company received a notice that our loan was paid in full by the Small Business Administration, and the PPP loan was forgiven.

The Company has historically incurred losses, however, under the BeMetals Option Agreement, the Company now has a recurring source of revenue, and its ability to continue as a going concern is no longer dependent on equity capital raises and borrowings. However, the Company believes it has the ability to raise capital in order to fund its future exploration and working capital requirements if necessary.

Potential additional sources of cash, include additional external debt, the sale of shares of our stock, or alternative methods such as mergers or sale of 8,000,000 BeMetals common stock shares held by the company. (See South Mountain Project above), No assurances can be given, however, that we will be able to obtain any of these potential sources of cash.

Our plans for the long-term continuation as a going concern include financing our future operations through sales of our common stock and/or debt and the potential exploitation of our mining properties. Our plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.

In addition to the BeMetals Corp. Option Agreement, we believe that the Company will be able to meet its financial obligations because of the following:

On February 15, 2022, we had $1,089,407 cash in our bank accounts.

We do not include in this consideration any option payments mentioned below.

Management is committed to manage expenses of all types to not exceed the on-hand cash resources of the Company at any point in time, now or in the future.

The Company will also consider other sources of funding, including potential mergers, the sale of all or part of the Company\`s BeMetals Corp. (TSX-V: BMET) common shares beneficially held, and/or additional farm-out of its other exploration property.

For the year ended December 31, 2021, the Company reports net cash used by operating activities of $257,816 compared to cash used by operating activities of 271,260 in 2020. During the year ended December 31, 2021, the Company received $1,149,557 in cash from investing activities, $500,000 from the sale of mineral interests for Tranches 5 and 6 of the BeMetals Option Agreement, and $649,557 in proceeds from sale of 2,000,000 shares of BeMetals common stock. During the year ended December 31, 2021, net cash used by financing activities was $9,274, which included $35,534 in proceeds from the exercise of stock options $39,808 in payments on related notes payables, and $5,000 to non-controlling interest. The Company reported a net cash increase of $882,467 for the year ended December 31, 2021, compared to a net cash increase of $21,740 for same period in 2020.

Our future liquidity and capital requirements will depend on many factors, including timing, cost and progress of our exploration efforts, our evaluation of, and decisions with respect to, our strategic alternatives, and costs associated with the regulatory approvals. If it turns out that we do not have enough cash to complete our exploration programs, we will attempt to raise additional funds from a public offering, a private placement, mergers, farm-outs or loans.

Additional financing may be required in the future to fund our planned operations. We do not know whether additional financing will be available when needed or on acceptable terms, if at all. If we are unable to raise additional financing when necessary, we may have to delay our exploration efforts or any property acquisitions or be forced to cease operations. Collaborative arrangements may require us to relinquish our rights to certain of our mining claims.

#### Private Placement

On February 27, 2019, the Company entered into an Option Agreement, (the "BeMetals Option Agreement") with BeMetals Corp., a British Columbia corporation ("BeMetals"), and BeMetals USA Corp., a Delaware corporation ("BMET USA"), a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, in the second quarter 2019, BeMetals purchased 2.5 million shares of the Company's common stock at a price of $0.10 per share, for an aggregate purchase price of $250,000, in a private placement. Use of proceeds are for general corporate working capital. This private placement was approved by the TSX-V.

The offerings are believed exempt from registration pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(6) the Securities Act of 1933, as amended. The securities offered, sold, and issued in connection with the private placement have not been or are not registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements.

### Contractual Obligations

During 2008 and 2009, three lease arrangements were made with landowners that own land parcels adjacent to the Company's South Mountain patented and unpatented mining claims. The leases were for a seven-year period, with options to renew, with annual payments (based on $20 per acre) listed in the following table. The leases have no work requirements.

| Contractual obligations Total\* | Payments due by period Less than 1 year | 2-3 years | 4-5 years | More than 5 years |  |
| --- | ---: | ---: | ---: | ---: | ---: |
| Acree Lease (yearly, June)(1) | $6,780 | $3,390 | $3,390 | - | $ - |
| Lowry Lease (yearly, October)(1)(2) | $22,560 | $11,280 | $11,280 | - | $ - |
| OGT LLC(3) | $20,000 | $5,000 | $5,000 | $10,000 | $ - |
| **Total** | $49,340 | $19,670 | $19,670 | $10,000 | $ - |

(1) Amounts shown are for the lease periods years 15 through 16, a total of 2 years that remains after 2021, the lease was extended an additional 10 years at $30/acre after 2014.

(2) The Lowry lease has an early buy-out provision for 50% of the remaining amounts owed in the event the Company desires to drop the lease prior to the end of the first seven-year period.

(3) OGT LLC, managed by the Company's wholly owned subsidiary SMMI, receives a $5,000 per year payment for up to 10 years, or until a $5 million capped NPI Royalty is paid.

### Critical Accounting Policies

We have identified our critical accounting policies, the application of which may materially affect the financial statements, either because of the significance of the financials statement item to which they relate, or because they require management's judgment in making estimates and assumptions in measuring, at a specific point in time, events which will be settled in the future. The critical accounting policies, judgments and estimates which management believes have the most significant effect on the financial statements are set forth below:

a) Estimates. Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition.

b) Stock-based Compensation. The Company records stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation" using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

c) Income Taxes. We have current income tax assets recorded in our financial statements that are based on our estimates relating to federal and state income tax benefits. Our judgments regarding federal and state income tax rates, items that may or may not be deductible for income tax purposes and income tax regulations themselves are critical to the Company's financial statement income tax items.

d) Investments. In a joint venture where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest. In determining whether significant influences exist, the Company considers its participation in policy-making decisions and its representation on the venture's management committee.

## Controls and procedures

As filed, 2,756 characters.

### Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this report, an evaluation was carried out under the supervision of, and with the participation of, the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) of the Securities and Exchange Act of 1934, as amended). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures were adequately designed and effective in ensuring that information required to be disclosed by the Company in its reports that it files or submits to the SEC under the Exchange Act, is recorded, processed, summarized, and reported within the time specified in applicable rules and forms.

Our Chief Executive Officer and Chief Financial Officer have also determined that the disclosure controls and procedures were effective to ensure that material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow for accurate required disclosure to be made on a timely basis.

### Management's Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021, using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and concluded that internal control over financial reporting was effective as of December 31, 2021, based on these criteria.

### Changes in internal controls over financial reporting

During the quarter ended December 31, 2021, there have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Filed Mar 22, 2022.
Source: SEC EDGAR, the filing index for accession 0001062993-22-008328. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.