New Jersey Mining Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549


FORM 10-Q


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2016


or


[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ______ to ______


Commission file number: 000-28837


NEW JERSEY MINING COMPANY

(Exact name of registrant as specified in its charter)



Idaho

 

82-0490295

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. employer identification No.)



201 N. Third Street, Coeur d’Alene, ID 83814

(Address of principal executive offices) (zip code)


(208) 503-0153

Registrant’s telephone number, including area code


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(D) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period as the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes [X]  No [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]  No [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer       .

Accelerated Filer        .     

Non-Accelerated Filer       .

Smaller reporting company      X   .


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes [  ] No [X]


On November 1, 2016, 95,571,388 shares of the registrant’s common stock were outstanding.




1




NEW JERSEY MINING COMPANY

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD

ENDED SEPTEMEBER 30, 2016



TABLE OF CONTENTS




PART I-FINANCIAL INFORMATION

3

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS

3

Consolidated Balance Sheets

3

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

4

Consolidated Statements of Cash Flows (Unaudited)

5

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

12

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

17

ITEM 4: CONTROLS AND PROCEDURES

17

PART II - OTHER INFORMATION

17

ITEM 1. LEGAL PROCEEDINGS

17

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

17

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

17

ITEM 4.MINE SAFETY DISCLOSURES

18

ITEM 5. OTHER INFORMATION

18

ITEM 6. EXHIBITS

18





2




PART I-FINANCIAL INFORMATION


ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS


New Jersey Mining Company

Consolidated Balance Sheets

September 30, 2016 and December 31, 2015

ASSETS

 

 

September 30, 2016

 

December 31,

2015

 

 

(Unaudited)

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

483,114

$

62,275

Joint venture receivables

 

315

 

3,109

Note receivable

 

58,386

 

58,386

Milling receivables

 

70,232

 

40,577

Timber Receivable

 

4,977

 

 

Other current assets

 

61,577

 

40,350

Total current assets

 

678,601

 

204,697

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation

 

5,776,455

 

5,698,831

Mineral properties, net of accumulated amortization

 

2,009,913

 

1,907,089

Investment in joint venture

 

435,000

 

 

Reclamation bond

 

58,000

 

 

Deposit on equipment

 

 

 

13,982

Total assets

$

8,957,969

$

7,824,599

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

Accounts payable

$

173,744

$

58,267

Accrued payroll and related payroll expenses

 

30,975

 

14,513

Notes and interest payable related parties, current portion

 

90,638

 

88,114

Notes payable, current portion, net of discount

 

486,030

 

488,435

Forward gold contracts, current portion

 

887,943

 

 

Total current liabilities

 

1,669,330

 

649,329

 

 

 

 

 

Asset retirement obligation

 

32,624

 

28,656

Notes and interest payable related parties, long term

 

1,056,660

 

598,127

Notes payable, long term, net of discount

 

398,664

 

731,940

Forward gold contracts, long term

 

819,146

 

 

Total long term liabilities

 

2,307,094

 

1,358,723

 

 

 

 

 

Total liabilities

 

3,976,424

 

2,008,052

 

 

 

 

 

Commitments (Note 3 and 9)

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, no par value, 1,000,000 shares authorized; no shares issued

   or outstanding

 

-

 

-

Common stock, no par value, 200,000,000 shares authorized; September 30,

   2016-94,935,908 shares and December 31, 2015-91,760,148 shares

   issued and outstanding

 

13,913,760

 

13,590,739

Accumulated deficit

 

(12,079,656)

 

(10,981,432)

Total New Jersey Mining Company stockholders’ equity

 

1,834,104

 

2,609,307

Non-controlling interests

 

3,147,441

 

3,207,240

Total stockholders' equity

 

4,981,545

 

5,816,547

 

 

 

 

 

Total liabilities and stockholders’ equity

$

8,957,969

$

7,824,599



The accompanying notes are an integral part of these consolidated financial statements.



3




New Jersey Mining Company

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

For the Three and Nine Month Periods Ended September 30, 2016 and 2015

 

 

September 30, 2016

 

September 30, 2015

 

 

Three Months

 

Nine Months

 

Three Months

 

Nine Months

Revenue:

 

 

 

 

 

 

 

 

Gold sales

$

45,854

$

123,518

 

 

 

 

Milling income

 

6,500

 

21,114

$

603,129

$

1,866,499

Total revenue

 

52,354

 

144,632

 

603,129

 

1,866,499

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Milling

 

51,241

 

146,428

 

379,201

 

1,149,491

Pre-development expenses

 

199,821

 

199,821

 

 

 

 

Exploration

 

32,772

 

112,829

 

50,599

 

143,725

(Gain) on forfeiture of milling advance

 

 

 

 

 

(125,000)

 

(125,000)

Depreciation and amortization

 

 

 

3,214

 

43,523

 

145,710

Management

 

45,923

 

102,074

 

50,896

 

187,553

Professional services

 

32,776

 

87,766

 

32,978

 

152,636

General and administrative expenses

 

42,520

 

98,285

 

59,139

 

227,470

Total operating expenses

 

405,053

 

750,417

 

491,336

 

1,881,585

Operating income (loss)

 

(352,699)

 

(605,785)

 

111,793

 

(15,086)

Other (income) expense:

 

 

 

 

 

 

 

 

Royalties and other income

 

 

 

(200)

 

 

 

 

Timber income

 

(52,252)

 

(52,252)

 

(22,847)

 

(22,847)

Timber expense

 

 

 

428

 

4,800

 

7,025

Interest income

 

(1,483)

 

(4,532)

 

(1,265)

 

(3,965)

Interest expense

 

20,760

 

60,837

 

11,018

 

22,656

Change in fair value of forward gold contracts

 

466,783

 

466,783

 

 

 

 

Amortization of note discount

 

42,249

 

67,157

 

 

 

 

Total other (income) expense

 

476,057

 

538,221

 

(8,294)

 

(2,869)

Income tax (provision) benefit

 

 

 

 

 

 

 

 

Net income (loss)

 

(828,756)

 

(1,144,006)

 

120,087

 

(17,955)

Net income attributable to non-controlling interest

 

9,702

 

23,311

 

9,414

 

44,281

Net income (loss) attributable to New Jersey Mining Company

$

(838,458)

$

(1,167,317)

$

129,501

$

26,326

 

 

 

 

 

 

 

 

 

Net income (loss) per common share-basic and diluted

$

Nil

$

Nil

$

Nil

$

Nil

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding-basic and diluted

 

94,855,670

 

94,485,652

 

91,760,148

 

91,760,148





The accompanying notes are an integral part of these consolidated financial statements.



4




New Jersey Mining Company

Consolidated Statements of Cash Flows (Unaudited)

For the Nine Month Periods Ended September 30, 2016 and 2015

 

September 30,

 

2016

2015

Cash flows from operating activities:

 

 

 

 

Net loss

$

(1,144,006)

$

(17,955)

Adjustments to reconcile net loss to net cash (used) by operating activities:

 

 

 

 

Depreciation and amortization

 

3,214

 

145,710

Write off of equipment

 

 

 

2,762

Gain on forfeiture of milling advance

 

 

 

(125,000)

Amortization of discount on note payable

 

67,157

 

 

Accretion of asset retirement obligation

 

3,968

 

3,968

Stock based compensation

 

55,815

 

69,930

Change in fair value of forward gold contracts

 

466,783

 

 

Change in:

 

 

 

 

Joint venture receivables

 

2,794

 

(17,721)

Milling receivables

 

(34,632)

 

(90,935)

Timber receivables

 

(4,977)

 

 

Other current assets

 

(16,250)

 

(1,997)

Interest payable

 

 

 

9,625

Accounts payable

 

115,477

 

27,317

Accrued payroll and related payroll expense

 

16,462

 

(11,821)

Interest payable related parties

 

14,479

 

-

Net cash (used) by operating activities

 

(453,716)

 

(6,117)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

(90,838)

 

(143,297)

Purchase of mineral property

 

(88,842)

 

-

Proceeds from option payment on property

 

10,000

 

10,000

Purchase of investment in joint venture

 

(225,000)

 

-

Acquisition of GF&H, net of gain recognized as equity transaction (Note 14)

 

41,333

 

 

Purchase of reclamation bond

 

(58,000)

 

-

Net cash (used) by investing activities

 

(411,347)

 

(133,297)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Milling advance

 

 

 

(75,000)

Proceeds from forward gold contracts

 

1,240,306

 

 

Borrowings on notes payable, related parties

 

475,000

 

-

Borrowings under line of credit, net

 

 

 

35,936

Principal payments on notes payable

 

(402,838)

 

(13,946)

Principal payments on note payables, related parties

 

(28,422)

 

(29,092)

Contributions from noncontrolling interest

 

1,856

 

-

Net cash provided (used) by financing activities

 

1,285,902

 

(82,102)

 

 

 

 

 

Net change in cash and cash equivalents

 

420,839

 

(221,516)

Cash and cash equivalents, beginning of period

 

62,275

 

336,525

Cash and cash equivalents, end of period

$

483,114

$

115,009

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

Shares of common stock issued for investment in joint venture

$

210,000

 

-

Shares of common stock issued for acquisition of GF&H (Note 14)

 

26,364

 

 

Debt for equipment purchase

 

-

$

92,320

 

 

 

 

 




The accompanying notes are an integral part of these consolidated financial statements.



5



New Jersey Mining Company

Notes to Consolidated Financial Statements (Unaudited)




1.

The Company and Significant Accounting Policies:


These unaudited interim consolidated financial statements have been prepared by the management of New Jersey Mining Company (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim consolidated financial statements have been included.


The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company's financial position and results of operations. Operating results for the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.


For further information, refer to the financial statements and footnotes thereto in the Company’s audited financial statements for the year ended December 31, 2015 as filed with the Securities and Exchange Commission.


Principles of Consolidation

At September 30, 2016, the consolidated financial statements include the accounts of the Company, the accounts of our majority owned New Jersey Mill Joint Venture (“NJMJV”), Golden Chest LLC Joint Venture (“GCJV”) and GF&H Company. Intercompany items and transactions between companies included in the consolidation are eliminated. The outstanding ownership of GCJV was acquired by the Company in December 2015. In August 2016, the Company acquired the remaining 33.3% outstanding shares of GF&H and now owns 100% of GF&H (Note 14).


Revenue Recognition

Revenue is recognized when title and risk of ownership of metals or metal bearing concentrate have passed and collection is reasonably assured. Revenue from the sale of metals may be subject to adjustment upon final settlement of estimated metal prices, weights and assays, and are recorded as adjustments to revenue in the period of final settlement of prices, weights and assays; such adjustments are typically not material in relation to the initial invoice amounts. Revenue received from drilling and exploration contracts with third parties is recognized when the contract has been established, the services are rendered and collection of payment is deemed probable. These services are not a part of normal operations. Income received as the operator of the Company’s joint ventures is recognized in the months during which those operations occur. Revenue received from engineering services provided is recognized when services are rendered and collection of payment is deemed probable. These services are not a part of normal operations. Revenues from mill operations and custom milling are recognized in the period in which the milling is completed, concentrates are shipped, and collection of payment is deemed probable.


Revenue from harvest of raw timber is recognized when a contract has been established, the timber has been shipped, and payment is deemed probable. These sales of timber found on the Company’s mineral properties are not a part of normal operations.


Pre-Development Activities

Pre-development activities involve cost incurred in the exploration stage that may ultimately benefit production, such as underground ramp development, pumping, and open pit development, which are expensed due to the lack of evidence of economic development, which is necessary to demonstrate future recoverability of these expenses. These cost are charged to operations as incurred.


Reclassifications

Certain prior period amounts have been reclassified to conform to the 2016 financial statement presentation. Reclassifications had no effect on net loss, stockholders’ equity, or cash flows as previously reported.


Going Concern


As shown in the accompanying financial statements, the Company had minimal revenue and a net loss of $828,756 and $1,144,006 respectively for the three and nine month periods ending September 30, 2016 as well as an accumulated deficit and negative working capital at September 30, 2016. These factors raise substantial doubt about the Company’s ability to continue as a going concern.


The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue its operations.




6



New Jersey Mining Company

Notes to Consolidated Financial Statements (Unaudited)




2.

Related Party Transactions


At September 30, 2016 and December 31, 2015 the Company had the following notes and interest payable to related parties:


 

 

September 30,

2016

 

December 31, 2015

 

 

 

 

 

Mine Systems Design (MSD), a company in which our Company’s Vice President owns 10.4%, 12% interest, monthly payments of $4,910 through October 2018

$

126,900

$

141,033

 

 

 

 

 

John Swallow, Company president, 5% interest, monthly payments of $5,834 with balloon payment of $475,973 in November 2017

 

530,920

 

545,208

 

 

 

 

 

John Swallow, Company president, 5% interest, principal and interest due January 2018

 

375,000

 

 

 

 

 

 

 

Margaret Bathgate, shareholder, 5% interest, principal and interest due January 2018

 

100,000

 

 

 

 

 

 

 

 

 

1,132,819

 

686,241

Accrued interest payable

 

14,479

 

 

 

 

 

 

 

Total

 

1,147,298

 

686,241

Current portion

 

90,638

 

88,114

Long term portion

$

1,056,660

$

598,127


Related Party interest expense for the three and nine month periods ending September 30, 2016 and 2015 is as follows:


September 30, 2016

September 30, 2015

3 months

9 months

3 months

9 months

 

 

 

 

$

16,806

$

47,488

$

4,740

$

15,093


An account payable existed with Butte Highlands LLC (Note 4) for $16,000 at September 30, 2016 for rental of some of Butte Highlands equipment being utilized at the Golden Chest.



3.

Joint Ventures


For joint ventures in which 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. For joint ventures in which the Company does not have joint control or significant influence, the cost method is used. For those joint ventures in which there is joint control between the parties and the Company has significant influence, the equity method is utilized.


At September 30, 2016 and December 31, 2015, the Company’s percentage ownership and method of accounting for each joint venture is as follows:


 

September 30, 2016

December 31, 2015

Joint Venture

% Ownership

Significant Influence?

Accounting Method

% Ownership

Significant Influence?

Accounting Method

New Jersey Mill Joint Venture(“NJMJV”)

67%

Yes

Consolidated

67%

Yes

Consolidated

Golden Chest LLC Joint Venture (“GCJV”)

100%

Yes

Consolidated

100%

Yes

Consolidated

Butte Highlands Joint Venture (“BHJV”)

50%

No

Cost

NA

NA

NA


New Jersey Mill Joint Venture Agreement


In June of 2012, Crescent Silver Corp. (“Crescent”) completed its buy-in for 35% of the NJMJV with a cumulative $3.2 million contribution to bring the capacity of the mill to 15 tonnes/hr. At September 30, 2016 and December 31, 2015, an account receivable existed with Crescent for $315 and $3,109, respectively, for monthly operating costs as defined in the JV agreement.




7



New Jersey Mining Company

Notes to Consolidated Financial Statements (Unaudited)




Golden Chest LLC Joint Venture

In December of 2015 the Company became the 100% owner of the Golden Chest property after purchasing the remaining 52.22% share of GCJV previously held by a third party (Note 12).


Butte Highlands JV, LLC (“BHJV”)

On January 29, 2016 the Company purchased a 50% interest in BHJV from Timberline Resources Corporation for $225,000 in cash and 3,000,000 restricted shares of the Company’s common stock valued at $210,000 for a total consideration of $435,000. Highland Mining, LLC (“Highland”) is the other 50% owner of the joint venture. The Company determined that it had no significant influence with the joint venture as Highland is funding the ongoing exploration program.


4.

Non-Controlling Interests


Non-controlling interests include Crescent’s interest in NJMJV (Note 4) and other shareholders in GF&H Company of which the Company owned 66 2/3% until August 2016 at which time the Company acquired the outstanding shares in GF&H and dissolved GF&H. These interests changed as follows from December 31, 2015 to September 30, 2016:


 

 

NJMJV

 

GF&H

 

TOTAL

Balance December 31, 2015

$

3,145,585

$

61,655

$

3,207,240

Contribution from non-controlling interest

 

1,856

 

 

 

1,856

Net income attributable to non-controlling interest

 

 

 

23,311

 

23,311

   Non-controlling interest purchased by the Company (Note 14)

 

 

 

(84,966)

 

(84,966)

Balance September 30, 2016

$

3,147,441

$

 

$

3,147,441


The Company purchased the outstanding shares of GF&H Company in the third quarter of 2016 and GF&H company was dissolved. See (Note 14).


5.

Earnings per Share


For the three and nine month periods ending September 30, 2016 and 2015, the effect of the Company’s potential issuance of shares from the exercise of 10,200,000 warrants and 5,750,000 stock options, and 10,200,000 warrants and 4,250,000 stock options, respectively would have been anti-dilutive. Accordingly, only basic net loss per share has been presented.


6.

Property, Plant, and Equipment


Property, plant and equipment at September 30, 2016 and December 31, 2015, consisted of the following:


 

 

September 30, 2016

 

December 31, 2015

Mill

 

 

 

 

Mill land

$

225,289

$

225,289

Mill building

 

536,193

 

536,193

Milling equipment

 

4,192,940

 

4,209,440

 

 

4,954,422

 

4,970,922

Less accumulated depreciation

 

(283,920)

 

(285,420)

Total mill

 

4,670,502

 

4,685,502

 

 

 

 

 

Building and equipment at cost

 

397,295

 

362,188

Less accumulated depreciation

 

(220,951)

 

(217,738)

Total building and equipment

 

176,344

 

144,450

 

 

 

 

 

Land

 

 

 

 

Bear Creek

 

266,934

 

196,204

Little Baldy

 

62,139

 

72,139

BOW

 

230,449

 

230,449

Eastern Star

 

250,817

 

250,817

Gillig

 

79,137

 

79,137

Highwater

 

40,133

 

40,133

Total Land

 

929,609

 

868,879

Total

$

5,776,455

$

5,698,831


In the three and nine month periods ended September 30, 2015 $575 and $16,295 of interest was capitalized for the mill expansion project. No interest was capitalized for the mill expansion or other capital projects in 2016.




8



New Jersey Mining Company

Notes to Consolidated Financial Statements (Unaudited)




7.

Mineral Properties


Mineral properties at September 30, 2016 and December 31, 2015 consisted of the following:


 

 

September 30,

2016

 

December 31, 2015

New Jersey

$

215,127

$

215,127

McKinley

 

250,000

 

250,000

Golden Chest

 

1,548,053

 

1,445,229

Toboggan

 

5,000

 

5,000

Less accumulated amortization

 

(8,267)

 

(8,267)

Total

$

2,009,913

$

1,907,089


In the nine month period ended September 30, 2016 $6,253 of interest was capitalized for the Golden Chest development project. No interest was capitalized for development in the nine month period ended June 30, 2015.


8.

Notes Payable


At September 30, 2016 and December 31, 2015, notes payable are as follows:


 

September 30, 2016

December 31, 2015

Property with shop 36 month note payable, 4.91% interest rate payable monthly, remaining principal of note due in one payment at end of term in June 2016, monthly payments of $474

$

40,376

$

42,726

Property 120 month note payable, 11.0% interest rate payable monthly, remaining principal of note due in one payment at end of term in March 2021, collateralized by property, monthly payments of $1,122

 

100,287

 

105,196

Tailings pump, 35 month note payable, 17.5% interest rate payable monthly, monthly payments of $3,268, collateralized by equipment

 

55,514

 

76,097

Mineral property, 10 quarterly payments, 0.0% interest rate discounted at 10%, collateralized by property, quarterly payments of $125,000

 

750,000

 

1,125,000

Total notes payable

 

946,177

 

1,349,019

Due within one year

 

538,441

 

572,806

Due after one year

$

407,736

$

776,213


Future principal payments of debt and related discount amortization at September 30, 2016 are as follows:


 

 

Note

 

Discount

 

Net

1 year

$

538,441

$

(52,411)

$

486,030

2 years

 

280,480

 

(9,072)

 

271,408

3 years

 

35,667

 

 

 

35,667

4 years

 

3,595

 

 

 

3,595

5 years

 

87,994

 

 

 

87,994

Thereafter

 

 

 

 

 

 

Total

$

946,177

$

(61,483)

$

884,694


9.

Equity


Common Stock

In the first quarter of 2016, 3,000,000 restricted shares of the Company’s common stock was issued to Timberline Resources in conjunction with the Company’s purchase of Timberline’s 50% interest in Butte Highlands JV (Note 4). In the third quarter of 2016 the Company issued 175,760 restricted shares of the Company’s common stock to outstanding shareholders of GF&H company as part of the acquisition of and dissolution of GF&H company (Note 14). No shares of common stock were issued in the first nine months of 2015.



9



New Jersey Mining Company

Notes to Consolidated Financial Statements (Unaudited)




Stock Purchase Warrants Outstanding

No transactions in common stock purchase warrants occurred during the nine month period ended September 30, 2016. The balance in stock purchase warrants is as follows:


 

 

Number of Warrants

 

Exercise Prices

Balance December 31, 2014

 

21,200,000

$

0.10-0.20

Expired May 31, 2015

 

(11,000,000)

 

0.15

Balance December 31, 2015 and September 30, 2016

 

10,200,000

 

0.10-0.20


These warrants expire as follows:


Shares

Exercise Price

Expiration Date

3,000,000

$0.15

March 4, 2017

6,000,000

$0.20

August 11, 2017

1,200,000

$0.10

August 11, 2019


10.

Stock Options


On December 30, 2015, 1,500,000 options were granted to management, 750,000 options vested immediately and the remaining 750,000 will vest on December 30, 2016. The options expire 5 years after their corresponding vesting date. Each option allows the holder to purchase one share of the Company’s stock at $0.10 prior to expiration. Compensation cost of $110,208 is associated with the options. Of this, $55,104 was recorded as a general and administrative expense in 2015 and $41,328 has been recognized in the first nine months of 2016. The remaining unrecognized compensation cost of $13,776 is expected to be recognized in the fourth quarter of 2016.


On April 30, 2014, 2,250,000 options were issued to management, 750,000 options vested immediately and the remaining 1,500,000 vested at a rate of 750,000 each year on the anniversary for 2 additional years, and they expire 3 years after vesting date. Each option allows the holder to purchase one share of the Company’s stock at $0.10 prior to expiration. Compensation costs of $173,844 are associated with these options.  Of this, $159,357 was recorded as a general and administrative expense in 2014 and 2015.  The remaining $14,487 has been recognized in the first nine months of 2016


 

 

Number of Options

 

Exercise Prices

 

Weighted Average Remaining Term (years)

Balance December 31, 2014

 

4,500,000

 

0.10-0.15

 

 

Cancelled

 

(250,000)

 

0.15

 

 

Issued

 

1,500,000

 

0.10

 

 

Balance December 31, 2015 and September 30, 2016

 

5,750,000

 

0.10-0.15

 

2.85

Exercisable at September 30, 2016

 

5,000,000

 

0.10-0.15

 

2.49


Outstanding options had no intrinsic value at September 30, 2016.


11.

Golden Chest Joint Venture


In December of 2015, the Company became the 100% owner of the Golden Chest Joint Venture (GCJV). The Company received the 52.22% share of GCJV previously held by a third party in exchange for $180,000 and a 2% NSR royalty on all future gold production from the property. In addition to the assets of GCJV, a note payable of $1,250,000 for the patented mining claims was assumed by the Company. The Company purchased the outstanding share in GCJV to consolidate ownership and facilitate exploration and mining plans going forward.


The unaudited pro forma financial information below represents the combined results of the Company’s operations as if the GCJV acquisition had occurred at the beginning of the period presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have occurred if the acquisition had taken place at January 1, 2015, nor is it indicative of future operating results.


 

September 30, 2015

 

Three months

Nine months

Revenue

$

603,129

$

1,866,499

Operating expenses

 

(248,456)

 

(3,056,149)

Net loss from continuing operations

 

(248,456)

 

(1,189,650)

Net loss per common share, basic and diluted

 

Nil

$

0.01

New Jersey Mining Company

Notes to Consolidated Financial Statements (Unaudited)




12.

Butte Highlands Joint Venture


On January 29, 2016 the Company purchased a 50% interest in Butte Highlands JV, LLC (“BHJV”) from Timberline Resources Corporation for $225,000 in cash and 3,000,000 restricted shares of the Company’s common stock valued at $210,000 for a total consideration of $435,000. The purchase was made utilizing proceeds from a promissory note at 5% interest rate extended to the Company by President John Swallow (Note 3). Highland Mining, LLC is the other 50% owner of the joint venture. The Company purchased the interest in the BHJV to provide additional opportunities for exploration and development and expand the Company’s mineral property portfolio.


13.

Acquisition of GF&H Company

In the third quarter of 2016 the Company purchased the remaining one third of the outstanding shares in GF&H Company. The transaction was completed in August 2016 and GF&H Company was subsequently dissolved. The Company paid the outstanding shareholders of GF&H Company $27,341 in cash and 175,760 shares of the Company’s restricted stock valued at $0.15 per share ($26,364) for a total consideration of $53,705. On the date of the acquisition, the non-controlling interest had a basis of $85,547 resulting in a gain of $30,842 which was been recognized as an addition to equity. The Company purchased the outstanding shares of GF&H Company to consolidate the Company’s land holdings in the area of the Golden Chest property and provide additional opportunities timber revenue and mineral exploration.


14.

Forward Gold Contracts


On July 13, 2016, the Company entered into a forward gold contract Ophir Holdings LLC, a company owned by three of the Company’s officers, for net proceeds of $467,500 to fund startup costs at the Golden Chest. The agreement calls for the Company to deliver a total of 500 ounces of gold to the purchasers in quarterly payments starting December 1, 2016 for a period of two years as gold is produced from the Golden Chest Mine and New Jersey Mill.


On July 29, 2016, the Company entered into a forward gold contract through GVC Capital LLC for net proceeds of $772,806 to fund startup costs at the Golden Chest. The agreement calls for the Company to deliver a total of 904 ounces of gold to the purchasers in quarterly payments starting December 1, 2016 for a period of two years as gold is produced from the Golden Chest Mine and New Jersey Mill.


The gold to be delivered does not need to be produced from the Golden Chest property. In addition, the counterparties can request cash payment instead of gold ounces each quarter. The cash payments will be based on current gold prices for the applicable quarter. Due to these provisions, the contracts are accounted for as derivatives requiring their value to be adjusted to fair value each period end. For the quarter ended September 30, 2016, the Company recognized a change in fair value of $466,783. The fair value was calculated using the market approach with Level 2 inputs for forward gold contract rates and a discount rate of 10%.





11





ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


When we use the terms "New Jersey Mining Company," the "Company," "we," "us," or "our," we are referring to New Jersey Mining Company (the “Company”) and its subsidiaries, unless the context otherwise requires.


Cautionary Statement about Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. These statements include, but are not limited to, comments regarding:


·

the establishment and estimates of mineralization;

·

the grade of mineralization;

·

anticipated expenditures and costs in our operations;

·

planned exploration activities and the anticipated outcome of such exploration activities;

·

plans and anticipated timing for obtaining permits and licenses for our properties;

·

expected future financing and its anticipated outcome;

·

anticipated liquidity to meet expected operating costs and capital requirements;

·

our ability to obtain joint ventures partners and maintain working relationships with our current joint venture partners;

·

our ability to obtain financing to fund our estimated expenditure and capital requirements; and

·

factors expected to impact our results of operations.


Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:


·

risks related to our limited operating history;

·

risks related to our history of losses and our expectation of continued losses;

·

risks related to our properties being in the exploration or development stage;

·

risks related our mineral operations being subject to government regulation;

·

risks related to future legislation and administrative changes to mining laws;

·

risks related to future legislation regarding climate change;

·

risks related to our ability to obtain additional capital or joint venture partners;

·

risks related to land reclamation requirements and costs;

·

risks related to mineral exploration and development activities being inherently dangerous;

·

risks related to our insurance coverage for operating risks;

·

risks related to cost increases for our exploration and development projects;

·

risks related to a shortage of equipment and supplies adversely affecting our ability to operate;

·

risks related to mineral estimates;

·

risks related to the fluctuation of prices for precious and base metals, such as gold and silver;

·

risks related to the competitive industry of mineral exploration;

·

risks related to our title and rights in our mineral properties and mill;

·

risks related to joint venture partners and our contractual obligations therewith;

·

risks related to potential conflicts of interest with our management;

·

risks related to our dependence on key management;

·

risks related to the New Jersey Mill operations, management, and milling capacity;

·

risks related to our business model;

·

risks related to evolving corporate governance standards for public companies; and

·

risks related to our shares of common stock.


This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Description of Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 28, 2016. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated, or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.



12






Plan of Operation


The Company is utilizing its business experience and operational capabilities to advance its diversified cash flow plan.


The Company’s strategy is to generate cash flow from milling fees, royalties, and possible future mine operations (as they are developed) with a view toward building an asset base focused on cash flow and/or production, thus reducing reliance on the capital markets. In recent examples, the Company has leveraged its property and mineral processing assets into joint ventures that brought exploration or development funding from partners. The strategy includes finding and developing potential mineral deposits of significant quality and quantity to justify investment in mining and/or mineral processing facilities. The Company’s primary focus is on gold with silver and base metals of secondary emphasis.


The Company has a portfolio of mineral properties including: the Golden Chest Mine (placed in production in the 4th quarter of 2016), the Butte Highlands Mine (50% carried interest), the New Jersey Mine (historic mine adjacent to the New Jersey Mill), and several exploration prospects including the McKinley, Eastern Star, and Toboggan projects. The Company is also the manager and majority-owner of the New Jersey Mill Joint Venture, which when in operation, is capable of processing both silver and gold ores through a 360 tonne per day (tpd) flotation plant.


In recent years, the Company has focused its efforts on the development and consolidation of ownership of the Golden Chest Mine. As detailed below, the Golden Chest Joint Venture leased out a portion of the Golden Chest Mine from 2013 to 2015, resulting in gold production of 8,000 ounces from the property. During this period the Company generated revenue from processing the Golden Chest ores at its mill and from a modest NSR royalty. In 2015, the Company’s milling activities contributed $1,886,421 to its consolidated revenue. The Company also conducted minimal exploration on its McKinley and Eastern Star projects during 2015. The Company is also examining other opportunities in the western USA to apply its development, operational, and processing expertise, including its recent purchase of a 50% interest in the Butte Highlands Gold Project near Butte, Montana.


During the third quarter of the 2016, building upon prior work and investment in the Golden Chest Project, the Company began development of the open pit, stockpiling and shipping ore, and dewatering of the underground workings. The Company also completed acquisition of the GF&H, a private company that holds 374 acres of patented mining claims near the Golden Chest Project.


Through the third quarter of 2016, NJMC’s progress includes:


Announced anticipated commencement of open pit mining operations (See Company news release dated July 15, 2016).

Completed financing and announced plans to resume production at the Golden Chest Mine (See Company news release dated August 02, 2016).

Completed acquisition of GF&H and began stockpiling of ore from the open pit at the Golden Chest (See Company news release dated August 30, 2016).

Discovered a new footwall vein in the open pit and ships first ore to the New Jersey Mill (See Company news release dated September 22, 2016).



During the second quarter of 2016, the Company built upon progress made in the latter part 2015 and the first quarter of 2016 and focused largely on its goal to resume production at the Golden Chest. This included necessary permitting and site work along with raising the funding needed for the Golden Chest mine plan, as outlined the internal scoping study and subsequent mine plan.


Through the second quarter of 2016 NJMC’s progress includes:


Received permit to initiate open pit mining at Golden Chest (See Company news release dated June 21, 2016);

Advanced funding efforts for the forward sale of gold at $935/ounce, to be paid back over 2.5 years in gold produced from the Golden Chest. The offering closed subsequent to end of quarter (See Company news release dated August 2, 2016).


During the first quarter of 2016, the Company completed purchase of 50-percent interest in the Butte Highlands Joint Venture from Timberline Resources Corp. (See Company news release dated February 1, 2016). This acquisition fits into our plans to build upon our portfolio of assets having considerable prior investment and a path toward cash flow potential and/or in which we might provide our expertise to help advance the project or to provide milling services. More than $30-million has been invested at Butte Highlands to-date by Montana State Gold Company (“MSGC”) and prior funding partner, Highland Mining LLC.


Through Q1 of 2016 NJMC’s progress includes (See Company news release dated March 29, 2016):


Development of a small-scale, two-year mine plan at Golden Chest, focusing on easily-accessible near-mine ore, retaining all upside potential of up-dip, down-dip, and on-strike zones, as well as larger district-scale potential;

Purchase of underground haul truck and loader, receipt of long-lead electrical components, and agreement for use of BHJV-owned equipment, in anticipation of resumed production at Golden Chest.

Purchase of 50-percent interest in Butte Highlands Joint Venture (BHJV) which owns the Butte Highlands Gold Mine;

Signing Memorandum of Understanding with partner Highland Mining LLC for NJMC to assume control of Permitting and Management at BHJV.



13






The Company’s focus during most of 2015 was focused on maintaining and running the New Jersey Mill in support of mining operations at the Golden Chest Mine. In anticipation of processing ores from the Golden Chest Mine, the Company invested in certain upgrades and expansions to the New Jersey Mill. The Company added a gravity processing circuit to the mill and expanded the tailings impoundment facility, among other minor modifications and adjustments. Gold Hill commenced construction and underground development during the third quarter of 2014, delivering the first ore to the New Jersey Mill in December of 2014. Mining activities continued during the year until Gold Hill ceased operations September, 2015 (See Company news release dated, September 21, 2015).


In October, 2015, the Company entered into an agreement to acquire 100-percent interest in the Golden Chest Mine from Marathon Gold Corporation, its joint venture partner in the project. It was considered by both parties that the Golden Chest Mine should have consolidated ownership going forward. The agreement with Marathon was completed in December (See Company news release dated December 4, 2015). The Company rendered payments of $180,000 to Marathon for its 52.22% interest in the Golden Chest Joint Venture and Marathon retained a 2% NSR on production from the Golden Chest, as well as an adjacent Area of Interest. An estimated $7-$9 million was spent by the lessee of the Skookum Shoot, which included mine development and infrastructure and any remaining mineralized material.


In May, 2015, the Company announced a realignment of management as it transitioned into an operating company to remain focused on cash flow and corporate overhead (See Company news release dated May 7, 2015).


In 2015, NJMC accomplishments and project milestones included (See Company news release dated March 29, 2016):


Completion of mine development at the Golden Chest property, by Juniper Resources under the Skookum lease, totaling approximately $7 to $9-million;

Completion of upgrades and commencement of commercial operations at the New Jersey Mill, achieving revenue of more than $1.8 million;

Commercial production, achieved by Juniper at the Golden Chest Mine, totaling 40,840 dry metric tonnes of ore produced at an average grade of 6.65 grams of gold per tonne;

Production of approximately 8,000 ounces of gold from Golden Chest ore at the New Jersey Mill, including approximately 500 ounces of gold from a cyanide leaching project which led to a series of recommendations for improving the concentrate leach circuit;

Consolidation of 100-percent ownership of the Golden Chest project, after the departure of Juniper, with the buy-out of former partner Marathon Gold;

Completed internal scoping study at Golden Chest, outlining plans for resumed production of unmined ore from the Juniper mine plan and from other easily accessible zones.


Prior to recent activity, during 2011 and 2012, the New Jersey mineral processing plant was expanded in order to process ore from the nearby Crescent silver mine. NJMC executed a definitive venture agreement with United Silver Corp (USC) and its subsidiary United Mine Services (UMS), owner of the Crescent mine, in January 2011. The plant was expanded from a processing rate of 4 tonnes/hr to 15 tonnes/hr. USC paid the expansion cost, which was $3.2 million. The joint venture agreement anticipated that USC would be entitled to process up to 7,000 tonnes per month from the Crescent Mine and NJMC would have rights for up to 3,000 tonnes per month of capacity during the processing of Crescent ores. Under the agreement, each party would pay its processing costs and NJMC will charge a management fee of $2.50/tonne. The plant was commissioned during 2012, but ore production from the Crescent Mine was curtailed by USC for economic reasons so the plant became idle in September 2012. The mill remained idle through 2013 and most of 2014, until commissioning its new upgrades in November of 2014 (See Company news release dated November 12, 2014).


In April 2014, Hale Capital Partners, through its subsidiary Crescent Silver LLC (“Crescent Silver”), acquired the assets of United Mine Services in a consensual foreclosure process. This transaction included the UMS stake in the New Jersey Mill JV. Hence, Crescent Silver is the Company’s current joint venture partner at the New Jersey Mill. Crescent Silver produced no ore during 2014.


NJMC geologists conducted limited programs at the McKinley and Eastern Star projects during 2014 and 2015. The Company drilled just under 400 meters of small-diameter core from the underground workings at McKinley. The drill results returned several high-grade intersections that may warrant follow-up, including 2.5m of 43.7 gpt Au and 3.5m of 18.5 gpt Au. The McKinley Project is at a very early stage of exploration, but there are high-grade (+30 gpt Au) showings over more than 3.8 kilometers of prospecting on the 1,800-hectare (4,443 acres) project, (see Company news release dated January 2, 2015).


During 2014 and 2015, the Company also conducted limited exploration work at the Eastern Star Project in the Elk City District of central Idaho. The property was acquired under a purchase option agreement with Premium Exploration Inc., (see Company news release dated April 25, 2014). In the first field season on the project, NJMC geologists collected rock samples and channel samples that included 11.34 gpt Au over 4.3 meters and 14.15 gpt over 0.9 meters. There has been no drilling at Eastern Star, so the project will require considerable additional work in order to assess its economic potential.


The Toboggan Project is a group of claims to the north of Golden Chest. Formerly joint ventured with Newmont Mining and including a lease agreement with Hecla Mining, the properties have seen well over $2.0 million in exploration investment in recent years. The gold prospects at Toboggan appear to be associated with alkalic intrusions and alteration is widespread.



14






At the Coleman underground mine, which is part of the New Jersey Mine and Mill property, the Company conducted no significant exploration during 2014 or 2015, but Company geologists are currently evaluating the known gold-bearing veins and historic targets for their future potential. Now that the New Jersey Mill is processing ores from the Golden Chest Mine, the potential economics of nearby gold prospects may have improved.


Changes in Financial Condition

The Company maintains an adequate cash balance by increasing or decreasing its exploration expenditures as limited by availability of cash from operations or from financing activities. The cash balance at September 30, 2016 was $483,114 compared to $62,275 at the end of 2015.


Results of Operations

There was $52,354 and $144,632 in revenue in the three and nine month periods, respectively ending September 30, 2016 compared to $603,129 and $1,866,499 for the comparable periods in 2015. The revenue in 2015 was from milling of ore at the Golden Chest Mine whereas minimal milling activity occurred in the first and second quarters of 2016. The net loss of $828,756 and $1,144,006 for the three and nine month periods ending September 30, 2016 compared to the net income of $120,087 and net loss of $17,955 in the comparable periods of 2015 are a result of reduced milling activity at the Company in 2016 and fair value adjustments related to the forward gold contracts entered into during July 2016.


The Company invested $191,374 in additional facilities at the mill in 2015 and processed ore from the Golden Chest (Skookum Project) that started production in December 2014 through the third quarter of 2015. The mining at the Golden Chest during this period was conducted by Gold Hill under a lease agreement. The Company has resumed production at the Golden Chest in the fourth quarter of 2016 with the Company as operator of both the mine and the mill.


The amount of money to be spent on exploration at the Company’s mines and prospects depends primarily on contributions of our joint venture partners, fundraising, and cash flow from the Golden Chest mine and the mill.


The audit opinion and notes that accompany our consolidated financial statements for the period ended September 30, 2016, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying consolidated financial statements have been prepared under the assumption that we will continue as a going concern. We are operating a start-up mineral processing operation, but we also remain an exploration stage company that has incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without seeing increased revenue from our milling and mining operations, deferring payment on certain current liabilities, and/or raising additional funds. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where the stability of our business is more assured. We currently have no historical recurring source of revenue and our ability to continue as a going concern is dependent on our ability to profitably execute our business plan or raise capital to fund our future exploration and working capital requirements. Our plans for the long-term return to and continuation as a going concern include growing milling revenues, sales of our common stock and/or debt, and the eventual profitable exploitation of our mining properties.


Additionally, the current capital markets and general economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial doubt about our ability to continue as a going concern.


Cash and Cash Equivalents

Cash and cash equivalents increased as of September 30, 2016 compared to December 31, 2015 as a result of the proceeds from forward gold contracts and revenue from timber and milling.


Investment in Joint Venture

Investment in Joint Venture increased in 2016 because of the acquisition of the 50% interest in the Butte Highlands JV.


Reclamation Bond

Reclamation bond increased in 2016 because a reclamation bond has been set aside for the open pit at the Golden Chest.


Deposit on Equipment

Deposit on equipment has decreased in 2016 because electrical equipment for which a deposit was made has been received.


Accounts Payable

Accounts payable have increased as of September 30, 2016 compared to December 31, 2015 because of increased spending in anticipation of production at the Golden Chest.


Accrued Payroll and Related Payroll Expenses

Accrued payroll and related payroll expenses increased as of September 30, 2016 compared to December 31, 2015 because of increased employee activity related to the Golden Chest mining operation.


Forward Gold Contracts

Forward gold contracts for the future delivery of gold from the Golden Chest mine were entered into during July 2016.




15





Notes and Interest Payable Related Party

Notes and interest payable related party increased as of September 30, 2016 compared to December 31, 2015 because two notes totaling $475,000 were extended to the Company, one by President John Swallow and additional one by Martha Bathgate, a major shareholder. The proceeds of the notes were utilized for the Butte Highlands joint venture purchase and continuing operations.


Gold Sales

Gold sales income increased in 2016 as a result leaching of materials from the New Jersey Mine property.


Milling Income

Milling income decreased in 2016 compared to 2015 as a result of termination of the Skookum lease in September 2015.


Milling Costs

Milling income decreased in 2016 compared to 2015 as a result of termination of the Skookum lease in September 2015.


Pre-Development Activities

Pre-development activities in 2016 are expensed related to the ramp up for production at the Golden Chest mine We began operations at the mine during the fourth quarter of 2016.


Gain on Forfeiture of Milling Advance

Gain on forfeiture of milling advance was a one time income source as a result of the termination of the Skookum lease in September 2015.


Depreciation and Amortization

Depreciation and amortization decreased in 2016 compared to 2015 as a result of units of production depreciation calculations as the mill processed the Skookum ore in 2015.


Management

Management expenses were lower in 2016 compared to the comparable period of 2015 as a result of management forgoing wages from May through July of 2016.


Professional Services

Professional services expenses were lower in 2016 compared to the comparable period of 2015 as a result of decreased discretionary funds available in 2016.


General and Administrative Expenses

General and administrative expenses were lower in 2016 compared to the comparable periods of 2015 as a result of decreased activity at the Company for the majority of the year.


Timber Revenue

Timber revenue was higher in 2016 compared to the comparable periods of 2015 as a result of development at the GF&H property and the resulting log revenue from road building.


Interest Expense

Interest expense increased in 2016 compared to 2015 because interest expense in 2015 was capitalized as a part of the New Jersey Mill expansion. The increase in 2016 is also due to new borrowings from related parties.


Amortization of Discount

Amortization of discount is a new item related to the purchase of the Golden Chest property in December 2015 and the corresponding non-interest bearing liability that was assumed by the Company.


Joint Venture Receivables

Joint venture receivables decreased in 2016 compared to 2015 as a result of termination of the Skookum lease in September 2015.


Milling Receivables

Milling receivables decreased in 2016 compared to 2015 as a result of termination of the Skookum lease in September 2015.


Milling Advance

Milling advance decreased in 2016 compared to 2015 as it was related to the Skookum lease which was terminated in September 2015.


Change in Fair Value of Forward Gold Contracts

Change in fair value of forward gold contracts is related to the forward contracts for the future delivery of gold from the Golden Chest mine that were entered into during in July 2016.


Timber Receivables

Timber receivables are related to logging on the GF&H property in 2016.




16





Interest Payable

Interest payable was related to a property financing in 2015.


Interest Payable Related Party

Interest payable increased in 2016 related to the delayed interest payments scheduled on two notes to related parties.


Purchase of Mineral Property

Purchase of mineral property increased in 2016 as development expenditures were made at the Golden Chest property in anticipation of resumed production.


Principal Payments on Notes Payable

Principal payments on notes payable increased as the Company began making payments on the Golden Chest property note in 2016.


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not required for small reporting companies.


ITEM 4:

 CONTROLS AND PROCEDURES


Disclosure Controls and Procedures

At September 30, 2016, our President who also serves as our Chief Accounting Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified by the Securities & Exchange Commission rules and forms.


Based upon that evaluation, it was concluded that our disclosure controls were effective as of September 30, 2016, to ensure timely reporting with the Securities and Exchange Commission. Specifically, the Company’s corporate governance and disclosure controls and procedures provided reasonable assurance that required reports were timely and accurately reported in our periodic reports filed with the Securities and Exchange Commission.


Changes in internal control over financial reporting

The President and Principal Accounting Officer conducted evaluations of our internal controls over financial reporting to determine whether any changes occurred during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. There was no material change in internal control over financial reporting in the quarter ended September 30, 2016.


PART II - OTHER INFORMATION


ITEM 1.

 LEGAL PROCEEDINGS


None


ITEM 2.

 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


Neither the constituent instruments defining the rights of the Company’s securities filers nor the rights evidenced by the Company’s outstanding common stock have been modified, limited or qualified.


During the first quarter of 2016 the Company issued 3,000,000 shares of unregistered common stock at $0.07 per share for a total consideration of $210,000 as a part of the Butte Highlands mineral property purchase. The Company issued 175,760 shares of unregistered common stock at $0.15 per share for a total consideration of $26,364 as part of the payment for the acquisition of the outstanding shares of GF&H Company. No shares of the Company’s stock were issued in 2015.


The Company relied on the transaction exemption afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D Rule 506(b). The common shares are restricted securities which may not be publicly sold unless registered for resale with the Securities and Exchange Commission or exempt from the registration requirements of the Securities Act of 1933, as amended.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


The Company has no outstanding senior securities.



17






ITEM 4.

MINE SAFETY DISCLOSURES


Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended September 30, 2016, the Company had no citations for a violation of mandatory health or safety standards that could significantly and substantially (S&S citation) contribute to the cause and effect a mine safety or health hazard under section 104 of the Federal Mine Safety and Health Act of 1977. There were no legal actions, mining-related fatalities, or similar events in relation to the Company’s United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.


ITEM 5.

 OTHER INFORMATION


None


ITEM 6.

 EXHIBITS


Number

Description

3.1

Articles of Incorporation. Filed as an exhibit to the registrant's registration statement on Form 10 (Commission File No. 000-28837) and incorporated by reference herein.

3.2

Bylaws. Filed as an exhibit to the registrant's registration statement on Form 10 (Commission File No. 000-28837) and incorporated by reference herein.

10.1

Member Interest Purchase Agreement of 50% Interest in Butte Highlands Joint Venture, LLC, dated January 29, 2016

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley act of 2002.*

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley act of 2002.*

32.1

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document


* as filed herewith




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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




NEW JERSEY MINING COMPANY


By:   /s/ John Swallow


John Swallow,

its: President

Date November 14, 2016



By:   /s/ Delbert Steiner


Delbert Steiner,

its: Chief Executive Officer and Chief Financial Officer

Date: November 14, 2016







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