Toronto-listed, Xtra Gold Resources, after assessing the risks associated with its portfolio of assets in Ghana for year-end 2021, has concluded it will continue to rely on private financing to meet its operational costs and expenses for 2022, according to the company’s annual report.
Year-in, year-out, the company relies on private placement financing, noting that it has incurred operating losses on an annual basis for a long time, primarily arising out of the costs related to continued exploration and development of mineral resource properties, including costs written off on properties no longer pursued by the company.
As of year-end 2021, the company had an accumulated deficit/loss of $21,793,376. The company’s total assets increased from $9,340,942 at year-end 2020 to $10,758,031 at year-end 2021, comprising mainly of cash, liquid securities, and gold inventory. Pre-Tax Income for the year was $2,045,713.
On the back of these financials, the company said: “It is anticipated that our company could experience an operating loss for fiscal 2022 until our company discovers economically mineable mineralized material and successfully develops a mine. There can be no assurance that our company will ever achieve significant revenues or profitable operations.”
With respect to the company’s projects, it is still at the exploration stage, and unfortunately, “the chance of ever reaching the production stage at our projects is uncertain,” according to the report.
“Our company cannot predict whether we will successfully effectuate our company’s current business plan. If our company does not obtain new financings, commencing from 2022, the amount of funds available to our company to pursue any further exploration activities at our projects could be reduced and our company’s plan of operations may be adversely affected.”
Xtra Gold
Xtra Gold in Need of Multiple Financing Alternatives
For the 2022 operational year, Xtra Gold will continue to explore various financing alternatives to meet its projected costs and expenses. Nonetheless, there is no guarantee to stockholders that it “will be able to obtain the necessary financing for our projects on favorable terms or at all,” the report read.
In addition to the above, “if the actual costs to execute the company’s business plan are significantly higher than expected”, the company warned, it may not have sufficient funds to cover the operational costs and worse still, it may not be able to obtain other sources of financing.
Accordingly, the failure to obtain all necessary financing would hinder the company from executing its business plan and “would impede the company’s ability to sustain operations or become profitable, and our company could be forced to cease our operations”.
“We anticipate that we may continue to incur losses in future periods until we are successful in generating revenues which are significant enough to pay our expenses and fund our exploration efforts. There are no assurances that we will be able to raise our revenues to a level which supports profitable operations and provides sufficient funds to pay our obligations as they are incurred.”
Xtra Gold
To reiterate, the company stated that, “if we are unable to meet those obligations, we could be forced to substantially curtail our operations and planned exploration efforts, which would have a material adverse effect on our business and operations in future periods.”
The company’s activities are currently focused on the Kibi and Kwabeng projects. With only these two assets, the company bemoaned that the lack of “property diversification” exposes it to some “heightened degree of risk”. The company explained that “Adverse changes or developments affecting our Kibi or Kwabeng projects would have a material and adverse effect on our company’s business, financial condition, results of operations and prospects.”
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