GOLDRICH MINING CO (Form: 10-K, Received: 11/04/2020 15:58:30)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR
o		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: 001-06412

Goldrich Mining Company

(Exact name of registrant as specified in its charter)

Alaska		91-0742812
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2607 Southeast Blvd., Suite B211
Spokane, Washington		99223-4942
(Address of principal executive offices)		(Zip Code)

(509) 535-7367

(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.10

(Tile of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o Nox

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o Nox

Indicate by checkmark whether the registrant (1) 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 that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and such files).

Yes o No x

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

Large accelerated filer o	Accelerated filer	o
Non-accelerated filer x	Smaller reporting company	x
	Emerging Growth Company	o

In an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $ 639,421 as of June 30, 2019

The number of shares of the Registrant’s Common Stock outstanding as of November 4, 2020 was 167,926,376.

Documents Incorporated by Reference: None

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COVID-19

Subsequent to the close of the year ended on December 31, 2019, in March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention. Its rapid spread around the world and throughout the United States prompted many countries, including the United States, to institute restrictions on travel, public gatherings and certain business operations. These restrictions significantly disrupted economic activity in Goldrich’s business, as manifested in:

·the inability of Company management, geologic professionals and contractors to travel to the Company’s Alaska property to engage in any meaningful field work,

·restrictions placed on face-to-face meetings with staff, members of the Board of Directors and other direct stakeholders to smoothly conduct Company business, and

·a general slowdown in capital markets and investor activities in the Company’s industry as it conducted ongoing, and subdued capital-raising activities,

As of December 31, 2019, there was no disruption or impact to the Company’s financial statements. Since December 31, 2019, due to the arbitration proceedings (as described herein) and limited cash availability, the Company has been largely inactive at its Chandalar property. However, if the severity of the economic disruptions increase as the duration of the COVID-19 pandemic continues beyond the Company’s current inactive period, anticipated to end in the late winter/early spring of 2021, the negative financial impact due to limitation in conducting geologic field work and exploration activities could be significantly greater in future periods.

In addition, the economic disruptions caused by COVID-19 could also adversely impact the impairment risks for certain long-lived assets and equity method investments. Goldrich evaluated these impairment considerations and determined that no such impairments occurred as of December 31, 2019.

As of December 31, 2019, Goldrich’s available capital was approximately $1,300 and as of September 30, 2020 its available capital was approximately $18,000. Management believes the Company will need additional capital resources under new or existing credit facilities and operating agreements. To the extent that future access to the capital markets or the cost of funding is adversely affected by COVID-19, the Company may need to consider alternative sources of funding for operations and working capital, which may adversely impact future results of operations, financial condition, and cash flows.

In March 2020, President Trump signed into law legislation referred to as the "Coronavirus Aid, Relief, and Economic Security Act" (the CARES Act). The CARES Act includes tax relief provisions such as: (a) an Alternative Minimum Tax (AMT) Credit Refund, (b) a 5-year net operating losses (NOL) carryback from years 2018-2020 and (c) delayed payment of employer payroll taxes. As of December 31, 2019, Goldrich had approximately $42.8 million in NOL’s, which cannot be carried back to prior years to generate tax refunds, since no tax has been paid in those years by the Company.

The Company is taking steps to mitigate the potential risks to suppliers and employees posed by the spread of COVID-19. The Company has implemented work from home policies where appropriate. The Company will continue to monitor developments affecting both their workforce and contractors, and will take additional precautions that management determines are necessary in order to mitigate the impacts. There has been no material adverse impact to the Company’s business operations due to remote work. Despite efforts to manage these impacts to the Company, the ultimate impact of COVID-19 also depends on factors beyond management’s knowledge or control, including the duration and severity of this outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects. Therefore, management cannot estimate the potential future impact to financial position, results of operations and cash flows, but the impacts could be material.

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Annual Report”) and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include but are not limited to:

·estimates of mineralized material;

·our anticipated results and developments in future periods;

·statements regarding our exploration plans at our Chandalar property;

·statements regarding our plans to finance our operations;

·statements regarding future costs and expenditures;

·statements regarding our anticipated plan of operation; 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.

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”, “should” 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 ability to continue as a going concern being in doubt;

·risks related to our history of losses;

·risks related to our outstanding gold forward sales contracts and notes;

·risks related to need to raise additional capital to fund our exploration and, if warranted, development and production programs;

·risks related to our property not having any proven or probable reserves;

·risk related to our limited history of commercial production;

·risk related to operating a mine;

·risk related to accurately forecasting, extraction and production;

·risks related to our dependence on a single property – the Chandalar property;

·risks related to climate and location restricting our exploration and, if warranted, development and production activities;

·risks related to our mineralization estimates being based on limited drilling data;

·risks related to our exploration activities not being commercially successful;

·risks related to actual capital costs, production or economic return being different than projected;

·risk related to our joint venture arrangements;

·risks related to unfavorable outcomes of the joint venture arbitration proceedings;

·risks related to mineral exploration;

·risks related to increased costs;

·risks related to a shortage of equipment and supplies;

·risk related to fluctuations in gold prices;

·risks related to title to our properties being defective;

·risks related to title to our properties being subject to claims;

·risks related to estimates of mineralized material;

·risks related to government regulation;

·risks related to environmental laws and regulation;

·risks related to land reclamation requirements;

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·risks related to future legislation regarding mining laws;

·risks related to future legislation regarding climate change;

·risks related to our lack of insurance coverage for all risks;

·risks related to competition in the mining industry;

·risks related to our dependence on key personnel;

·risks related to our executive offices not dedicating 100% of their time to our company;

·risks related to potential conflicts of interest with our directors and executive officers;

·risks related to market conditions;

·risks related to our disclosure controls and procedures; 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 “Item 1. Business,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Results of Operation” of this Annual Report. 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.

We qualify all the forward-looking statements contained in this Annual Report by the foregoing cautionary statements.

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PART I

As used in herein, the terms “Goldrich,” the “Company,” “we,” “us,” and “our” refer to Goldrich Mining Company.

ITEM 1. BUSINESS

Overview and History

We are a minerals company in the business of acquiring and advancing mineral properties to the discovery point, where we believe maximum shareholder returns can be realized. Although we have conducted limited extraction of gold on one of our gold prospects, Goldrich is an exploration stage company as defined by the U.S. Securities and Exchange Commission (“SEC”) under its Industry Guide 7 (“SEC Industry Guide 7”), although over $50 million in revenue from gold has been produced from its claims since 2015.

Incorporated in 1959, Goldrich Mining Company (OTCBB trading symbol “GRMC”) has been a publicly traded company since October 9, 1970. Our executive offices are located at 2607 Southeast Blvd, Suite B211, Spokane, WA 99223, and our phone number there is (509) 535-7367. Our website address is www.goldrichmining.com. Information contained on our website is not part of this annual report.

At this time, our major mineral exploration prospects are contained within our wholly-owned Chandalar property, located approximately 190 air miles north of Fairbanks, Alaska. The property is largely on land owned by the State of Alaska, which is one of the active and highly ranked mining jurisdictions in the world. Both patented federal mining claims and Alaska state mining claims provide exploration and mining rights to lode and placer mineral deposits. A more detailed description of our Chandalar property is set forth in “Item 2 – Properties” of this Annual Report.

The Chandalar property contains both our Chandalar hard-rock (lode) gold project, our primary target, and the Chandalar alluvial gold mine. The area has a long prospecting and mining history dating to the discovery of placer gold deposits in 1905, soon followed by the discovery of more than 30 separate high-grade lode gold mineralization prospects. Over the next 80 years the lode gold mineralization occurrences were intermittently explored or mined by various small operators, but because of the district’s remote location the readily mineable alluvial gold deposits received the most attention.

Although there is a history of past lode and alluvial extraction on our Chandalar property, it currently does not contain any known proven or probable ore reserves as defined in SEC Industry Guide 7. The probability that ore reserves that meet SEC Industry Guide 7 guidelines will be discovered on an individual hard rock prospect at Chandalar cannot be determined at this time. We have however commissioned an independent engineering firm to complete a mining plan and initial assessment for the Company’s Chandalar placer mine, according to the new amendments adopted by the SEC to modernize the property disclosure requirements for mining registrants as codified in subpart 1300 of Regulation S-K under the Securities Exchange Act of 1934, as amended (“Subpart 1300”). The new disclosure requirements under Subpart 1300 will replace the SEC Industry Guide 7 and mining registrants are required to follow them beginning in fiscal years beginning on or after January 1, 2021. The new disclosure requirements under Subpart 1300 allow issuers to disclose inferred, indicated and measured resources as defined therein. Subject to the findings of Company’s currently commissioned initial assessment, we will decide if a preliminary feasibility study should also be prepared for the Chandalar placer mine. A preliminary feasibility study allows an issuer to disclose any proven or probable mineral reserves on a mineral property.

The ownership and management of Goldrich changed in 2003. Beginning in 2004, we ended a twenty-year hiatus of hard-rock exploration on the property and began employing modern exploration techniques. Our focus is two-fold:

(1) Continue exploration of our Chandalar property where we have discovered and identified drilling targets for a potentially large bulk tonnage hard-rock intrusion-related gold deposit.

(2) Continue gold extraction from the Chandalar placer gold deposit discovered on the property.

We have spent many millions of dollars in exploration and mining activities of our Chandalar property. Some of the

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highlights include (see details of highlights in the Properties section below):

2012: As described below in Joint Venture Agreement, we signed an agreement with NyacAU to form a joint venture, Goldrich NyacAU Placer, LLC (“GNP”) for the purpose of mining the alluvial gold deposits within the bounds of our Chandalar property.

2013: Achievements included GNP’s mobilization of drilling equipment and plant setup, approval of permits to expand mining operations, significant infrastructure improvements and extraction of 680 ounces of fine gold.

2014: We conducted a property-wide airborne radiometric and magnetic survey to generate and further refine exploration targets for bulk-tonnage low-grade mineralization and possible deeper sources of intrusion-related mineralization. We also completed advanced petrographic studies of drill core samples from the Chandalar gold property. The new data refined the orogenic model that has historically guided exploration at Chandalar and redirected our future exploration for intrusion-related mineralization.

2015: We completed reclamation of mine waste road built in 2010 and received a confirmation of completion and satisfaction from the Army Corps of Engineers. GNP extracted approximately 3,600 ounces of fine gold.

2016: GNP extracted approximately 8,200 ounces of fine gold.

2017: We performed additional oxygen isotope studies to further confirm intrusion-related mineralization. In addition, GNP completed a sonic drill program and drilled 231 holes totaling 14,271 feet to further define the Chandalar placer deposit. GNP extracted approximately 12,300 ounces of fine gold.

2018: GNP extracted approximately 17,100 ounces of fine gold.

Although GNP extracted over 42,000 ounces of fine gold from 2013 to 2018, GNP failed to meet the minimum production requirements under the GNP Operating Agreement. Goldrich began arbitration proceedings against NyacAU and certain NyacAU related parties in 2017 (see Joint Venture Agreement and Arbitration below). GNP was dissolved in June 2019 and is in the process of liquidation. Except for equipment needed for reclamation, most of the heavy equipment and the wash plant were removed in March through mid-April 2019. There was no gold extracted in 2019. NyacAU is the holder of the mine permits and began reclamation of the mine in 2019. NyacAU is responsible for future reclamation costs. Goldrich hired an independent mining engineering firm in 2019 to formulate a mine plan and complete an initial assessment under Subpart 13000 to determine if Goldrich should pursue production at the placer mine. Any plan to continue future mining is contingent upon our success in raising sufficient capital to fund these activities or any portion of them (see Joint Venture Agreement below for details of the GNP joint venture, arbitration activities and the joint venture’s pending liquidation).

Concerning hard-rock exploration, although we are pleased with the progress that has been made, weak financial markets during the last several years have been an important factor affecting the level of our exploration activities. If the placer mine enters into commercial production (by Goldrich or a third-party operator), we look forward to potential internal cash flow and additional opportunities for financing that will give us a unique advantage for growth over other junior mining exploration companies; however, finances must be obtained before we can continue mining activities.

We also intend to list our shares on a recognized stock exchange in Canada in addition to maintaining our quotation on the OTCBB in the United States. We believe these factors will increase our access to financial markets and positively affect our ability to raise the funds necessary to add value to our property and increase shareholder value. Our main focus in the future will continue to be the exploration of the hard-rock targets of our Chandalar property as funds become available.

Competition

There is aggressive competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. We compete for the opportunity to participate in promising exploration projects with other entities. In addition, we compete with others in efforts to obtain financing to acquire and explore mineral properties,

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acquire and utilize mineral exploration equipment and hire qualified mineral exploration personnel.

We may compete with other junior mining companies for mining claims in regions adjacent to our existing claims, or in other parts of the world should we dedicate resources to doing so in the future. These companies may be better capitalized than us and we may have difficulty in expanding our holdings through additional mining claims.

In competing for qualified mineral exploration personnel, we may be required to pay compensation or benefits relatively higher than those paid in the past, and the availability of qualified personnel may be limited in high-demand mining periods, such as have been experienced during the increased price of gold in recent years.

Employees

In October 2009, William Schara began employment as our President and Chief Executive Officer (“CEO”). We rely on consulting contracts for some of our management and administrative personnel needs, including for our Chief Financial Officer (“CFO”), Mr. Ted Sharp. The contract for Mr. Sharp expired on December 31, 2009, however, Mr. Sharp continues to provide services to the Company under the same terms provided in the contract. We employ individuals and contractors on a seasonal basis to conduct exploration, mining and other required company activities, mostly during the late spring through early fall months.

We currently have 2 full-time employees; our CEO and Controller. We had as many as 23 part-time employees and contractors during 2011, 5 part-time employees and contractors during 2012, and one employee at the mine site for logistics and other company activities during 2013, 2014, 2015, and 2017. In addition to the employees of Goldrich, GNP had as many as 10 employees during 2012, 46 employees during 2013, 10 employees during 2014, 67 employees during 2015, 50 employees during 2016, 63 employees during 2017, and 61 employees in 2018.

Seasons

We conduct exploration activities at Chandalar between late spring and early autumn. Access during that time is exclusively by airplane. All fuel is supplied to the campsite by air transport. Access during winter months is by ice road, snowmobile and ski-plane. All heavy supplies and equipment are brought in by trucking over the ice road from Coldfoot. Snow melt generally occurs toward the end of May, followed by an intensive, though short, 90-day growing season with 24 hours of daylight and daytime temperatures that range from 60° to 80° Fahrenheit. Freezing temperatures return in late August and freeze-up typically occurs by early October. Winter temperatures, particularly in the lower elevations, can drop to -50° F or colder for extended periods. Annual precipitation is 15 to 20 inches, coming mostly in late summer as rain and during the first half of the winter as snow. Winter snow accumulations are modest. The area is essentially an arctic desert.

Regulation

Our mineral exploration activities are subject to various federal, state, and local laws and regulations governing prospecting, exploration, production, labor standards, occupational health and mine safety, control of toxic substances, land use, water use, land claims of local people and other matters involving environmental protection and taxation. New rules and regulations may be enacted or existing rules and regulations may be applied in a manner that could limit or curtail exploration at our property. It is possible that future changes in these rules or regulations could have a significant impact on our business, causing those activities to be economically re-evaluated at that time.

Taxes Pertaining to Mining

Alaska’s tax and regulatory policy is widely viewed by the mining industry as offering the most favorable environment for establishing new mines in the United States. The mining taxation regimes in Alaska have been stable for many years. There is regular discussion of taxation issues in the legislatures but no changes have been proposed that would significantly alter their current state mining taxation structures. The economics of any potential mining operation on our properties would be particularly sensitive to changes in the State of Alaska's tax regimes. Amendments to current laws, regulations and permits governing our operations and the general activities of mining and exploration companies, or more stringent implementation thereof, could cause unanticipated increases in our exploration expenses, capital expenditures or future production costs, or could result in abandonment or delays in establishing operations at our

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Chandalar property. Although management has no reason to believe that new mining taxation laws that could adversely impact our Chandalar property will materialize, such an event could and may happen in the future.

At present, Alaska has a 7% net profits mining license tax on all mineral production (AS 43.65), a 3% net profits royalty on minerals from state lands (AS 38.05.212) (where we hold unpatented state mining claims), and a graduated annual mining claim rental beginning at $1.03/acre. Alaska state corporate income tax is 9.4% if net profit is more than a set threshold amount. Alaska has an exploration incentive credit program (AS 27.30.010) whereby up to $20 million in approved accrued exploration credits can be deducted from the state mining license tax, the state corporate income tax, and the state mining royalty. All qualified new mining operations are exempt from the mining license tax for 3 1/2 years after production begins.

Environmental Regulations

Our Chandalar property contains an inactive small mining mill site on Tobin Creek with tailings impoundments, last used in 1983. The mill was capable of processing 100 tons of ore per day. A total of 11,884 tons were put through the mill, and into two small adjacent tailings impoundments. A December 19, 1990 letter from the Alaska Department of Environmental Conservation (the “Alaska DEC”) to the Alaska Division of Mining of the Department of Natural Resources (the “Alaska DNR”) states: “Our samples indicate the tailings impoundments meet Alaska DEC standards requirements and are acceptable for abandonment and reclamation.” The Alaska DNR conveyed acknowledgement of receipt of this report to us in a letter dated December 24, 1990. We subsequently reclaimed the tailings impoundments and expect that no further remedial action will be required. Vegetation has established itself on the tailings impoundments, thereby mitigating erosional forces.

In 1990, the Alaska DEC notified us that soil samples taken from a gravel pad adjacent to our Tobin Creek mill site contained elevated levels of mercury. In response to the notification, we engaged a professional mineral engineer to evaluate procedures for remediating contamination at the site. In 1994, the engineer evaluated the contamination and determined that it consists of approximately 160 cubic yards of earthen material that could be cleansed by processing it through a simple gravity washing plant. This plan was subsequently approved by the state. In 2000, the site was listed in the Alaska DEC’s contaminated sites database as a “medium” priority contaminated site. We are not aware of any changes in state environmental laws that would affect our state approved cleanup plan or impose a timetable for it to be done. During 2008, our employees took a suite of samples at the contamination site to update the readings taken in 1990 or prior. The results of this sampling reconfirmed the earlier findings, and also suggest that some attenuation of the mercury contamination has occurred. An independent technical consultant assessed those results and believes that proper procedures for sampling and testing were followed. During 2011, 2013 and 2014, we took additional samples that showed an overall reduction of mercury in the previously sampled area. However, one sample on the margin of the sampled area yielded high mercury content, and that may necessitate continued expansion of the area to be sampled in the future. The 2011, 2013 and 2014 sample results were submitted to the State for analysis and determination of what additional sampling the State may require on the area around the mill. In 2013, we received a letter request from the Alaska DEC to update our plan for remediating the contaminated site and in 2014, 2015, and 2016 continued communication with the Alaska DEC to determine what remediation is necessary. We have engaged an independent environmental engineering company to perform an evaluation of the remediation requirements based on locality, latitude, altitude, permafrost and other factors. During 2017, the environmental engineering company performed an eco-scoping study on the site. The Alaska DEC has notified us that further sampling will need to be performed in and around the streambed from the mine site to the stream’s confluence into Chandalar Lake. At December 31, 2019, we have an accrued liability of $100,000 in our financial statements for sampling and remediation costs.

During 2009 and 2010, we engaged in permitted open pit mining operations on Little Squaw Creek. The Small Mines permit restricts ground disturbance to a total maximum of ten acres and requires a specified reclamation plan for the disturbed area to be completed prior to additional acreage being disturbed. We joined the State of Alaska reclamation bond pool to assure the minimum legal reclamation requirements could be met. During the 2010 mining operations, we experienced a situation where it was not practical to concurrently mine and reclaim without wasting (or sacrificing) a significant portion of the mineralized material we intended to mine. During 2012, GNP completed certain corrective actions required by the ACE. In 2013, NyacAU, the managers of GNP, received a new permit to expand the mine site from 10 to approximately 350 acres. The new mining permit provided an increased area for stockpiling topsoil, a larger settling pond system with greater capacity to ensure water quality and availability, and room to allow concurrent mine

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reclamation as the project advances. In addition, the permit also allowed for construction of a new airstrip. Processing plants used for the recovery of gold will use a recirculating closed-loop water system to minimize water usage and protect the environment.

Although NyacAU received a new permit to expand the mine, Goldrich was still required to remove a mine waste road built in 2010. Remediation activities were completed during 2015, and the Company received a confirmation of completion and satisfaction from the ACE on September 23, 2015.

ITEM 1A. RISK FACTORS

The following sets forth certain risks and uncertainties that could have a material adverse effect on our business, financial condition and/or results of operations, and the trading price of our common stock which may decline and investors may lose all or part of their investment. These risk factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial also may impair our business operations. We cannot assure you that we will successfully address these risks or that other unknown risks exist that may affect our business.

Risks Related to Our Operations

Our ability to operate as a going concern is in doubt.

The audit opinion and notes that accompany our consolidated financial statements for the year ended December 31, 2019, 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 an exploration stage company and we have 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 deferring payment on certain current liabilities and raising additional funds. During the year ended December 31, 2019, we raised $888,000 net cash from senior secured notes payable to third-party and related-party persons, as described elsewhere. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities 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 raise capital to fund our future exploration and working capital requirements or our ability to profitably execute our business plan. Our plans for the long-term return to and 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. 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.

GNP was dissolved in 2019 and is now in the process of liquidation. We are making our best efforts to raise sufficient capital to continue profitably operating the mine beginning in 2021. The current plant has been disassembled and it, as well as most of the equipment used by GNP, has been demobilized from the mine site. While we are working to replace the dissolved GNP operations with commensurate gold extraction by us or a qualified third-party operator, we cannot assure you we will have sufficient capital to implement our plan of operation, that we will be successful in beginning gold extraction operations in the future, the timing for any such operations or that the extraction results in future years will be similar to past results.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

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We have a history of losses and expect to continue to incur losses in the future.

We have incurred losses since inception, with the exception of the year ended December 31, 2015, and expect to continue to incur losses in the future. We had net income of $50,163 in the year ended 2015, but we incurred net losses during each of the following periods:

·$2,603,065 for the year ended December 31, 2019;

·$3,779,949 for the year ended December 31, 2018;

·$965,457 for the year ended December 31, 2017; and

·$733,298 for the year ended December 31, 2016;

We had an accumulated deficit of approximately $35.5 million as of December 31, 2019. We expect to continue to incur losses unless and until such time as the Chandalar Mine or one of our properties enters into commercial production and generates sufficient revenues to fund continuing operations. We recognize that if we are unable to generate significant revenues from mining operations and dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition.

We may be unable to timely pay our obligations under our outstanding note payable in gold or our secured senior secured notes, which may result in us losing some of our rights to gold from Chandalar alluvial extraction operations and may adversely affect our assets, results of operations and future prospects.

At December 31, 2019, a portion of the Company’s notes payable in gold outstanding, with a net liability of $406,319, obligate the Company to deliver 266.788 ounces of fine gold on demand. To date, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. These notes are secured against our right to future distributions of gold extracted from subsequent gold mining operations. At December 31, 2019, we owed secured senior notes to related parties totaling $3,246,316 and outstanding notes payable to unrelated parties of $1,020,000, each with a maturity date of October 31, 2018, as amended on November 1, 2019 to be payable within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder. These notes are secured against all of the assets and property of each of Goldrich Mining Company and Goldrich Placer, LLC, whether real, personal or mixed, in which the holders of any Notes (or their Collateral Agent) hold a security interest at such time, including any property subject to liens or security interest granted by the Deed of Trust.

Under our gold forward sales contracts, each of the following constitutes an event of default: (a) our failure to perform or observe any term, covenant or agreement contained in the gold forward sales contract; (b) any warranty made by us in the gold forward sales contract shall prove to have been incorrect in a material respect when made; or (c) we shall declare bankruptcy. Upon the occurrence of an event of default, the holders of the gold forward sales contracts may designate a termination date for the contract and upon termination receive the delivery date index price (as determined in the gold forward sales contract) of any quantities of gold we were deficient in delivering payable in either (i) cash or (ii) an amount of our shares of common stock equal such value converted into shares at the greater of $0.15 per share or 75% of the current market price per share on the delivery date.

Under our senior secured notes, each of the following constitutes an event of default: (a) the Company fails to pay (i) any portion of the principal amount of any Note when due or (ii) any accrued and unpaid Interest when due and such failure continues for three (3) Business Days or (iii) any other amount that is due and payable under this Amended Agreement, any Note, or the Deed of Trust and such failure continues for ten (10) Business Days after demand for such payment is made by the Holder; (b) the Company fails to observe or perform any other obligation, covenant, or agreement applicable to the Company under this Amended Agreement as and when due and fails to cure such failure within 10 Business Days of notice of such failure by the holder to the Company; (c) the Company fails to observe or perform any covenant or agreement applicable under the Guaranty and fails to cure such failure within 10 Business Days of notice of such failure by the holder to the Company; (d)an insolvency or liquidation proceeding or assignment is commenced with respect to the Company or its subsidiary; or (e) any alleged creditor other than the holders seeks to collect any amount allegedly due and owing to said creditor at that time.

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If we are unable to timely satisfy our obligations under the notes payable in gold or the secured senior notes, including timely payment of gold on demand or interest when due and payment of the principal amount on demand for the secured senior notes and we are not able to re-negotiate the terms of such agreements, the holders will have rights against us, including potentially seizing or selling our assets. The notes payable in gold are specifically secured against our right to future gold distributions from subsequent gold mining operations. The senior secured notes are secured against all our assets. Any failure to timely meet our obligations under these instruments may adversely affect our assets, results of operations and future prospects or cause us to declare bankruptcy.

We have entered into arbitration with our joint venture partner.

In 2017, we, our subsidiary and the joint venture, as claimants, filed an arbitration statement of claim before a three-member Arbitration Panel (“the Panel”), against our JV partner and its affiliates; NyacAU, LLC (“NyacAU”), BEAR Leasing, LLC, and Dr. J. Michael James, as respondents. In 2018, the respondents filed a counter-claim against the Company, its subsidiaries and certain members of our current and former management, the counterclaim respondents. During the year ended December 31, 2019, and in 2020 subsequent to the end of the reported period, the Panel has released various awards relating to the allegations of both parties. Some of which have been in favor of our positions some have been in favor of our JV partner and its affiliates. Under the terms of the Operating Agreement, both partners are required to abide by the rulings proceeding from the arbitration panel. The arbitration is ongoing and the various parties to the claims and counterclaims continue to disagree on several matters.

On May 25, 2019, the Panel issued an Interim Award, which requested input from the parties on a small number of discrete issues, all input to be supported by references to the arbitration record. On November 30, 2019, the Panel issued the Partial Final Award and concurrently the Second Interim Award RE Dissolution/Liquidation of GNP and Related Issues (“the Second Interim Award”). On September 4, 2020, the Arbitration Panel (the “Panel”) issued the Final Post Award Orders, wherein the Panel issued rulings on multiple material issues. A summary of each award is provided below in the Item 2: Properties section under Arbitration.

GNP is in liquidation.

NyacAU filed the formal Notice of Dissolution in May 2019 and received the certificate of dissolution in July with an effective date of June 3, 2019. GNP is now in the liquidation process (see Joint Venture Agreement and Arbitration below). The Panel ruled that NyacAU should continue as the liquidator. Except for equipment needed for reclamation, most the heavy equipment and the wash plant were removed on a winter trail in March through mid-April 2019. The Panel has jurisdiction over the liquidation process. The arbitration is ongoing and the various parties to the claims and counterclaims continue to disagree on several matters. The Panel may or may not rule in our favor.

We are required to raise additional capital to fund our exploration and, if warranted, development and production programs on the Chandalar property.

We are an exploration stage company and currently do not have sufficient capital to fully fund any long-term plan of operation at the Chandalar gold property. We will require additional financing in the future to fund exploration of and development and production on our properties, if warranted, to attain self-sufficient cash flows. We expect to obtain financing through various means including, but not limited to, private or public placement offerings of debt or our equity securities, the exercise of outstanding warrants, the sale of a production royalty, the sales of gold from future production, joint venture agreements with other mining companies, or a combination of the above. The level of additional financing required in the future will depend on the results of our exploration work and recommendations of our management and consultants. Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration or even a loss of some property interest. Additional capital or other types of financing may not be available if needed or, if available, may not be available on favorable terms or terms acceptable to us. Failure to raise such needed financing could result in us having to discontinue our mining and exploration business.

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We have only a brief, recent history of gold extraction.

We have only a brief recent history of gold extraction from 2013-2018 and have carried on our business at a loss. As a result of dissolution of GNP, the current plant has been disassembled and it, as well as most of the equipment used by GNP, has been demobilized from the mine site. While we are working to replace the GNP operations with commensurate gold extraction by us or a qualified third-party operator, we cannot assure you that similar results will be accomplished in future years. At this time, due to the risks and uncertainties described in this section, we cannot assure you that extraction activities in the future will generate revenues, profits or cash flow to us.

Estimates of cash flows, extraction costs, profitability and other financial and extraction measurements are subject to the inherent risks related to accurately forecasting extraction.

Estimates of future extraction costs and potential extraction profitability are dependent on numerous factors, which could affect the success and profitability of extraction activities. These risks include volatile gold prices, engineering and construction errors, changes or shortages in equipment and labor availability and costs, variances in grade, natural disasters and other events outside our control. The occurrence of such events could make anticipated results differ from actual results and could negatively affect our financial position.

We depend largely on a single property - the Chandalar property.

Our major mineral property at this time is the Chandalar property. We are dependent upon making a gold deposit discovery at Chandalar for the furtherance of the Company at this time. Should we be able to make an economic find at Chandalar, we would then be solely dependent upon a single mining operation for our revenue and profits, if any.

Chandalar is located within the remote Arctic Circle region and exploration and, if warranted, development and production activities may be limited by climate and location.

While we have conducted test mining and minor gold mining extraction in recent years, our current focus remains on exploration of our Chandalar property. With our current infrastructure at Chandalar, the arctic climate limits exploration activities to a summer field season that generally starts in early May and lasts until freeze-up in mid-September. The remote location of the Chandalar property limits access and increases exploration expenses. Costs associated with such activities are estimated to be between 25% and 50% higher than costs associated with similar activities in the lower 48 states in the United States. Transportation and availability of qualified personnel is also limited because of the remote location. Higher costs associated with exploration activities and limitations for the annual periods in which we can carry on exploration activities will increase the costs and time associated with our planned activities and could negatively affect the value of our property and securities.

Our mineralized material estimate at Chandalar is based on a limited amount of drilling completed to date.

The internal report of Paul L. Martin on the mineralized material estimate and data analysis for the Chandalar Alluvial Gold Deposit on our Chandalar property is based on a limited amount of drilling completed during our 2007 drilling program. These estimates have a high degree of uncertainty. While we plan on conducting further drilling programs on the deposit, we cannot guarantee that the results of future drilling will return similar results or that our current estimate of mineralized materials will ever be established as proven and probable reserves as defined in SEC Industry Guide 7. Any mineralized material or gold resources that may be discovered at Chandalar through our drilling programs may be of insufficient quantities to justify commercial operations.

Our exploration activities may not result in commercially successful mining operations.

Our operations are focused on mineral exploration, which is highly speculative in nature, involves many risks and is frequently non-productive. Unusual or unexpected geologic formations and the inability to obtain suitable or adequate machinery, equipment or labor are risks involved in the conduct of exploration programs. The focus of our current exploration plans and activities is conducting mineral exploration and deposit definition drilling at Chandalar. The success of this gold exploration is determined in part by the following factors:

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·identification of potential gold mineralization based on analysis;

·availability of government-granted exploration permits;

·the quality of our management and our geological and technical expertise; and

·capital available for exploration.

Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to determine metallurgical processes to extract metal, and to establish commercial mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit at Chandalar would be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. Any mineralized material or gold resources that may be discovered at Chandalar may be of insufficient quantities to justify commercial operations.

Actual capital costs, operating costs, extraction and economic returns may differ significantly from those anticipated and there are no assurances that any future development activities will result in profitable mining operations.

We have limited operating history on which to base any estimates of future operating costs related to any future development of our properties. Capital and operating costs, extraction and economic returns, and other estimates contained in pre-feasibility or feasibility studies may differ significantly from actual costs, and there can be no assurance that our actual capital and operating costs for any future development activities will not be higher than anticipated or disclosed.

Mining and Exploration activities involve a high degree of risk.

Our operations on our properties will be subject to all the hazards and risks normally encountered in the mining of and exploration for deposits of gold. These hazards and risks include, without limitation, unusual and unexpected geologic formations, seismic activity, rock bursts, pit-wall failures, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and legal liability. Milling operations, if any, are subject to various hazards, including, without limitation, equipment failure and failure of retaining dams around tailings disposal areas, which may result in environmental pollution and legal liability.

The parameters that would be used at our properties in estimating possible mining and processing efficiencies would be based on the testing and experience our management has acquired in operations elsewhere. Various unforeseen conditions can occur that may materially affect estimates based on those parameters. In particular, past mining operations at Chandalar indicate that care must be taken to ensure that proper mineral grade control is employed and that proper steps are taken to ensure that the underground mining operations are executed as planned to avoid mine grade dilution, resulting in uneconomic material being fed to the mill. Other unforeseen and uncontrollable difficulties may occur in planned operations at our properties that could lead to failure of the operation.

If we decide to exploit our Chandalar property and build a large gold mining operation based on existing or additional deposits of gold mineralization that may be discovered and proven, we plan to process the resource using technology that has been demonstrated to be commercially effective at other geologically similar gold deposits elsewhere in the world. These techniques may not be as efficient or economical as we project, and we may never achieve profitability.

Increased costs could affect our financial condition.

We anticipate that costs at our projects that we may explore or develop, will frequently be subject to variation from one year to the next due to a number of factors, such as changing ore grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location of the ore body. In addition, costs are affected by the price of commodities such as fuel, rubber, and electricity. Such commodities are at times subject to volatile price movements, including increases that could make extraction at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.

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A shortage of equipment and supplies could adversely affect our ability to operate our business.

We are dependent on various supplies and equipment to carry out our mining exploration and, if warranted, development and production operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of reaching production.

We may be adversely affected by a decrease in gold prices.

The value and price of our securities, our financial results, and our exploration activities may be significantly adversely affected by declines in the price of gold and other precious metals. Gold prices fluctuate widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the relative value of the United States dollar against foreign currencies on the world market, global and regional supply and demand for gold, and the political and economic conditions of gold producing countries throughout the world. The price for gold fluctuates in response to many factors beyond anyone’s ability to predict. The prices that would be used in making any economic assessment estimates of mineralized material on our properties would be disclosed and would probably differ from daily prices quoted in the news media. Percentage changes in the price of gold cannot be directly related to any estimated resource quantities at any of our properties, as they are affected by a number of additional factors. For example, a ten percent change in the price of gold may have little impact on any estimated quantities of commercially viable mineralized material at Chandalar and would affect only the resultant cash flow. Because any future mining at Chandalar would occur over a number of years, it may be prudent to continue mining for some periods during which cash flows are temporarily negative for a variety of reasons, including a belief that a low price of gold is temporary and/or that a greater expense would be incurred in temporarily or permanently closing a mine there. Mineralized material calculations and life-of-mine plans, if any, using significantly lower gold and precious metal prices could result in material write-downs of our investments in mining properties and increased reclamation and closure charges.

In addition to adversely affecting any of our mineralized material estimates and its financial aspects, declining metal prices may impact our operations by requiring a reassessment of the commercial feasibility of a particular project. Such a reassessment may be the result of a management decision related to a particular event, such as a cave-in of a mine tunnel or open pit wall. Even if any of our projects may ultimately be determined to be economically viable, the need to conduct such a reassessment may cause substantial delays in establishing operations or may interrupt on-going operations, if any, until the reassessment can be completed.

Title to our properties may be defective.

We hold certain interests in our Chandalar property in the form of State of Alaska unpatented mining claims. We hold no interest in any unpatented U.S. federal mining claims at Chandalar or elsewhere. Alaska state unpatented mining claims are unique property interests, in that they are subject to the paramount title of the State of Alaska, and rights of third parties to uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 – 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 – 86.600. The validity of all State of Alaska unpatented mining claims is dependent upon inherent uncertainties and conditions. These uncertainties relate to matters such as:

·The existence and sufficiency of a discovery of valuable minerals;

·Proper posting and marking of boundaries in accordance state statutes;

·Making timely payments of annual rentals for the right to continue to hold the mining claims in accordance with state statutes;

·Whether sufficient annual assessment work has been timely and properly performed and recorded; and

·Possible conflicts with other claims not determinable from descriptions of records.

The validity of an unpatented mining claim also depends on: (1) the claim having been located on Alaska state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting corner stakes in the ground; (2) compliance with all applicable state statutes in terms of the contents of claim

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location notices or certificates and the timely filing and recording of the same; (3) timely payment of annual claim rental fees; and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable minerals, the ground covered by an unpatented mining claim is open to location by others unless the owner is in actual possession of and diligently working the claim. We are diligently working and are in actual possession of all of our mining claims comprising our Chandalar, Alaska property. The unpatented state mining claims we own or control there may be invalid, or the title to those claims may not be free from defects. In addition, the validity of our claims may be contested by the Alaska state government or challenged by third parties.

Title to our property may be subject to other claims.

There may be valid challenges to the title to properties we own or control that, if successful, could impair our exploration activities on them. Title to such properties may be challenged or impugned due to unknown prior unrecorded agreements or transfers or undetected defects in titles.

A major portion of our mineral rights on our flagship Chandalar property consists of “unpatented” lode mining claims created and maintained on deeded state lands in accordance with the laws governing Alaska state mining claims. We have no unpatented mining claims on federal land in the Chandalar mining district, but do have unpatented state mining claims. Unpatented mining claims are unique property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of complex federal and state laws and regulations. Also, unpatented mining claims are always subject to possible challenges by third parties or validity contests by the federal and state governments. In addition, there are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims.

We have attempted to acquire and maintain satisfactory title to our Chandalar mining property, but we do not normally obtain title opinions on our properties in the ordinary course of business, with the attendant risk that title to some or all segments our properties, particularly title to the State of Alaska unpatented mining claims, may be defective. We do not carry title insurance on our patented mining claims.

Estimates of mineralized material are subject to evaluation uncertainties that could result in project failure.

Our exploration and future mining operations, if any, are and would be faced with risks associated with being able to accurately predict the quantity and quality of mineralized material within the earth using statistical sampling techniques. Estimates of any mineralized material on any of our properties would be made using samples obtained from appropriately placed trenches, test pits and underground workings and intelligently designed drilling. There is an inherent variability of assays between check and duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. Additionally, there also may be unknown geologic details that have not been identified or correctly appreciated at the current level of accumulated knowledge about our Chandalar property. This could result in uncertainties that cannot be reasonably eliminated from the process of estimating mineralized material. If these estimates were to prove to be unreliable, we could implement a plan that may not lead to commercially viable operations in the future.

Government regulation may adversely affect our business and planned operations.

Our mineral exploration activities are subject to various laws governing prospecting, mining, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local residents and other matters in the United States. New rules and regulations may be enacted or existing rules and regulations may be applied in a manner that could limit or curtail exploration at our Chandalar property. The economics of any potential mining operation on our properties would be particularly sensitive to changes in the federal and State of Alaska's tax regimes.

The generally favorable State of Alaska tax regime could be reduced or eliminated. Such an event could materially hinder our ability to finance the future exploitation of any gold deposit we might prove-up at Chandalar, or elsewhere on State of Alaska lands. Amendments to current laws, regulations and permits governing our operations and the general activities of mining and exploration companies, or more stringent implementation thereof, could cause

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unanticipated increases in our exploration expenses, capital expenditures or future extraction or production costs, or could result in abandonment or delays in establishing operations at our Chandalar property.

Our activities are subject to environmental laws and regulation that may materially adversely affect our future operations, in which case our operations could be suspended or terminated.

We are subject to a variety of federal, state and local statutes, rules and regulations in connection with our exploration activities. We are required to obtain various governmental permits to conduct exploration at and development of our property. Obtaining the necessary governmental permits is often a complex and time-consuming process involving numerous federal, state and local agencies. The duration and success of each permitting effort is contingent upon many variables not within our control. In the context of permitting, including the approval of reclamation plans, we must comply with known standards, existing laws, and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations implemented by the permitting authority. The failure to obtain certain permits or the adoption of more stringent permitting requirements could have a material adverse effect on our business, plans of operation, and property in that we may not be able to proceed with our exploration programs. Compliance with statutory environmental quality requirements may require significant capital investments, significantly affect our earning power, or cause material changes in our intended activities. Environmental standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities. As a result of these matters, our operations could be suspended or cease entirely.

Minerals exploration and mining are subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Insurance against environmental risk (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) is not generally available to us (or to other companies in the minerals industry) at a reasonable price. To the extent that we become subject to environmental liabilities, the remediation of any such liabilities would reduce funds otherwise available to us and could have a material adverse effect on our financial condition. Laws and regulations intended to ensure the protection of the environment are constantly changing, and are generally becoming more restrictive.

Federal legislation and regulations adopted and administered by the U.S. Environmental Protection Agency, Forest Service, Bureau of Land Management (“BLM”), Fish and Wildlife Service, Mine Safety and Health Administration, and other federal agencies, and legislation such as the Federal Clean Water Act, Clean Air Act, National Environmental Policy Act, Endangered Species Act, and Comprehensive Environmental Response, Compensation, and Liability Act, have a direct bearing on U.S. exploration and mining operations within the United States. These regulations will make the process for preparing and obtaining approval of a plan of operations much more time-consuming, expensive, and uncertain. Plans of operation will be required to include detailed baseline environmental information and address how detailed reclamation performance standards will be met. In addition, all activities for which plans of operation are required will be subject to review by the BLM, which must make a finding that the conditions, practices or activities do not cause substantial irreparable harm to significant scientific, cultural, or environmental resource values that cannot be effectively mitigated.

U.S. federal initiatives are often administered and enforced through state agencies operating under parallel state statutes and regulations. Although some mines continue to be approved in the United States, the process is increasingly cumbersome, time-consuming, and expensive, and the cost and uncertainty associated with the permitting process could have a material effect on exploring and mining our properties. Compliance with statutory environmental quality requirements described above may require significant capital investments, significantly affect our earning power, or cause material changes in our intended activities. Environmental standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities. As a result of these matters, our operations could be suspended or cease entirely.

At this time, our Chandalar property does not include any federal lands and therefore we do not file plans of operations with the BLM. However, we are subject to obtaining watercourse diversion permits from the U.S. Army Corp of Engineers.

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Land reclamation requirements for our properties may be burdensome and expensive.

Although variable depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as well as companies with mining operations) in order to minimize long term effects of land disturbance.

Reclamation may include requirements to:

·control dispersion of potentially deleterious effluents; and

·reasonably re-establish pre-disturbance land forms and vegetation.

In order to carry out reclamation obligations imposed on us in connection with our potential development activities, we must allocate financial resources that might otherwise be spent on further exploration and development programs. We plan to set up a provision for our reclamation obligations on our properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.

Future legislation and administrative changes to the mining laws could prevent us from exploring and operating our properties.

New local, state and U.S. federal laws and regulations, amendments to existing laws and regulations, administrative interpretation of existing laws and regulations, or more stringent enforcement of existing laws and regulations, could have a material adverse impact on our ability to conduct exploration and mining activities. Any change in the regulatory structure making it more expensive to engage in mining activities could cause us to cease operations. We are at this time unaware of any proposed Alaska state or U.S. federal laws and regulations that would have an adverse impact on the future of our Alaska mining properties.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our business.

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our venture partners and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.

We do not insure against all risks.

Our insurance policies will not cover all the potential risks associated with our operations. We may also be unable to maintain insurance coverage to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurances against risks such as environmental pollution or other hazards as a result of exploration and production are not generally available to us or to other companies in the mining industry on acceptable terms. We might also become subject to liability for pollution or other hazards for which we may not be insured against or for which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial condition and results of operations.

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We compete with larger, better capitalized competitors in the mining industry.

The mining industry is acutely competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of exploration stage properties, or properties capable of producing precious metals. Many of these companies have greater financial resources, operational experience and technical capabilities than us. As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable or at all. Consequently, our revenues, operations and financial condition and possible future revenues could be materially adversely affected by actions by our competitors. At our property at Chandalar, Alaska, we face no other competitors at this time.

We may experience cybersecurity threats.

We rely on secure and adequate operations of information technology systems in the conduct of our operations. Access to and security of the information technology systems are critical to our operations. Given that cyber risks cannot be fully mitigated and the evolving nature of these threats, we cannot assure that our information technology systems are fully protected from cybercrime or that the systems will not be inadvertently compromised, or without failures or defects. Potential disruptions to our information technology systems, including, without limitation, security breaches, power loss, theft, computer viruses, cyber-attacks, natural disasters, and noncompliance by third party service providers and inadequate levels of cybersecurity expertise and safeguards of third party information technology service providers, may adversely affect our operations as well as present significant costs and risks including, without limitation, loss or disclosure of confidential, proprietary, personal or sensitive information and third party data, material adverse effect on its financial performance, compliance with its contractual obligations, compliance with applicable laws, damaged reputation, remediation costs, potential litigation, regulatory enforcement proceedings and heightened regulatory scrutiny.

Newly adopted rules regarding mining property disclosure by companies reporting with the SEC may result in increased operating and legal costs.

On October 31, 2018, the SEC adopted new rules to modernize mining property disclosure in reports filed with the SEC in order to harmonize SEC disclosure requirements with international standards. These rules are not effective until the Company’s first full fiscal year beginning on or after January 1, 2021. The Company currently reports mineralization in compliance with SEC Industry Guide 7 and does not currently have any technical reports or assessments completed on its properties that would be in compliance with the new rules. The new rules may require the preparation and filing of technical reports on the Company’s properties on a more frequent basis than the Company’s historical practice. Such changes to the Company’s reporting requirements and the preparation of technical reports and assessments could result in increased compliance costs.

Risks related to the Company

We are dependent on our key personnel.

Our success depends in a large part on our key executives: William Schara, our President and CEO, and Ted Sharp, our Corporate Secretary and CFO. The loss of their services could have a material adverse effect on us. Mr. Sharp is a licensed Certified Public Accountant and an independent contractor, with business management and consulting interests that are independent of the consulting agreement he currently has in place with the Company—he is not an employee of the Company.

At such time as we again undertake mineral exploration activities, we will need to fill positions such as Vice President of Exploration, Vice President of Operations and Chandalar Project Manager with persons possessing requisite skills. Our ability to manage our mineral exploration activities at our Chandalar gold property or other locations where we may acquire mineral interests will depend in large part on the efforts of these individuals. We may face competition for qualified personnel, and we may not be able to attract and retain such personnel.

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Certain of our executive officers do not dedicate 100% of their time on our business.

William V. Schara, our CEO, devotes 100% of his time to company business. Ted Sharp, our CFO, provides services under a consulting arrangement, which permits him to provide services to other companies. Mr. Sharp dedicates approximately 30% of his business time to Goldrich, and currently provides consulting services to a variety of small business clients, which may detract from the time Mr. Sharp can spend on our business. Mr. Sharp often conducts business remotely by internet communication. In the event of a failure of laptop or telecommunications, or at times of internet connection disruption, Mr. Sharp’s ability to communicate with other company personnel or conduct company transactions may be obstructed.

Our officers and directors may have potential conflicts of interest due to their responsibilities with other entities.

The officers and directors of the Company serve as officers and/or directors of other companies in the mining industry, which may create situations where the interests of the director or officer may become conflicted. The consulting arrangement of Mr. Sharp allows him to provide services to other companies. The companies to which Mr. Sharp provides services may be potential competitors with the Company at some point in the future. The directors and officers owe the Company fiduciary duties with respect to any current or future conflicts of interest.

Risks related to our Common Stock

The market for our common stock has been volatile in the past and may be subject to fluctuations in the future.

The market price of our common stock has ranged from a high of $0.028 and a low of $0.006 during the twelve-month period ended December 31, 2019. The market price for our common stock closed at $0.024 on December 29, 2019, the last trading day of 2019. The market price of our common stock may fluctuate significantly from its current level. The market price of our common stock may be subject to wide fluctuations in response to quarterly variations in operating results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of the operating results of certain companies to meet market expectations that have particularly affected the market prices of equity securities of many exploration stage companies that have often been unrelated to the operating performance of such companies. These broad market fluctuations, or any industry-specific market fluctuations, may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action securities litigation has been instituted against such a company. Such litigation, whether with or without merit, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, operating results and financial condition.

We have convertible securities outstanding, which if fully exercised could require us to issue a significant number of shares of our common stock and result in substantial dilution to existing shareholders.

As of December 31, 2019, we had 139,573,798 shares of common stock issued and outstanding. We may be required to issue the following shares of common stock upon exercise of options and warrants or conversion of convertible securities:

•1,075,000 shares of common stock issuable upon exercise of vested options outstanding as of December 31, 2019;

•32,190,475 shares of common stock issuable upon conversion of preferred shares outstanding as of December 31, 2019; and

•60,325,024 shares of common stock issuable upon exercise of warrants outstanding as of December 31, 2019.

If these convertible and exercisable securities are fully converted or exercised, we would issue an additional 93,590,499 shares of common stock, and our issued and outstanding share capital would increase to 233,164,297 shares. The convertible securities are likely to be exercised or converted at the time when the market price of our common stock exceeds the conversion or exercise price of the convertible securities. Holders of such securities are likely to sell the common stock upon conversion, which could cause our share price to decline.

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Broker-dealers may be discouraged from effecting transactions in our common stock because they are considered a penny stock and are subject to the penny stock rules.

Rules 15g-1 through 15g-9 promulgated under the United State Securities and Exchange Act of 1934, as amended (the “Exchange Act”) impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a “penny stock.” Subject to certain exceptions, a penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. The market price of our common stock on the FINRA OTCBB during the twelve-month period ended December 31, 2019, ranged between a high of $0.028 and a low of $0.006, and our common stock is deemed penny stock for the purposes of the Exchange Act. The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of the stock and impede the sale of our stock in the secondary market.

A broker-dealer selling penny stock to anyone other than an established customer or “accredited investor,” generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the United States Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

In the event that your investment in our shares is for the purpose of deriving dividend income or in expectation of an increase in market price of our shares from the declaration and payment of dividends, your investment will be compromised because we do not intend to pay dividends, except as required by the terms of the Series A Convertible Preferred Shares.

We have never paid a dividend to our shareholders, and we intend to retain our cash for the continued growth of our business. We do not intend to pay cash dividends on our common stock in the foreseeable future. As a result, your return on investment will be solely determined by your ability to sell your shares in a secondary market. The terms of the Series A Convertible Preferred Shares require payment of a dividend to the holders at the time they convert their shares; however, this dividend can and likely will be paid in the form of additional shares of common stock sufficient to satisfy the dividend provision.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

Map 1 – Location of the Chandalar, Alaska Mining District

Chandalar Property, Alaska

The Chandalar gold property is currently our only mineral property. It is an exploration stage property. We were attracted to the Chandalar district because of its similarities to productive mining districts, its past positive exploration results, and the opportunity to control multiple attractive gold quartz-vein prospects and adjacent unexplored target areas for large bulk tonnage deposits. We believe that our dominant land control eliminates the risk of a potential competitor finding ore deposits located within adjacent claims. Summarily, we believe the scale, number and frequency of the Chandalar district gold-bearing exposures and geochemical anomalies compare favorably to similar attributes of productive mining districts.

Location, Access & Geography of Chandalar

Our Chandalar property essentially envelops the entire historic Chandalar mining district and lies approximately 70 miles north of the Arctic Circle at a latitude of about 67°30’. It is about 190 air miles north of Fairbanks, Alaska, a full-service support center for the oil and mining industry, and 48 air miles east of the Dalton Highway, the major all-weather north-south route that links Fairbanks to the Prudhoe Bay oil fields on the Arctic Ocean to the north, and 48 air miles east-northeast of the town of Coldfoot (Map 1). Access to our Chandalar Squaw Lake mining camp and nearby Chandalar Gold Mine is either by aircraft from Fairbanks, or overland during the winter season via a 95-mile-long ice road from Coldfoot through the community of Chandalar Lake to Squaw Lake.

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Map 2 – Chandalar Mining Claim Block

Geographically, our Chandalar property is situated in rugged terrain just within the south flank of the Brooks Range where elevations range from 1,900 feet in the lower valleys to just over 5,000 feet on the surrounding mountain peaks. The region has undergone glaciation due to multiple ice advances originating from the north and, while no glacial ice remains, the surficial land features of the area reflect abundant evidence of past glaciation.

The property is characterized by deeply incised creek valleys that are actively down-cutting the terrain. The steep hill slopes are shingled with frost-fractured slabby slide rock, which is the product of arctic climate mass wasting and erosion. Consequently, bedrock exposure is mostly limited to ridge crests and a few locations in creek bottoms. Vegetation is limited to the peripheral areas at lower elevations where there are relatively continuous spruce forests in the larger river valleys. The higher elevations are characterized by arctic tundra.

Snow melt generally occurs toward the end of May, followed by an intensive, though short, 90-day growing season with 24 hours of daylight and daytime temperatures that range from 60 to 80° Fahrenheit. Freezing temperatures return in late August and freeze-up typically occurs by early October. Winter temperatures, particularly in the lower elevations, can drop to -50° F or colder for extended periods. Annual precipitation is 15 to 20 inches, coming mostly in late summer as rain and during the first half of the winter as snow. Winter snow accumulations are modest. The area is essentially an arctic desert.

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Map 3 – Gold Prospects and Geologic Structure of Chandalar

Chandalar Mining Claims

We have a block of contiguous mining claims at Chandalar that cover a net area of about 22,858 acres (approximately 35.7 square miles) (Map 2), and which are maintained by us specifically for the exploration and possible exploitation of placer and lode gold deposits. The mining claims were located to secure most of the known gold bearing zones occurring within an area approximately five miles by eight miles. Within the claim block, we own in fee simple 426.5 acres as twenty-one federal lode claims, one patented federal placer claim, and one patented federal mill site. The 23 federal patented claims cover the most important of the known gold-bearing structures. In addition, there are 197 Traditional and MTRSC 40-acre State of Alaska. The 197 Traditional and MTRSC state mining claims provide exploration and mining rights to both lode and placer mineral deposits on an additional 22,432 acres of unpatented claims. Unlike federal mining claims, State of Alaska mining claims cannot be patented, but the locator has the exclusive right of possession and extraction of the minerals in or on the claim.

Alaska state unpatented mining claims are unique property interests in that they are subject to the paramount title of the State of Alaska, and rights of third parties to non-interfering uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. There are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims and possible conflicts with other claims are not always determinable from the descriptions contained in public records. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 – 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 – 86.600.

The validity of an Alaska state unpatented mining claim depends on: (1) the claim having been located on state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting stakes in the ground; (2) compliance with all applicable state statutes in terms of the contents of claim location notices or certificates and the timely filing and recording of the same; (3) timely payment of annual claim rental fees; and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable

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minerals, the ground covered by an unpatented mining claim is open to location by others unless the owner is in actual possession of and diligently working the claim. We are diligently working and are in actual possession of all our claims at Chandalar.

The locator of a mining claim on land belonging to the State of Alaska does not have an option to patent the claim. Instead, rights to deposits of minerals on Alaska state land that is open to claim staking may be acquired by discovery, location and recording as prescribed in Alaska state statutes, as previously noted. The locator has the exclusive right of possession and extraction of the minerals in or on the claim, subject to state statutes governing mining claims. We are not in default of any annual assessment work filing or annual claim rental payment required by the state of Alaska to keep our title to the mining rights at Chandalar in good standing.

An important part of our Chandalar property is patented federal mining claims owned by us. Patented mining claims, which are real property interests that are owned in fee simple, are subject to less risk than unpatented mining claims. We have done a title chain search of our patented federal mining claims and believe we are the owner of the private property, and that the property is free and clear of liens and other third-party claims except for the 2% mineral production royalty. The 2% mineral production royalty was formerly held by our previous management (Anderson Partnership, also known as Jumbo Basin). During 2012, NyacAU loaned $250,000 to GNP and GNP purchased the royalty from Anderson Partnership. The loan to GNP for the royalty carried interest at the greater of prime plus 2% or 10% and was repaid from Goldrich’s portion of production (as defined in the joint venture agreement). The royalty was extinguished when Goldrich paid back the loan.

The Company entered into an Amended and Restated Loan Security and Intercreditor Agreement (the “Agreement”) with Nicholas Gallagher (“Gallagher”), a related party and member of the Company’s Board of Directors, in his capacity as Agent for and on behalf of Gallagher and other lenders to amend the Senior Secured Note financing effective as of November 1, 2019. Under the Agreement, the borrower and holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and similar assets. For more information see Notes Payable and Notes Payable – Related Party below.

Chandalar Geology and Mineralization

Refer to Maps 3 and 4 for graphic representation of both the hard-rock prospects and alluvial fans on which we are focusing varying degrees of exploration effort, as determined by exploration activities already completed in prior years.

The Chandalar lode occurrences are part of a regionally mineralized schist belt that extends east-west across the 600-mile width of Alaska along the south flank of the Brooks Range. The geology and mineralization of the Chandalar lode gold systems are quite similar to many important productive gold deposits that have been variously categorized as greenstone-hosted, orogenic, shear-zone related, low-sulfide, mesothermal, amongst other names and which, collectively, account for a major part of the world’s gold production. Although there is a history of past lode and alluvial extraction on our Chandalar property, it currently does not contain any known proven or probable ore reserves as defined in SEC Industry Guide 7. The probability that ore reserves that meet SEC Industry Guide 7 guidelines will be discovered on an individual hard rock prospect at Chandalar cannot be determined at this time. We have however commissioned an independent engineering firm to complete a mining plan and initial assessment for the Company’s Chandalar placer mine, according to the new amendments adopted by the SEC to modernize the property disclosure requirements for mining registrants. The new disclosure requirements will replace the SEC Industry Guide 7 and mining registrants are required to follow them beginning in 2021. The new disclosure requirements will allow Goldrich to disclose inferred, indicated and measured resources. Subject to the findings of the initial assessment, Goldrich will decide if a preliminary feasibility study should also be prepared for the Chandalar Mine. A preliminary feasibility study would allow Goldrich to disclose any reserves of the Chandalar Mine.

Infrastructure

We have established a substantial exploration infrastructure at our Chandalar property, including a 25-person camp, heavy and light-duty equipment, a 5,000-foot airstrip, and a network of roads that offer all-weather access to all of the major gold prospects. Current surface access to the camp from the Dalton Highway is restricted to the winter months

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via a winter trail from Coldfoot along the Dalton Highway. The State of Alaska has a right-of-way to construct a permanent all-season road along this trail which, when built, will allow year-around surface access to the project site. We are not aware of any plans to build this road at the present time.

Historical Mining and Exploration Activities in the Modern Era

We maintain an extensive file of the prospecting and exploration of the Chandalar Mining district, cataloging documents dated as early as 1904. Most of the previous work was by mining companies and individuals who were focused on mining the gold placers and quartz veins but who conducted little organized geologically based exploration. Even less attention was given beyond existing vein exposures.

When new management began exploration in 2004, we ended a twenty-year hiatus of hard-rock exploration on the property and began employing modern exploration techniques. We have spent many millions of dollars in exploration and mining activities of our Chandalar property as discussed below.

2004

In 2004, we contracted an independent geological consulting company to review and analyze previous work done on Chandalar. A technical report produced by the consultants recommended an initial exploration program to better assess the gold lodes and the placer gold deposits.

We also commissioned a remote sensing technical study of the Chandalar district by another independent contractor who studied high altitude air photography available for the region. The purpose of the study was to identify geological structures that may be associated with gold occurrences in a schist belt containing greenstones. The lineament study identified fifty-nine sites thought to be favorable for discovery of mineralization. Major linears, especially where they may form a regional rift, are an excellent exploration tool in the search for gold. The consultant recommended making field examinations of known gold occurrences associated with the linears and other structural features identified by the study.

During the 2004 summer field season at Chandalar, using independent certified professional geologists, we followed up on the work recommended by the remote sensing consultant’s studies. We also expanded our claim block to cover outlying vein showings and reconnaissance sampling of rocks, soils and stream sediments for geochemical analyses. The objective of the field program was to assess the validity of historic records, refine known drilling targets and identify new drilling targets. Several prospects of previously unevaluated or unknown gold mineralization were found.

2005

During 2005, we completed a modest prospecting and geologic mapping program at Chandalar, which was limited by our lack of funds. In all, 189 exploratory samples of stream sediments, soils and rock chips were taken, and mapping was completed on a series of ten prospects. That work was successful in identifying additional gold prospects within our claim block, and also in developing specific drilling targets on several of the prospects.

2006

During early 2006, we acquired sufficient funds to undertake a substantial exploration program on the Chandalar property. During the 2006 summer field season, a geological contractor completed a 1:20,000 scale geologic map of the Chandalar district, and we drilled 39 reverse circulation drill holes for 7,763 feet on nine of some thirty gold prospects within our Chandalar claim block. In the process, several miles of old roads were repaired and three miles of new roads were constructed. We established an exploration base camp (Mello Bench camp) capable of housing 20 people, and accomplished environmental clean ups of two abandoned mining campsites that predate our management takeover in 2003.

2007

Concerning hard-rock exploration, the 2007 Chandalar exploration program expanded our understanding of several hard-rock gold prospects through trenching and associated sampling. In all, forty prospect areas were mapped in detail and 1,342 samples of rock (including trench and placer drill holes to bedrock) and soil were collected and analyzed. Forty-five trenches for 5,927 feet were accomplished using an excavator, of which 4,954 feet cut into bedrock and were sampled. Some 534 trench samples were taken continuously along the lengths of all trenches. Additionally,

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ground magnetic surveys on fifteen of the prospects were conducted with survey lines totaling 28 miles.

Concerning placer exploration, we conducted 15,000 feet (4,572 meters) of reverse circulation drilling on the Little Squaw Creek drainage. Of 107 holes collared, 87 were completed to their targeted depths. We engaged an independent geological contractor to conduct all sampling in our drilling program, complete all drill sample gold recovery, evaluate ore, maintain drill sample security and report the results of their work.

2008

The analytical processing of the 3,031 drill samples and report on the final results of the samples gold contents from our 2007 placer drill program was completed by March of 2008. From these results, we concluded that we discovered a relatively large alluvial gold deposit of sufficient grade to be potentially economical to mine under prevailing gold prices. This drill program delineated approximately 10.5 million cubic yards of mineralized material at an average grade of 0.025 ounces (0.78 grams) gold per cubic yard containing an estimated 250,000 ounces of gold (This mineralized material is not a mineral reserve as defined in SEC Industry Guide 7). We believe that with continued drilling, the mineralized body may be substantially increased.

The deposit is geologically characterized as an aggradational placer gold deposit. It is unusual in the sense that it is the only such known alluvial, or placer, gold deposit in Alaska, although many exist in Siberia. Our discovery contrasts to others in Alaska that are commonly known as bedrock placer gold deposits. Aggradational alluvial gold deposits contain gold particles disseminated through thick sections of unconsolidated stream gravels in contrast to bedrock placer deposits where thin but rich gold-bearing gravel pay streaks rest directly on bedrock surfaces. Aggradational placer gold deposits are generally more uniform and thus more conducive to bulk mining techniques incorporating economies of scale. This contrasts with bedrock placer gold deposits where gold distribution tends to be erratic and highly variable. The plan view of our discovery is somewhat funnel-shaped, and as such has been divided into two distinct geomorphological zones: a Gulch, or narrower channel portion, and a Fan, or broad alluvial apron portion.

2009

We began a placer gold test mining operation on Little Squaw Creek. We also started to execute on the recommended plan in April 15, 2009 technical report prepared by an independent consultant. Some exploration of the various other placer gold creeks on the Chandalar property took place. Prospecting work on the hard-rock gold deposit possibilities was also accomplished. That work led to some key understandings of the geology. The work also resulted in the generation of an internal Company memorandum by Mr. Barker proposing an exploratory diamond-core drill program of about 40 drill holes aggregating 20,000 feet. The proposed drill program would evaluate the degree of mineralization occurring as a large strata-bound unit nearly 5 miles in length, as explained in the report Interpretation of Exploratory Findings at Chandalar.

In the 2009 test mining operation, we accomplished a major step in assessing the economic potential of this mineralized body. Most importantly, we found that the mineralized material is a continuous but variably mineralized horizon. There are specific horizons within it that are up to 20 feet thick containing the richest gold grades. The mineralized material is about forty percent composed of gravel, cobbles and boulders set in a sixty percent matrix of fine silt. It is nicely compacted and stands well when opened up. Because of the high silt content, the mineralized material, and the overburden as well, expands by over forty percent in volume when it is mined and converted into loose cubic yards. During 2009 mining test, we stripped approximately 40,000 bank cubic yards of waste material and processed about 9,875 bank cubic yards of gold bearing gravels through our wash plant. About 593.5 ounces of alluvial gold were recovered which, when smelted, yielded 497.5 ounces of fine gold.

The 2009 alluvial gold test mining operation successfully yielded valuable geological, mining and engineering data that lead us to the decision to ramp-up the project into gold extraction in the spring of 2010.

2010

During the winter of 2009/2010, we raised additional funds to ramp-up the Little Squaw Creek Gold Mine into extraction. The ramp-up process involved substantial infrastructure upgrades, including building a new 30-man mining camp located about two miles from the exploration camp that had been in use since 2004. Infrastructure and mining development at the Little Squaw Creek alluvial gold mine was initiated in late May 2010, with the first gold extraction being delivered to a smelter-refinery on July 15, 2010.

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The 2010 gold extraction was limited by the lack of capital to get a second wash plant on line. The 2009 wash plant was re-modeled with improvements (primarily an enlarged hopper with a wet grizzly style in-feed) and put on line for the 2010 extraction. Unfortunately, the plant turned out to be capable of processing only about 29 bank cubic yards per hour on a consistent basis. Attempts at higher processing rates led to overloading the machine and frequent break downs. The plant ran for 1,094 hours, extracting at an average rate of about 1.45 ounces of fine gold per hour.

While there were no drill holes within 400 feet of the perimeter of the 2009 test pit, there was mineralized material exposed in three walls of the pit which encouraged management’s decision to expand the mine by following the mineralized material, using in-pit grade control, and mining material to the physical and economic extent possible. No estimate of metallurgical recovery balances could be made regarding the mined mineralized material in 2010 for lack of sufficient prior data about the gold content in the block of ground that was mined. The gold recovery performance of the plant was checked on a consistent basis by panning its tailings. No significant gold was ever found in the tailings, leading management to conclude that the wash plant, albeit undersized for the job, was working properly.

The mining operation ultimately involved stripping an estimated 131,000 bank cubic yards of waste material and the mining and processing of about 31,680 bank cubic yards of gold bearing gravels. During the 2010 extraction season, 1,503 ounces of fine gold and 259 ounces of silver were recovered at the refinery. Additionally, 24.1 ounces of gold nuggets estimated to contain 19.2 ounces of fine gold were extracted and either sold to jewelers or retained by the Company. Our gross precious metal sales in 2010 came to $1,904,124.

Map 4 - Chandalar Exploratory Gold Deposit Drill Target with Holes Proposed in 2009 and Drilled in 2011

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2011

Our 2011 hard-rock drilling plan was extrapolated from a 2007 exploration plan that was not undertaken previously due to financial limitations. Independent third-party professionals analyzed the 2006 hard-rock rotary drill results and the surface exploration work performed in intervening years and recommended prioritized hard-rock drill targets for the 2011 exploration season. The 2011 exploration program included a diamond-core drilling exploration program on a series of hard-rock gold targets on our Chandalar claims. These targets contain numerous gold showings and we believe they are the source areas of the alluvial gold deposits in the creek drainages. We believe we have accumulated a body of knowledge on the Chandalar claims which points us toward significant areas of interest for discovery of very large tonnages of mineralization, and our drilling program has been designed to further qualify those targets for potential commercialization.

We completed our 2011 diamond core drilling campaign at Chandalar, Alaska along with a property-wide, grid-based soil sampling and a detailed airborne magnetometer survey. We completed a 25-hole, 4,404-meter (14,444-foot) exploratory program, using HQ size core, tested six prospect areas located along a 4-km (2.5-mile) long northeast trending belt of gold showings. The drilling contractor completed the last hole on September 30, 2011.

The HQ diameter diamond drill holes were generally sampled using a five-foot sample length and overall core recovery averaged greater than 90%. Six quality control samples (one blank and five standards) were inserted into each batch of 120 samples. The drill core was sawn, with half sent to the ALS Minerals sample preparation in Fairbanks, Alaska, where the samples were prepared for assay and then sent to the ALS Minerals Lab in Sparks, Nevada for analyses. Gold was analyzed by fire assay and Atomic Absorption Spectrometry finish and a four-acid sample digestion with Inductively Coupled Plasma Spectrometry method was used to analyze a full suite of elements. Samples were securely transported from the project site to the ALS Minerals preparation laboratory in Fairbanks via chartered aircraft hired by the Company.

Donald G. Strachan, Certified Professional Geologist and Goldrich’s contracted project manager for Chandalar, managed the drill program and confirmed that all procedures, protocols and methodologies used in the drill program conform to industry standards.

The results of this first diamond core exploration drilling on our Chandalar gold property have exposed what we believe is a wide-spread system of gold mineralization at intervals from surface to depths of up to 120 meters (about 400 feet). We also believe the mass of rock affected by the mineralizing system to be large, as more than 50 gold showings are scattered over about six square miles (fifteen square kilometers), only a fraction of which has yet been drill-tested. The drill cores contain a total of 56 mineralized intervals of 0.5 or greater grams per tonne gold (g/t Au) that average 2.3 meters (7.5 feet) in length and have a weighted average grade of 1.66 g/t Au (see table below). Gold-bearing intercepts were obtained in 72% of the holes, with many having multiple intercepts.

Drilling results draw us to focus on two prospects – Aurora and Rock Glacier – which we believe are geologically associated and related to the same controlling mineralizing features. Intercepts include:

·1.5 meters (5.0 feet) at 6.57 g/t Au in Hole LS11-0063 on the Aurora prospect;

·2.1 meters (7.0 feet) at 6.02 g/t Au in Hole LS11-0041 on Rock Glacier

A map and tables showing drill hole locations, drill depths, data and intercepts can be found in our annual reports filed with the SEC for 2011 and 2012.

These and other intercepts are associated with much longer core runs of strongly anomalous gold (> 0.10 g/t Au) between 4.3 meters (14 feet) and 21.3 meters (70 feet) in length. Also worth noting, while constructing a road to a proposed drill site, we encountered two zones of shearing with sheeted and stockwork quartz veinlets, approximately 5 meters (16 feet) and 15 meters (49 feet) wide. These zones are located 135 meters vertically above and 200 meters southwest of Aurora drill holes #61 to #64. Representative continuous chip sampling of these zones yielded assays of 2.8 g/t gold and 2.1 g/t gold, respectively. We believe the mineralized Aurora drill hole intercepts may represent an extension of these zones and that additional drilling could extend these zones even further.

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While the silver (Ag) values associated with these and most of the other gold intercepts are generally less than 2 g/t, unusually, native silver is observed in one core interval of 0.46 meters (1.5 feet) from 80.01 meters (262.5 feet) to 80.47 meters (264.0 feet) in Hole LS11-0042, which assays greater than 690 g/t Ag (> 20.1 oz/st Ag [st = short ton]) with only a trace of gold. A second curious silver rich interval occurs in Hole LS11-0040 for 2.1 meters (7.0 feet) from 23.47 meters (77.0 feet) to 25.60 meters (84.0 feet), which returned 397 g/t (11.6 oz/st Ag), again accompanied with only a trace of gold. We believe this silver mineralization may represent a separate mineralizing event within a large and complex precious metal bearing mineral system.

Chandalar’s wide-spread precious metal system is hosted by carbonaceous, pyrrhotite-arsenopyrite-pyrite bearing schist. Significantly, extensive intercepts of hydrothermal alteration manifested by massive chloritization and strong silicification of the schist are associated with the mineralization, and are often geochemically anomalous (> 0.05 g/t) in gold as well. Mineralized intercepts have now been intersected by drilling over a vertical elevation difference of 550 meters (1,800 feet), with the lowest exposure being in the northeast at the Aurora prospect which is close to the Little Squaw alluvial gold deposit.

Additional core drilling is necessary to assess the continuity and extent of outcropping and any projection from the gold-mineralized intercepts as well as determine the limits of the mineralizing system. In addition to drilling, the 2011 Chandalar gold exploration program included a grid soil sampling survey consisting of 1,150 samples for multi-element analyses.

The soil sampling, prioritized to first cover known mineralized trends, consisted of over 1,100 samples collected on a reconnaissance scale grid over approximately 65 percent of the 22,858-acre Chandalar property. In the airborne geophysical survey, approximately 750 line miles (1,246 line kilometers) were flown by an international geophysical contractor over the entire Chandalar property along flight lines 100 meters apart.

The 2011 exploration season was successful in significantly expanding our existing body of geological knowledge about our Chandalar property. The combination of core, soil and magnetic data is expected to provide a solid foundation for going forward with a thorough exploration and evaluation of the numerous gold occurrences on the property.

2012

As described below in Joint Venture Agreement, we signed an agreement with NyacAU to form a joint venture, Goldrich NyacAU Placer, LLC (“GNP”) for the purpose of mining the alluvial gold deposits within the bounds of our Chandalar property.

2013

Achievements included GNP’s mobilization of drilling equipment and plant setup, approval of permits to expand mining operations, significant infrastructure improvements and extraction of 680 ounces of fine gold.

2014

In 2014, we completed advanced petrographic studies of drill core samples from the Chandalar gold property. The new data refined the orogenic model that has historically guided exploration at Chandalar and redirected our future exploration for intrusion-related mineralization. We also conducted a property-wide airborne radiometric and magnetic survey to generate and further refine exploration targets for bulk-tonnage low-grade mineralization and possible deeper sources of intrusion-related mineralization.

Our geologists concurred the studies are important for exploration as the pegmatite textures in outcrop and drilling and the radiogenic activity from accessory minerals associated with pegmatite-veins may indicate proximity to intrusive-related mineralization and may provide us a highly useful tool for gold mineralization discovery.

The petrologic study involved detailed microprobe examination of samples taken from veins in the Chandalar gold system that exhibit characteristics of pegmatite, an igneous rock deposited during emplacement of a granitic intrusive body. All of the samples contain numerous accessory minerals that commonly derive from magma or late stage magmatic fluids, including monazite, thorite and xenotime. Some of the accessory minerals co-precipitated with gold,

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indicating that late intrusive stage hydrothermal fluids migrated upward along shear zones within which the lode gold mineralization is emplaced. Importantly, radiogenic activity is associated with the accessory mineral suite.

We believe rigorous follow-up rock sampling and radiogenic surveys may result in more effective selection of high-priority drill sites, an important factor considering the expansive size of the Chandalar system.

In August 2014, we engaged a contractor and geologists to perform additional airborne magnetic and radiometric studies across the entire Chandalar property. An airborne radiometric and magnetic survey was conducted to test an intrusion-related model for emplacement of lode quartz-gold occurrences. Results of the airborne study demonstrate a broad northwest-trending belt of elevated potassium values with a centrally located, kilometer-scale feature where thorium values are elevated relative to potassium. The potassium/thorium feature anomaly is closely associated with magnetic anomalies to form a circular kilometer-scale feature in the highlands above and adjacent to the Goldrich-NYAC Placer operation consistent with an intrusive body at depth and is central to the northeast-trend of lode quartz-gold occurrences.

The data obtained from these studies will be compiled with data already derived from sampling, trenching, drilling and geophysical testing to present a comprehensive 3D model of the Chandalar prospects and their geological setting. The results of these studies will assist us in determining methods and targets for exploration.

2015

We completed reclamation of mine waste road built in 2010 and received a confirmation of completion and satisfaction from the Army Corps of Engineers. GNP extracted approximately 3,600 ounces of fine gold.

2016

GNP extracted approximately 8,200 ounces of fine gold.

2017

We performed additional oxygen isotope studies to further confirm intrusion-related mineralization. In addition, GNP completed a sonic drill program and drilled 231 holes totaling 14,271 feet to further define the Chandalar placer deposit and extracted approximately 12,300 ounces of fine gold.

2018

GNP extracted approximately 17,100 ounces of fine gold.

2019

Due to the failure of the joint venture to meet the minimum production requirements under its Operating Agreement, GNP was dissolved in June 2019 and is in the process of liquidation (see Joint Venture Agreement and Arbitration below). Except for equipment needed for reclamation, most the heavy equipment and the wash plant were removed on a winter trail in March through mid-April 2019. There was no gold production in 2019. NyacAU is the holder of the mine permits and began reclamation of the mine in 2019. NyacAU is responsible for future reclamation costs. Goldrich hired an independent mining engineering firm in 2019 year to formulate a mine plan and complete an Initial Assessment to determine if Goldrich should resume production. Any plan to continue future mining is contingent upon our success in raising sufficient capital to fund these activities or any portion of them.

Planned 2020 Exploration and Mining Activities

In 2020, we do not anticipate conducting hard-rock exploration drilling activities and other hard-rock exploration activities at the Chandalar property. We will once again undertake such activities if and when our financial situation permits.

Interpretation of Exploratory Findings at Chandalar

Since the 2011 diamond drill coring program, continued processing of prospecting information along with compilation of geophysical survey data, core re-logging and an associated stream of petrographic studies (relevantly referenced to 2014 activities presented above) has resulted in the re-thinking of the geologic model guiding the Chandalar gold

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exploration program. That model started with a preliminary theory derived from the available evidence of the time that the Chandalar gold mineralization was likely a stratabound indigenous feature of the Mikado phyllite/schist photoliths (parent rocks), enhanced by compressional mountain building activity (orogenesis). That theory has now largely been discarded as evidence builds that the gold mineralization is related to a magmatic-hydrothermal alteration system driven by an underlying pluton (a body of intrusive igneous rock).

There are more than 50 bedrock gold showings are contained in a North-Easterly (“NE”) trending zone about 3 km (2 miles) wide and 6 km (4 miles) long. The host rock formation of this distinct zone is mainly pyrrhotitic (magnetic iron sulfide) schist. These prospects are generally associated with the presence of North-Westerly (“NW”) fault zones where they transgress the NE zone of prospects. The numerous gold mineralized prospects can be grouped into three distinct populations: A - massive quartz veins, B - shear and fault gouge zones, and C – dikelets of pegmatite (coarsely crystalline igneous rock). Group A are invariably NW striking, repeatedly sheared and boudinized (segmented like a string of sausages) massive quartz veins containing gold, lead, zinc and arsenic sulfide minerals. Group B, also NW striking, are encased in heavily chloritized host schist, contain crushed or pulverized quartz vein and/or dikelet material, all of which have disseminated arsenopyrite with free-milling gold in them. Group C are intensely hydrothermally altered pegmatite dikelets (generally 5 to 50 cm thick) consisting mostly of secondary clay minerals (after original feldspars, micas and other minerals) mixed with iron carbonates (siderite) and by-product or remnant quartz, all of which have some degree of gold and arsenic mineralization, sometimes also with lead and zinc.

The mapped (surface and drill holes) distribution of the different Groups reflects a general zoning pattern of the gold-mineralized magmatic-hydrothermal alteration system. Group A appears to be the result of lower temperature crystallization and deposition which is peripheral to the massively chloritized sheared schist host rocks of Group B and furthermore to what appear to be swarms of hydrothermally altered pegmatitic dikelets of Group C recorded in some of the drilling. It is important to note the altered gold-bearing dikelets are so soft with pervasive clays they rarely survive weathering erosion to form outcrops, which makes it very difficult to determine their distribution, except as noted in drill intercepts. As explained in the 2014 project activities discussion above, these dikelets contain high-temperature accessory minerals and other minerals which give radiometric responses that help identify their aggregated location. Notably, the dikelets intercepted in the drill holes are usually seen to be intruding and/or replacing schist host rock and are not usually in rock faults, although fault zones may be nearby.

The dikelets of Group C are almost certainly the offspring of larger but hidden intrusive igneous bodies yet to be discovered. The metamorphic grade of the region appears to never have been high enough to melt the indigenous rock, and it is also doubtful it could have produced the selective types of rock alterations now recognized. Since virtually all those of Group C exposed by drilling are mineralized to some degree with gold, geologists servicing the Company clearly believe a parent pluton will also be mineralized, most likely as disseminations, fracture fillings or quartz stockworks within its cupola (roof pendant) where fractionated hydrothermal fluids pregnant with gold would crystalize. Such a deposit of gold mineralization is considered by the Company to be an inspiring exploration target as it could host millions of ounces of gold at economically mineable grades as other intrusive-related gold deposits around the world do.

The Company’s geologists have compiled and analyzed all available geophysical, geochemical, and geological technical data with the objective of identifying the best spots to proceed with exploratory drilling. The most useful component in the data portfolio is the record of the number and intensity of dikelet intercepts in each drill hole. This is found to be most pronounced in the lowest 62-meter (203 ft.) interval of diamond drill core hole LS 11-0060 drilled at -55° for 263 meters (863 ft.). This drill hole hit a vertical section of a gold bearing dikelet swarm for some 50 meters (164 ft.) and terminated within it at a vertical depth of 180 meters below the surface cover of the Rock Glacier prospect. There are no other drill tests of this location. Combined with other supporting technical data (such as the 250,000-ounce Little Squaw Creek gold placer deposit (this deposit is not a SEC Industry Guide 7 resource) about 2.6 km ((1.6 miles)) downstream from it), this site constitutes the best target choice for discovery of a mineralized pluton deeper under or in the immediate vicinity of the Rock Glacier. The next drill test is designed to penetrate 300 meters below the Rock Glacier. The possibility also exists that a more prolific zone of higher density gold-mineralized dikelets could be intersected, which in itself could constitute a gold deposit discovery.

The Company believes it is progressing step by step in solving the more than century-old puzzle of how the more than 50 scattered gold prospects of the Chandalar gold mining district may be genetically related or what other

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commonality they may have. It is variously manifested in abundant gold showings within an oval NE-oriented zone some 3 km wide and 6 km long (about 18 km²). The Chandalar magmatic-hydrothermal alteration “system” is recognized as a geological fact by those studying it, and is being used as a working model on which to base future explorations. There may be several plutons along this stretch of this zone feeding the “system”. In 2021 and onward, the Company will be focused on identifying “hot spots” within this zone for drill testing.

Joint Venture Agreement

On April 3, 2012, Goldrich Placer, LLC (“GP”), a subsidiary of Goldrich, entered into a term sheet for a joint venture with NyacAU, LLC (“NyacAU”), an Alaskan private company, to bring Goldrich’s Chandalar placer gold properties into production as defined in the joint venture agreement (the “Operating Agreement”), which was subsequently signed and made effective April 2, 2012. In each case as used herein in reference to the JV, ‘production’ is as defined by the JV agreement. As part of the agreement, Goldrich Placer, LLC (“GP”), a subsidiary of Goldrich and NyacAU (together the “Members”) formed a 50:50 joint venture company, Goldrich NyacAU Placer LLC (“GNP”), to operate the Chandalar placer mines, with NyacAU acting as managing partner. Goldrich has no significant control or influence over the JV, and therefore accounts for its investment using the cost less impairment method.

Under the terms of the joint venture agreement (the “Agreement”), NyacAU provided funding to the JV. The loans are to be repaid from future production. According to the Agreement, on at least an annual basis, the JV shall allocate and distribute all revenue (whether in cash or as gold) generated from the JV’s placer operation in the following order:

1.Operating Expenses. GNP will first pay all Operating Expenses as defined in the Operating Agreement for placer mining operations at the Claims for the current mining year. Until Commercial Production is achieved, GNP will drawdown or use a line of credit from NyacAU (“LOC1”) to fund payment of the Operating Expenses and repay LOC1 to the extent of the current year's Operating Expenses.

2.Members' Distribution - Ten Percent (10%) Portion. After payment of Operating Expenses, GNP will distribute in kind twenty percent (20%) of the remaining gold produced, equally, ten percent (10%) to NyacAU as a Member of the GNP and ten percent (10%) to Goldrich as a Member of GNP; provided, however, that, for so long as any secondary line of credit from NyacAU to GNP (“LOC2”) or loan from NyacAU to GNP to purchase the Jumbo Basin royalty (“Loan3”) are not paid in full, GNP shall retain one hundred percent (100%) of this distribution to Goldrich and shall apply such funds as payment to reduce the balance of LOC2 and Loan3 until they are paid in full.

3.LOC1 Payments. After payment of Operating Expenses and the Members' distribution, GNP will apply any remaining revenue to reduce the remaining balance of LOC1, if any, until it is paid in full.

4.Reserves. After payment of Operating Expenses, the Members' distribution, and payment of LOC1, we may fund Reserves in an amount that is consistent with the annual budget.

5.Member Distributions, LOC2 Payments and Loan3 Recovery. After payment of Operating Expenses, the Members' payment of LOC1, and funding of any Reserves, from any remaining gold production or revenue, GNP will distribute fifty percent (50%) to NyacAU as a Member of GNP and fifty percent (50%) to Goldrich as a Member of GNP; provided, however, that, for so long as LOC2 or Loan3 are not paid in full, GNP shall retain one hundred percent (100%) of the distribution to Goldrich and shall apply such funds as payment to reduce the balance of LOC2 and Loan3 until they are paid in full. LOC2 has never been funded or utilized.

As of December 31, 2018, the JV had not achieved commercial production as required under the Operating Agreement, and as a result the JV was dissolved in May 2019 and, as of December 31, 2019, is in the process of being liquidated. The Panel has jurisdiction over the liquidation process and has ruled that NyacAU should continue as the liquidator. Except for equipment needed for reclamation, most the heavy equipment and the wash plant were removed on a winter trail in March through mid-April 2019. For 2018, we have calculated distributions under item #2 above for the 2018 production season using the same methodology as prior years’ distributions. NyacAU has challenged its responsibility to declare or pay any distributions under 2018 for item #2. We have refuted the challenge as well as certain changes to the financial statements (see Arbitration).

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On June 23, 2015, we raised net proceeds of $1.1 million through the sale of 12.5% of the cash flows Goldrich receives in the future from its interest in GNP (“Distribution Interest”), paid in cash under items #2, to Chandalar Gold, LLC (“CGL”) and GVC Capital, LLC, (“GVC”), both of which are non-related entities. Goldrich retained its ownership of its 50% interest in GNP but, after the transaction, subject to the terms of the GNP operating agreement, Goldrich will effectively receive approximately 44%, CGL will effectively receive 6% (12% of Goldrich’s 50% of GNP = 6%) and GVC will effectively receive 0.25% (0.5% of Goldrich’s 50% of GNP = 0.25%) of any distributions produced by GNP. At December 31, 2018 and 2017, an amount of $35,794 has been accrued for the distribution which is included in accrued liabilities for distributions to us that were applied to Loan3. No amount has been accrued for the 2019 because there was no production in 2019, or for 2018, due to uncertainties relating to realization of distributions from NyacAU, although during arbitration proceedings, Loan3 was determined and agreed to be paid in full (see Arbitration).

In 2012, the joint venture purchased, on Goldrich’s behalf, a 2% royalty interest, payable on all production from certain Goldrich mining claims at the Chandalar, Alaska property for $250,000 from Jumbo Basin Corporation. This transaction gave rise to Loan3, was carried at an interest rate of the greater of prime plus 2% or 10%, and was to be repaid from distributions to Goldrich as defined in the Operating Agreement, prior to any distributions in cash to Goldrich. The 2016 and 2017 Members Distributions under item #2 above, as adjusted by the rulings of the arbitration panel, were first applied against Loan3 in accordance with the terms of the Operating Agreement, The distributions were sufficient to pay all of Loan3 principal and interest in full.

Arbitration

In 2017, we, our subsidiary and the joint venture, as claimants, filed an arbitration statement of claim before a three-member Arbitration Panel (“the Panel”), against our JV partner and its affiliates; NyacAU, LLC (“NyacAU”), BEAR Leasing, LLC, and Dr. J. Michael James, as respondents. In 2018, the respondents filed a counter-claim against the Company, its subsidiaries and the certain members of our current and former management, the counterclaim respondents. The arbitration claim alleged, amongst other things, claims concerning related-party transactions, accounting issues including capital vs. operating leases, interpretation of the joint venture operating agreement, allocation of tax losses between the joint venture partners, and unpaid amounts due Goldrich relating to the Chandalar Mine.

During the year ended December 31, 2019, and in 2020 subsequent to the end of the reported period, the Panel has released various awards relating to the allegations of both parties. Some of which have been in favor of our positions some have been in favor of our JV partner and its affiliates. The arbitration is ongoing and the various parties to the claims and counterclaims continue to disagree on several matters.

On May 25, 2019, the Panel issued an Interim Award, which requested input from the parties on a small number of discrete issues, all input to be supported by references to the arbitration record. On November 30, 2019, the Panel issued the Partial Final Award and concurrently the Second Interim Award RE Dissolution/Liquidation of GNP and Related Issues (“the Second Interim Award”). On September 4, 2020, the Arbitration Panel (the “Panel”) issued the Final Post Award Orders, wherein the Panel issued rulings on multiple material issues. A summary of each award is provided below. Matters of minor significance on which the Panel ruled or waived actions on matters over which the Panel had no jurisdiction are not included in the summary.

The Partial Final Award

A summary of the various matters addressed in the Partial Final Award is as follows:

Capital vs. Operating Leases

In response to a claim made by Goldrich, the Panel ruled that certain leases were capital leases, rather than operating leases, which increased the basis upon which distributions are made to the JV partners. In addition, the Panel modified the interest rates applicable to the leases, which decreased the profitability of the JV for the change in interest on all leases but only decreased the basis upon which distributions are made to Goldrich for leases that were deemed to be operating leases. The net change had no effect on the Company’s 2019 financial statements, and the net change on

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Goldrich’s 2018 financial statements is yet to be determined by the Panel. The ruling did, however, affect the amount of interim distributions made from GNP to Goldrich for 2016 and 2017 as noted below.

Ownership by GNP of Leased Equipment

The Panel ruled that certain continuing lease payments made by GNP for equipment treated as operating leases, which were subsequently ruled capital leases, represented buy-out payments at the conclusion of the capital lease. Therefore, ownership of the subject equipment was transferred to GNP. As a result of the ruling, certain leased equipment became capital leases and property of GNP, but the assets and equity built up in those capital leases was subsequently transferred to Bear Leasing to partially satisfy default of other lease agreements when GNP was dissolved.

Lease Charges and Ownership of Arctic Camp Purchased by NyacAU related party from Third-Party

The Panel ruled that lease payments made by GNP to Bear Leasing toward rented Arctic camp facilities that had been purchased from an unrelated third-party from 2012 through 2014 represented purchase consideration. As a result, GNP was deemed the beneficial owner of the camp in connection with the dissolution/liquidation process. Further, LOC1 was reduced by $531,164, which represents the lease payments GNP was charged beyond the purchase price for the Arctic camp.

Interim Distributions to Goldrich for 2016 and 2017

As a result of the awards noted above, the Panel determined that the Company is entitled to an additional $214,797 in distributions for 2016 and an additional $198,644 for 2017, for a total of $413,442. In like manner, the Panel determined that NyacAU is entitled to an additional $413,442 in distributions for these years. Goldrich’s distributions were first applied against Loan3, in accordance with the terms of the Operating Agreement, and were sufficient to pay all of Loan3 principal and interest in full. As we are uncertain as to the collectability of these remaining distributions, no recognition of these revenues is included in our Statement of Operations for the year ended December 31, 2019.

Payment of Interest Earned by LOC1

The Partial Final Award also addressed our claim for payment of interest earned by LOC 1. The Panel determined that NyacAU should pay the Company 50% of the interest earned on LOC 1 actually received by NyacAU, or $126,666. We have not accrued a receivable or recognized interest income for the interest due to uncertainties surrounding its collectability. NyacAU is contesting the amount of LOC1 interest paid by GNP to NyacAU. The matter is further discussed below in the summary for the Final Post Award Order.

2012 Reclamation Work

The Panel ruled Goldrich is responsible to pay the full amount of $339,016 charged by NyacAU for the 2012 reclamation work and NyacAU is also entitled to 5% interest on the award from the date the first invoice was sent to Goldrich in 2014. Goldrich has accrued a liability for this ruling, however Goldrich has contested the party to whom payment should be made and whether additional amounts not invoiced by GNP should be included in the award.

Allocation of Tax Losses

From 2012 through 2018, NyacAU, as managers of GNP, had allocated net tax losses from GNP totaling $19,888,374 to NyacAU and $839,537 to Goldrich. Goldrich claimed it had a right to 50% of all tax losses under the GNP Operating Agreement and filed Form 8082 for each year with the Internal Revenue Service (“IRS”) to correct the GNP K-1’s filed by NyacAU. Goldrich claimed a total of $9,946,369, 50% of the total GNP losses for the years 2012 through 2018. The Panel generally agreed with that allocation but only during the periods where actual mining operations were being performed, since those rationally are the only periods in which both parties bore a material economic risk, in terms of the impact of mining operations on processed and unprocessed gold. Based on the evidence before the Panel, mining operations were performed in August-September 2013, and 2015-2018.

Prior to Goldrich receiving the award, the IRS had processed and accepted the Forms 8082, corrected GNP K-1’s, and amended tax returns filed by Goldrich for 2012 through 2017. The IRS also notified Goldrich that Goldrich’s 2012 through 2014 tax returns were closed for further changes due to the expiration of the statute of limitations for those years. The IRS also conducted an audit of Goldrich’s 2014 through 2017 tax returns with a ‘no change’ determination. Therefore, although Goldrich was not awarded 50% of all GNP 2012 to 2014 tax losses in the arbitration, Goldrich has been allowed to take the full total of its share of GNP tax losses of $9,946,369, which can be used to offset taxable profits Goldrich generates in future years.

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Subsequent to the end of the year, in August 2020, the IRS issued an unfavorable ruling to GNP as it affects the Company in regard to the audit of the joint venture which, when the individual partners’ effects are communicated to us by the IRS, is probable to decrease our net federal and state net operating loss carryforwards by $2.0 million and $1.8 million, respectively, for the years under audit. The recourse available to us in regard to the audit ruling is a challenge of the IRS ruling before the tax court, should we determine this to be in our best interests.

Other

·The arbitration awarded NyacAU’s request that an entry be made on GNP’s books for unpaid and unbilled interest expense of $66,180 under the appropriate Lease, incurred during the period of construction of the wash plant. In the liquidation process, NyacAU (through Bear Leasing) shall be treated as a third-party creditor with respect to the recovery of this amount from GNP.

·The Panel awarded Dr. James $9,858, plus interest at 5% and legal fees, for personal expenses incurred relating to 2012 Goldrich reclamation costs. These amounts totaling $27,943 have been included in accounts payable and interest payable of the Company at December 31, 2019.

·The Partial Final Award found the Company liable for an act of negligent misrepresentation regarding the concealment of certain technical information from NyacAU. We have vigorously disputed the concealment and the finding of negligence. Nevertheless, as a result of the Panel’s determination, the Panel awarded Dr. J. Michael James a reimbursement of 17% of his previous $350,000 stock investment in the Company or $59,500 plus interest of 5% and legal fees. The award plus interest, totaling $70,244, has been included in accounts payable and interest payable of the Company at December 31, 2019.

·As requested by Goldrich and NyacAU, the Panel will retain jurisdiction and oversight over the dissolution/liquidation process to its completion. The Panel stated, “there is likely more information the parties will have to provide on certain issues--including, among others, changes in the balance of LOC 1 and the issue of transfer of the permit to Goldrich--before a Final Award on dissolution/liquidation can be made.” As of the date of this report, the balance of LOC1 continues to change as a result of on-going rulings by the Panel. Additionally, the Panel has stated it lacks jurisdiction on the transfer of the mining permit, which the Panel has ruled is a matter to be negotiated between the parties.

·The Panel ruled that “there has been no prevailing party in the arbitration to this point, although it reserves judgment as to whether a prevailing party will emerge from the Final Award with regard to issues which are now part of the Revised [Second] Interim Award. Accordingly, as to all issues covered by this Partial Final Award, the parties shall bear their own costs, expenses, and attorneys’ fees.”

The Second Interim Award

The Second Interim Award was necessitated by the fact that the dissolution/liquidation of the joint venture had not yet run its course. A summary of the various matters addressed in the Second Interim Award is as follows:

Transfer of Mining Permits

The Panel ordered that:

a)No later than January 15, 2020, NyacAU and Goldrich shall attempt to establish, by agreement, a market value for the GNP permit in connection with a transfer of the Permit to Goldrich or a third party, taking into consideration the obligation of GNP, or any transferee of the permit, to complete reclamation in accordance with NyacAU’s government-approved reclamation plan.

b)Reasonably prior to May 31, 2020, NyacAU shall perform its obligation to “make provision … for reclamation by (1) adding all reclamation expenses actually incurred by NyacAU to LOC 1; (2) from GNP’s assets, to the extent possible after payment of GNP’s debts and liabilities and liquidation expenses”.

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Neither order was successfully executed by the parties on the dates specified by the Panel. The Second Interim Award confirmed the dissolution of GNP and noted that “no provision of the Claims Lease or the Operating Agreement speaks directly to the rights or obligations of GNP to transfer its mining permit, which is held in the name of the manager, NyacAU. Although GNP no longer has the right to mine, GNP and specifically NyacAU have the liability of reclamation. Absent a transfer of the Permit, GNP (through NyacAU) would be obligated to complete reclamation, and obtain final approval from appropriate government authorities, as required by the Claims Lease—a process estimated to take several years.”

If NyacAU does not transfer the mining permit to Goldrich as part of the dissolution, they will retain the requirement to reclaim the mine, and Goldrich will be prevented from mining the property, since two mining permits cannot be issued for the same claims. The actual cost of the reclamation will be subject to many variables, not the least of which will be whether the remedial activity is undertaken while the mine is inactive or conversely, when the mine is actively producing gold. If the mining permit were to be transferred to Goldrich or another entity with the reclamation obligation intact, the reclamation activity could be undertaken as a key piece of a mining plan in order to mitigate reclamation costs. If an agreement cannot be reached to transfer the mining permit and the associated reclamation of prior mining activities, Goldrich will be prevented from mining its claims, and will be limited to exploration activities on the hard rock deposits of the Chandalar property

NyacAU has indicated they will not transfer the permit without also transferring the reclamation obligation, of which they believe to be approximately $3 million. Goldrich has indicated they will not accept transfer of the permit together with the reclamation obligation, which they believe to be substantially greater. Both parties are in discussion to attempt to reach an agreement for the transfer of both the permit and the reclamation obligation, no transfer of either, or some other arrangement.

Balance and payment of LOC1

The Panel calculated a tentative balance of LOC1 at $16,483,271 as of June 2019. This balance will be adjusted for any additional awards and/or adjustments made by the Panel.

Upon liquidation of GNP, 50% of the LOC1 liability may be recorded on Goldrich’s balance sheet. Per the Operating Agreement and a separate Security Agreement between GNP and NyacAU, NyacAU was entitled to record a security interest in all placer gold production from the placer claims as collateral for repayment of fifty percent (50%) of LOC1. The agreements between GNP and NyacAU are silent concerning what happens if GNP is dissolved and is no longer producing gold, the basis of calculation, timing of remittance and other key factors related to repayment if mining activities were to be undertaken again.

The Panel ruled in the Final Post Award, discussed below, that LOC1 cannot be increased for costs incurred after mining operations have ceased, including costs for reclamation. Mining operations ceased on September 21, 2018. This deprives NyacAU of a security interest in 50% of future placer gold production at the site to repay NyacAU for expenses incurred subsequent to the cessation of mining operations.

If an agreement cannot be reached for the transfer of the mining permit and reclamation liability to Goldrich or an operating company that will harvest the placer gold in the deposit, mining will likely not continue at the mine and LOC1 likely will not be paid. Further, in order to operate the mine, Goldrich will be required to raise money to fund replacement equipment, wash plant, infrastructure and initial operating costs to restart the mine, due to the mining assets which have been removed as part of the liquidation of GNP. Goldrich is actively preparing a new mine plan and an initial assessment to show the mine’s potential, as announced in Goldrich’s news release dated July 29, 2020. However, at the date of this report, there is no candidate for operating the mine without a settling concession as part of the transfer of the permit and the associated reclamation and LOC1 obligations.

Goldrich may not have a reasonable avenue to pursue in restarting the mine and may be limited to raising investment funds for the sole purpose of exploration of the hard rock deposits.

Right to Offset Damages or Distributions

The Panel granted the request that any damages awarded to one party can be an offset to distributions (or damages) due to the other party.

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Arbitration events subsequent to December 31, 2019

Final Post Award Orders

A summary of the various matters addressed in the Final Post Award is as follows:

On September 4, 2020, the Panel issued Final Post Award Orders, wherein the Panel issued rulings on multiple material issues:

Reclamation:

a)We had previously filed a motion to compel NyacAU to correct accruals for certain expenses including reclamation, demobilization, equipment rental and utilities. Most notably, we contended that an accrual for reclamation liability of approximately $2.1 million was woefully short of an $18.4 million estimate prepared by independent professionals as engaged by Goldrich. The Panel denied our motion and ruled that Goldrich does not have the authority to compel the establishment of any reserves on the GNP financial records; NyacAU having sole authority to establish reserves as manager of the joint venture. There was no direct financial consequence to us as a result of this ruling. The effect on the future balance of LOC1 and our liability for 50% of that balance is not determined yet.

b)We had previously filed a motion to compel NyacAU to reclaim the disturbed acres as required under the Operating Agreement and the mining permit issued to NyacAU in 2013, and to require NyacAU to fund the reclamation reserve from cash that had been distributed to NyacAU. The Panel denied our motion and ruled that while there was express provision in the Operating Agreement to establish reserves necessary for contingent or unforeseen liabilities or obligations, which could conceivably include reclamation reserves, the agreement does not impose an express obligation to reclaim the project site. The obligation to perform reclamation is imposed by the claims lease and the mining permit issued to NyacAU, which requires the permit holder to reclaim the site in accordance with government regulations. The ruling also states that the determination of the scope of potential obligations to reclaim under the permit is beyond the jurisdiction of the Panel. Further, the Panel ruled that the Operating Agreement does not impose an obligation on the Company to pay 50% of the reclamation fee, confirming again the obligation resides with the permit holder. Still further, the Panel ruled that the reclamation fees were not operating expenses to bring the mine to commercial production and therefore by definition of the Operating Agreement, precludes reclamation expenses from being added to LOC1, for which we may be obligated to remit 50% to NyacAU upon liquidation of GNP. This ruling deprives NyacAU of a security interest in 50% of future placer gold production at the site to repay reclamation expenses which it advances. Subject to the Panel’s future rulings, there was no direct financial consequence to us as a result of this ruling; however, the effect on the future balance of LOC1 and our potential liability for 50% of that balance would be significant now that NyacAU is not allowed to pass through reclamation costs to GNP but is required to retain responsibility for those costs as holder of the mining permit.

c)NyacAU had previously filed a motion to compel the Company to recognize and remit a reclamation liability that had been invoiced by GNP to Goldrich in 2014 for reclamation work it performed on Goldrich’s behalf for violations resulting from our 2012 mining activities. We had previously challenged the validity of the invoice, citing back charges to GNP that had not been recognized or remitted to it. The Panel denied Goldrich’s claim and ruled in favor of NyacAU. While we continue to work with the Panel to clarify the party to whom the reclamation is payable, the specific amount of the payable and the calculation of interest associated with the liability, it has recorded an accrued liability totaling $ 421,366 for the year ended December 31, 2019, related to this reclamation liability and associated interest thereon, due to the liability now being estimable and probable under ASC 450. The total consists of $329,157 for reclamation expense and $92,209 for pre- and post-judgement interest expense, calculated at 5%.

Mining Claims:

All of our mining claims remain the property of the Company; however, NyacAU staked several claims contiguous to the claims owned by the Company. We had previously filed a motion to compel the transfer NyacAU’s claims from

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NyacAU to us. The motion was granted in part in that the claims held in NyacAU’s name were ruled to be owned by the Company, but would not be transferred immediately. They would remain in the possession of NyacAU as manager of the liquidation until the property covered by the claims was not being used for liquidation activities and could be transferred without disruption to the liquidation activity. There was no direct financial consequence to us as a result of this ruling. The claims are assured to be transferred to us at a reasonable future time.

Repayment of misappropriation of JV funds

We had previously filed a motion to compel NyacAU to repay funds Goldrich considered to be misappropriated as payments on LOC1 in contravention of the payment priority requirements as outlined in the Operating Agreement (See Note 4 Joint Venture). A successful challenge of these cash disbursements would return to GNP funds that we considered to be necessary to pay for 2018 partner distributions that have precedence over repayment of LOC1. The ruling was deferred pending additional information to be determined in the future, such as the profitability of operations in 2018, which has not yet been determined when taking the Panel’s ruling into account. There was no immediate direct financial consequence to us as a result of this ruling; however, the inappropriate redirection of cash funds from GNP could affect the JV’s ability to remit funds due to Goldrich or to cover reclamation costs yet to be incurred with no funding in place.

Clarification concerning GNP’’s 2018 Profitability and 2018 Interim Distributions.

We had made a challenge to the Panel’s understanding of facts related to GNP’s profitability for 2018 as presented in the arbitration proceedings, with a motion to distribute interim distribution after applying the rulings made to date. The Panel deferred ruling on the matter, retaining jurisdiction to decide the issue of interim distributions for 2018 and requested the parties to present evidence and argument (disregarding any jurisdictional issue) as to (i) whether Goldrich has a right to interim distributions for 2018, and (ii) the amount, if any, of distributions to be paid. Goldrich has submitted a claim for approximately $680,000 plus prejudgment interest thereon at 5%; NyacAU claims that Goldrich is not entitled to any distributions for 2018. The direct financial consequence to us is that our claims to distribution for the 2018 profitability are uncertain, undetermined and delayed until some future date as a result of this ruling.

Clarification of LOC1 Interest Paid and Amounts Owed to Goldrich.

We had challenged the amount of payment of LOC1 interest by GNP to NyacAU and claimed reimbursement of 50% of the amount remitted as specified by the Operating Agreement. The Panel deferred a ruling and requires more information from each party. The direct financial consequence to us is that our claims to our share of interest paid on LOC1, amounting to approximately $120,000, may be denied by the Panel. The reimbursement of interest to us is uncertain, undetermined and delayed until some future date as a result of this ruling.

Subordination of Mr. Gallagher’s Security to NyacAU’s Security.

A challenge to the validity of priority of security interest was ruled in the Company’s favor. NyacAU’s security interest for LOC1 was reaffirmed to be gold production from the mining claims, while Mr. Gallagher’s security is perfected in the mining claims themselves. The Panel determined there was no conflict between the two security interests. There was no direct financial consequence to us as a result of this ruling.

Judgements issued by Superior Court

On April 29, 2020, the Superior Court of the State of Alaska issued a judgement in favor of Dr. James, in the total amount of $13,713 (for the 2012 reclamation costs personally incurred, including interest) and $83,588 (for the adjustment to Dr. James’ stock purchase, including interest). The Court ordered both Goldrich and NyacAU to submit a status report to the Court in September 2020 regarding the Panel’s clarification of the amounts payable for the 2012 reclamation, including interest, it determined to be payable to NyacAU at that time. The status report has been filed by both parties, and these judgements remain unpaid and in force before the Superior Court.

Estimates of Arbitration

It is possible that there could be either adverse or favorable developments in the arbitration pending with the Company and its JV partner. An unfavorable outcome or settlement of pending arbitration could encourage the commencement of additional legal action by the affected party.

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We record provisions in the consolidated financial statements for pending arbitration results when it determines that an outcome is probable, and the amount of the gain or loss can be reasonably estimated. At the present time, except as stated otherwise, while it is reasonably possible that a favorable or unfavorable outcome in the arbitration may occur, after assessing the information available, management is unable to estimate the possible gain or loss, or range of gains or losses, for the pending arbitration; and accordingly, no estimated gains or losses have been accrued in the consolidated financial statements for favorable or unfavorable outcomes. Legal defense costs are expensed as incurred.

ITEM 3. LEGAL PROCEEDINGS

We are subject to legal proceedings and claims, which arise from time to time. These can include, but are not limited to, legal proceedings and/or claims pertaining to environmental or safety matters. With the exception of the arbitration actions detailed below, there are no pending material legal proceedings in which the Company is a party or any of their respective properties is subject. Also, with the exception of the arbitration actions detailed below, there are no pending legal proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficiary of more than 5% of the common stock of the Company, or any security holder of the Company is a party adverse to the Company or has a material interest adverse to the Company.

In 2017, the Company, its subsidiary and the joint venture, as claimants, filed an arbitration statement of claim against NyacAU, LLC (“NyacAU”), BEAR Leasing, LLC, and Dr. J. Michael James, as respondents. In 2018, the respondents filed a counter-claim against us, the claimants. The arbitration claim alleges, amongst other things, claims concerning related-party transactions, accounting issues, interpretation of the joint venture operating agreement, allocation of tax losses between the joint venture partners, and unpaid amounts due Goldrich relating to the Chandalar Mine. The arbitration occurred during July and August 2018 in Anchorage, Alaska before a three-member panel. Under the terms of the Operating Agreement, both partners are required to abide by the rulings proceeding from the Panel. We have received an Interim Award, a Partial Final Award, a Second Interim Award, and a Final Post Award and are awaiting the outcome of the arbitration that would come in the form of a Final Award from the panel.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95.1 to this Annual Report.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTCBB of the OTC Markets. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network which provides information on current “bids” and “asks” as well as volume information. The OTCBB is not considered a “national securities exchange.”

Our common stock is quoted on the OTCBB under the symbol “GRMC”. The following table shows the high and low bid information for the common stock for each quarter of the fiscal years 2019 and 2018.

Fiscal Year	High Closing	Low Closing
2019
First Quarter	$0.03	$0.01
Second Quarter	$0.02	$0.01
Third Quarter	$0.02	$0.01
Fourth Quarter	$0.02	$0.01
2018
First Quarter	$0.04	$0.03
Second Quarter	$0.04	$0.03
Third Quarter	$0.04	$0.03
Fourth Quarter	$0.02	$0.03

The above quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. The closing price for our common stock on the OTCBB was $0.037 on October 30, 2020. Goldrich intends to seek a listing of its shares on a recognized stock exchange in Canada, but has not yet filed application to do so as of the date of this Annual Report.

Holders of Record

As of November 4, 2020, there were 2,940 shareholders of record of our common stock and an unknown number of additional shareholders whose shares are held through brokerage firms or other institutions.

Dividends

We have not paid any dividends and do not anticipate the payment of dividends on our common stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, or Series F Convertible Preferred Stock in the foreseeable future. Our Series A Convertible Preferred Stock (the “Series A Preferred Stock”) earns dividends as follows:

·Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from our surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year.

oPreferential and Cumulative. The Series A Dividends shall be payable before any dividends will be paid upon, or set apart for, our common stock and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company.

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·Payment of Dividend: If we shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by our Board of Directors in compliance with the Alaska Code and our Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if we are producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from our Chandalar property. We have total dividends in arrears of $84,958 as of December 31, 2019. Total dividends of $30,618 were declared and payable as a result of conversion of preferred stock during 2011 and 2016 and are included in current liabilities on our Balance Sheet.

We issued Series A Preferred Stock to two U.S. Persons (as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) who are accredited investors, relying on the exemptions from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act. These two U.S. Persons have exercised their conversion privileges and are now holders of our Common Stock. In addition, we issued Series A Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.

We issued Series B Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.

We issued Series C Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.

We issued Series D Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.

We issued Series E Preferred Stock to five U.S. Persons who are accredited investors, and two person who are “accredited investors” and not U.S. Persons, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.

We issued Series F Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.

Securities Authorized for Issuance under Equity Compensation Plans

A vote of shareholders at our Shareholder Meeting held on November 26, 2013 authorized an increase in the total shares in the Restated 2008 Equity Incentive Plan (the “Plan”) to 9,550,672 shares of common stock, an amount that represented 10% of the outstanding shares of our common stock at that time. At December 31, 2019, we have the following options outstanding and available for issuance:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance (c)
Equity compensation plans approved by security holders	1,075,000	$0.06	2,350,672
Equity compensation plans not approved by security holders	0	0	0
Total	1,075,000	$0.06	2,350,672

The Plan permits the grant of: (i) incentive stock options; (ii) nonqualified stock options; (iii) restricted stock or restricted stock units; and (iv) stock appreciation rights. The Board of Directors administers the Plan and has the authority to interpret the Plan and the awards granted under the Plan and establish rules and regulations for the administration of the Plan. The Compensation Committee of the Board of Directors makes recommendations to the

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Board regarding the administration of the 2008 Plan.

Unless otherwise provided in the applicable award agreement or any severance agreement, vested awards are granted under the 2008 Plan will expire, terminate, or otherwise be forfeited as follows:

·Ninety (90) days after the date of termination of a participant’s continuous status as a participant, other than in the circumstances described below;

oImmediately upon termination of a participant’s continuous status as a participant for cause as defined in a Company subplan or award agreement;

oTwelve (12) months after the date on which a participant ceased performing services as a result of his or her Disability (as defined in the Plan); and

oTwelve (12) months after the death of a participant who was a participant whose continues status as a participant terminated as a result of their death.

Issuer Purchase of Equity Securities

We and our affiliates did not repurchase any of our securities during the year ended December 31, 2019.

Sale of Unregistered Securities

All sales of unregistered securities during the period covered by this Annual Report that were previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Overview

Our Chandalar, Alaska gold mining property has seen over a hundred years of intermittent mining exploration and extraction history. There has been small extraction of gold from several alluvial, or placer gold streams, and from an array of small quartz veins that dot the property. However, only in very recent times is the primary source of the gold becoming evident. As a result of our exploration, considering structural geology, petrographic, geochemical and geophysical evidence, we have realized that all of the gold is sourced within a system of magmatic hydrothermal alteration features such as small pegmatitic dikes and chloritized schist. We believe these features are common to and link all of the hard-rock (lode) prospects, the weathering of which generated the gold placer deposits, and furthermore are an outlying expression of an underlying gold bearing pluton.

We are currently defining drilling targets for a hard-rock (lode) gold deposit in an area of interest approximately 1,800 feet wide and over five miles long, possibly underlain by a series of mineralized magmatic intrusions (plutons). Exploration therefore has taken on two directions; one toward defining a low-grade, large tonnage body of mineralization running beneath the headwaters of Little Squaw Creek where dense swarms of gold mineralized pegmatitic dikelets are seen, the other a deeper, larger mineralized plutonic body(ies) from which the district’s mineralizing fluids have emanated and migrated through Chandalar country rock. Our main focus continues to be the exploration of these hard-rock targets. We were successful in raising funds for a limited exploration program in 2014 and reclamation work in 2015; however, weak financial markets prevented us from obtaining funds for significant exploration in other years from 2012 through 2019. Significant increases in the price of gold since 2019, appear to have increased the availability of funds so we are hopeful to secure sufficient funds for a major exploration program in the near future.

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Because of the weak financial markets suffered by the mining industry in recent years, we endeavored to develop our placer properties as a source of internal cash to protect us from future market fluctuations and to provide funds for future exploration. In 2012, Goldrich and NyacAU LLC (“NyacAU”) formed Goldrich NyacAU Placer LLC (“GNP”), a 50/50 joint-venture company, managed by NyacAU, to mine Goldrich’s various placer properties at Chandalar.

As shown below, the placer gold extracted by GNP increased each year from 2015 through 2018, trending toward production figures that were anticipated by a preliminary economic assessment authored by qualified geologists for us:

Year	Ounces of Placer Gold	Ounces of Fine Gold
2015	4,400	3,900
2016	10,200	8,200
2017	15,000	12,300
2018	20,900	17,100

Although GNP’s extraction increased over the years, ultimately the extraction numbers attained over those years fell short of the Minimum Production Requirements required in the Operating Agreement. According to the terms of the agreement, GNP was required to pay a Minimum Production Requirement of 1,100 ounces for 2016, 1,200 ounces for 2017, and 1,300 ounces for 2018 to both Goldrich and NyacAU by October 31, 2018. This payment was not made. Under the joint venture Operating Agreement, GNP would be dissolved if GNP failed to meet the Minimum Production Requirement.

On August 20, 2018, we announced the intended dissolution of the GNP joint venture. According to the terms of the joint venture operating agreement, GNP was required to pay a Minimum Production Requirement of 1,100 ounces for 2016, 1,200 ounces for 2017, and 1,300 ounces for 2018 to both Goldrich and NyacAU by October 31, 2018. This payment was not made. Under the joint venture Operating Agreement, GNP would be dissolved if GNP failed to meet the Minimum Production Requirement. GNP was dissolved in May 2019 and is currently being liquidated with NyacAU managing the process. Goldrich and NyacAU are currently in arbitration as noted above.

Subsequent to 2019, Goldrich commissioned an independent third-party mining engineering firm to complete a mining plan and initial assessment for the Company’s Chandalar Mine.

Liquidity and Capital Resources

We are an exploration stage company and have incurred losses since our inception. We currently do not have sufficient cash to support the Company through 2020 and beyond. We anticipate that we will incur approximately $650,000 for general operating expenses and property maintenance, $693,432 for interest, $406,319 for payment of the gold notes, $3,456,842 for payment of notes payable to related party, and $1,020,000 for the payment of senior secured loans over the next 12 months as of December 31, 2019. Additional funds will be needed for any exploration expenditures, should any be undertaken. We also anticipate additional unknown and undeterminable costs for arbitration. We plan to raise the financing through a combination of debt and/or equity placements, sale of mining property interests, and revenue from placer operations.

We have filed an arbitration claim against our joint venture operating partner to challenge certain accounting treatments of capital leases, allocations of tax losses, charges to the JV for funding costs related to the JV manager’s financing, related-party transactions, and other items of dispute. For recent developments in the arbitration proceedings, see the sections entitled Joint Venture Agreement and Arbitration above and Subsequent Events below. Each of these is disclosed in detail in the Notes to our financial statements included as part of this Annual Report as filed on Form 10-K for 2019. The arbitration is proceeding on the basis that GNP has been dissolved. As noted above, NyacAU has recorded a secured interest in all placer gold production from certain claims owned by Goldrich as collateral for repayment of fifty percent (50%) of LOC1. Arbitration proceedings may significantly affect the balance of LOC1, the magnitude of which cannot be estimated at the date of this report. The arbitration panel calculated a tentative balance of LOC1 at $16,483,271 as of June 2019. This balance will be adjusted for any additional awards and/or adjustments made by the arbitration panel.

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The audit opinion and notes that accompany our consolidated financial statements for the year ended December 31, 2019, 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 an exploration stage company and we have 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 deferring payment on certain current liabilities and 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 funding of its activities is more assured.

We currently have only a brief, recent history of a recurring source of revenue and in 2016 received our first cash distribution from the joint venture. If we profitably execute a production business plan, our ability to continue as a going concern may improve and become less dependent on our ability to raise capital to fund our future exploration and working capital requirements. Our plans for the long-term include the profitable exploitation of our mining properties and financing our future operations through sales of our common stock and/or debt. Additionally, the capital markets and general economic conditions in the United States are constantly changing and may present significant obstacles to raising the required funds. These factors raise substantial doubt about our ability to continue as a going concern.

During the year ended December 31, 2019, we completed financings of $888,000, compared to $1,460,000 net cash for note financings and placements of our securities during the year ended December 31, 2018. Subsequent to the close of the December 31, 2019 year, we borrowed an additional $325,000 of notes payable, bringing the total notes payable obligation as of August 15, 2020, to $4,566,316, of which $3,052,632 came due October 31, 2018. On November 1, 2019, the Company and lenders entered into the Amended and Restated Loan Security and Intercreditor Agreement (the “Agreement”). Under the Agreement, the borrower and holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like.

If we are unable to timely satisfy our obligations under these secured senior notes payable, the notes payable in gold, originally due November 2018 and subsequently amended to be on demand, and the interest on both the secured senior note due quarterly and the notes payable in gold, and we are not able to re-negotiate the terms of such agreements, the holders will have rights against us, including potentially seizing or selling our assets. The notes payable in gold are secured against our right to future distributions of gold extracted by our joint venture with NyacAU or subsequent gold production. At December 31, 2019, we had outstanding total notes payable in gold of $406,319, representing 266.789 ounces of fine gold deliverable at March 31, 2019. During the year ended December 31, 2019, the Company renegotiated terms with the holders. The Fourth Delayed Delivery Required Quantity shall be delivered to the Purchaser at the Delivery Point on the date that is sixty (60) days after the date that the Purchaser gives notice to the Company. To date, the gold notes have not been paid, the note holders have not demanded payment and have indicated willingness to work with the Company to extend the due date.

At December 31, 2019, the Company had outstanding Notes payable of $1,020,000 and outstanding Notes payable – related party of $3,246,316. The Notes payable and Notes payable – related party had matured on October 31, 2018. In November 2019, the Company and the holders of the notes amended the notes, and the notes are now due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder.

We believe we will be able to secure sufficient financing for further operations and exploration activities of our Company but we cannot give assurance we will be successful in attracting financing on terms acceptable to us, if at all. Additionally, anticipating continued placer production after dissolution of GNP, we look forward to internal cash flow and additional options for financing. A successful mining operation may provide the long-term financial strength for the Company to remove the going concern condition in future years. To increase its access to financial markets, Goldrich intends to also seek a listing of its shares on a recognized stock exchange in Canada in addition to its listing on the OTCBB in the United States.

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Results of Operations

On December 31, 2019 we had total liabilities of $8,084,670 and total assets of $724,992. This compares to total liabilities of $5,912,698 and total assets of $1,083,521 on December 31, 2018. As of December 31, 2019, our liabilities consist of $255,951 for remediation and asset retirement obligations, $406,319 of notes payable in gold, $3,246,316 of notes payable to related parties, $1,020,000 of notes payable, $1,656,854 of trade payables and accrued liabilities, $600,147 due to related parties, $608,097 of interest payable to related parties, $260,368 of interest payable, and $30,618 for dividends payable. Of these liabilities, $7,622,930 are due within 12 months. The increase in liabilities compared to December 31, 2018 is largely due to the secured senior notes payable that came due in October 2018 and as amended on November 1, 2019 to be payable within 10 days of a demand notice of the holders. In addition, notes payable in gold increased as a result of an increase in gold prices during 2019, which increased the valuation of gold ounces to be delivered under the contracts. The decrease in total assets was due to a decrease in cash and a decrease in property and equipment as a result of depreciation expense for the year ended December 31, 2019.

On December 31, 2019 we had negative working capital of $7,525,082 and a stockholders’ deficit of $7,359,678 compared to negative working capital of $5,251,940 and a stockholders’ deficit of $4,829,177 for the year ended December 31, 2018. Working capital decreased because of increased deferred compensation to the Company’s officers as well as certain long-term liabilities are coming due within the next 12 months and now classified as current liabilities.

During 2019, we used cash from operating activities of $963,904 compared to $1,869,033 for 2018. Net loss of $2,603,065 for 2019 compared to net loss of $3,779,949 for 2018. In 2018, we recognized a distribution from the JV of $nil, compared to a distribution in 2017 of $228,770. At the end of 2019, we have accumulated approximately $42.8 million and $39.5 million in federal and state net operating losses, respectively, which may enable us to generate like amounts in net income prior to incurring any significant income tax obligation. The net operating losses will expire in various amounts from 2020 through 2037.

During 2019 and 2018, no cash was used or provided from investing activities.

During 2019, cash of $888,000 was provided by financing activities, compared to cash of $1,460,000 provided during the year ended December 31, 2018. Cash of $824,000 was provided from notes payable related party, net of offering costs and $64,000 from notes payable, net of offering costs. This compares to cash of $1,260,000 provided from notes payable related party, net of offering costs and $200,000 provided from notes payable, net of offering costs in 2018.

Private Placement Offerings

No private placement offerings occurred during 2018 and 2019.

Notes Payable in Gold, Notes Payable & Notes Payable – Related Party

At December 31, 2019, we owed $406,319 for Notes payable in Gold, $1,020,000 for Notes payable and $3,246,316 for Notes payable – related party. Interest payable on these borrowings totaled $868,465. These borrowings have matured beyond their original due dates and have been amended to be due upon demand.

During September of 2020, the holders of the Notes payable and Notes payable – related party, received shares in lieu of cash for interest. A total of 13,719,248 common shares with a basis of $0.015 per share, were issued to the lenders, reducing interest payable by $205,789, of which $168,976 was to a related party.

Effective November 1, 2019, we entered into an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) with Nicholas Gallagher, a related party and member of our Board of Directors, in his capacity as agent for and on behalf of the holders of the Notes payable.

As a result of the borrowings under the Notes payable in gold, Notes payable and Notes payable – related party (collectively, the “Notes”), we are faced with a significant hurdle in financing the Company going forward, whether to conduct exploration programs or initiate a mining program at the Chandalar mine. Our near-term cash requirements are

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greater than the assets we have available to satisfy them, and the holders of the Notes could choose to exercise their rights to demand payment, which would result in a default situation relative to the Notes. Mr. Gallagher is secured in his lending to the Company by means of the Amended Agreement, and if he were to demand payment, the Company would not be able to pay him the amounts due and he would be entitled to take ownership of our claims and other assets. We believe these holders to be friendly to the Company and that they will refrain from demanding payment, but the Company cannot control the potential demands nor the consequences that would be extracted as a result of default on the Notes.

Mining Permit and Future Mining Activities

The recent upward movements in the price of gold to a range of $1,800 to $2,000 per ounce or higher over the most recent three months of 2020 have created renewed interest in gold mining, gold exploration and investments in companies engaging in those activities, including the junior mining/exploration sector in which we participate. Additionally, the fact that we own a mine that has produced over 40,000 ounces in recent years along an annual increasing trend has caught the interest of placer mining companies and investors who support placer mining operations. We believe we have the fundamentals to raise capital and continue our primary strategy of exploration and secondarily placer mining.

If we can attract the type of investor who is comfortable with reinstating the placer mining operation, we may have a viable and productive path forward toward obtaining financing in the short-term to achieve long-term profitability. To effectively pursue this strategy, (1) the mining permit for the Chandalar mine must be transferred to us from NyacAU, our former JV partner and the current holder of the permit, (2) financial concessions must be made relative to LOC1, which is currently to be satisfied from gold produced from the claims at the Chandalar mine, and (3) reclamation costs for the Chandalar mine that currently are the responsibility of NyacAU must be mitigated by a mining plan that accomplishes much of the reclamation costs as part of the ongoing mining activity. We do not believe an investor or group of investors will be willing to step forward to fund the placer mining activity without these three factors aligning themselves as described.

Additionally, without a profitable mining operation, the ability to pay back the Notes may not be available to us. If that is the case, the payback would require us to raise money from placements of equity instruments to raise the cash to satisfy the obligations. Such a use of funds may present a funding effort that receives tepid or little response in the equity markets.

However, we do believe there are investors motivated to provide funding for exploration programs to locate and exploit the hard rock deposits from which the placer mineralization is coming from. This strategy can be pursued independent of any mining activities.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Inflation

We do not believe that inflation has had a significant impact on our consolidated results of operations or financial condition.

Contractual Obligations

There are no current contractual obligations.

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

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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:

·Estimates of the recoverability of the carrying value of our mining and mineral property assets. We use publicly available pricing or valuation estimates of comparable property and equipment to assess the carrying value of our mining and mineral property assets. However, if future results vary materially from the assumptions and estimates used by us, we may be required to recognize an impairment in the assets’ carrying value.

·Expenses and disclosures associated with accounting for stock-based compensation. We used the Black-Scholes option pricing model to estimate the fair market value of stock options issued under our stock-based compensation plan, which determines the recognition of associated compensation expense. This valuation model requires the use of judgment in applying assumptions of risk-free interest rate, stock price volatility and the expected life of the options. While we believe we have applied appropriate judgment in the assumptions and estimates, variations in judgment in applying assumptions and estimates used in this valuation could have a material effect upon the reported operating results.

·Estimates of our environmental liabilities. Our potential obligations in environmental remediation, asset retirement obligations or reclamation activities are considered critical due to the assumptions and estimates inherent in accruals of such liabilities, including uncertainties relating to specific reclamation and remediation methods and costs, the application and changing of environmental laws, regulations and interpretations by regulatory authorities.

·Accounting for Investments in Joint Ventures. For joint ventures in which we do not have joint control or significant influence, the cost method is used. Under the cost method, these investments are carried at the lower of cost or fair value. For those joint ventures in which there is joint control between the parties and in which we have significant influence, the equity method is utilized whereby our share of the ventures’ earnings and losses is included in the statement of operations as earnings in joint ventures and our investments therein are adjusted by a similar amount. We have no significant influence over our joint venture described in Note 5 Joint Ventures to the financial statements, and therefore account for our investment using the cost method. For joint ventures where we hold more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of a non-controlling interest. In determining whether significant influence exists, we consider our participation in policy-making decisions and our representation on the venture’s management committee. We currently have no joint venture of this nature.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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	Page
Report of Independent Registered Public Accounting Firm	50
Consolidated Balance Sheets, December 31, 2019 and 2018	52
Consolidated Statements of Operations for the years ended December 31, 2019 and 2018	53
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2019 and 2018	54
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018	55
Notes to the Consolidated Financial Statements	56-77

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Goldrich Mining Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Goldrich Mining Company, (“the Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has generated no revenues and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2003

/s/DeCoria, Maichel & Teague, P.S.

DeCoria, Maichel & Teague P.S.

Spokane, Washington

November 4, 2020

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Goldrich Mining Company
Consolidated Balance Sheets
December 31, 2019 and 2018
	2019	2018
ASSETS
Current assets:
Cash and cash equivalents	$ 1,274	$ 77,178
Prepaid expenses	96,574	122,131
Other current assets	-	13,671
Total current assets	97,848	212,980

Property, equipment, and mining claims:
Equipment, net of accumulated depreciation	716	2,025
Mining properties, claims, and royalty option	626,428	868,516
Total property, equipment and mining claims	627,144	870,541
Total assets	$ 724,992	$ 1,083,521

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$ 1,656,854	$ 1,052,520
Interest payable	223,555	44,747
Interest payable – related party	439,121	205,570
Related party payables	600,147	457,727
Notes payable, net of discount	1,020,000	952,634
Notes payable, net of discount – related party	3,246,316	2,378,947
Notes payable in gold	406,319	342,157
Dividends payable on preferred stock	30,618	30,618
Total current liabilities	7,622,930	5,464,920

Long-term liabilities:
Interest payable in stock	36,813	-
Interest payable in stock – related party	168,976	-
Remediation and asset retirement obligation	255,951	447,778
Total long-term liabilities	461,740	447,778
Total liabilities	8,084,670	5,912,698

Commitments and contingencies (Notes 4, 9, 10, 12)
Stockholders' deficit:
Preferred stock; no par value, 8,998,700
shares authorized; no shares issued or outstanding	-	-
Convertible preferred stock series A; 5% cumulative dividends,
no par value, 1,000,000 shares authorized; 150,000 shares issued and outstanding, respectively, $300,000 liquidation preferences	150,000	150,000
Convertible preferred stock series B; no par value, 300 shares authorized, 200 shares issued and outstanding, $200,000 liquidation preference	57,758	57,758
Convertible preferred stock series C; no par value, 250 shares authorized, issued and outstanding, $250,000 liquidation preference	52,588	52,588
Convertible preferred stock series D; no par value, 150 shares
authorized, issued and outstanding, $150,000 liquidation preference	-	-
Convertible preferred stock series E; no par value, 300 shares authorized, issued and outstanding, $300,000 liquidation preference	10,829	10,829
Convertible preferred stock series F; no par value, 300 shares authorized, , 153 shares issued and outstanding, $50,000 liquidation preference	-	-
Common stock; $0.10 par value, 250,000,000 shares authorized; 139,573,798 and 139,573,798 issued and outstanding, respectively	13,957,380	13,957,380
Additional paid-in capital	13,905,542	13,832,978
Accumulated deficit	(35,493,775)	(32,890,710)
Total stockholders’ deficit	(7,359,678)	(4,829,177)
Total liabilities and stockholders' deficit	$ 724,992	$ 1,083,521

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

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Goldrich Mining Company
Consolidated Statements of Operations

	Year Ended	Year Ended
	December 31, 2019	December 31, 2018

Operating expenses:
Mine preparation costs	$ 306,929	$ 175,369
Depreciation	1,309	4,844
Management fees and salaries	222,562	309,746
Professional services	85,758	60,418
General and administrative	257,984	309,335
Office supplies and other	8,760	9,533
Directors' fees	26,700	20,600
Mineral property maintenance	97,439	91,059
Reclamation expense	339,015	50,000
Royalty interest adjustment	36,350	-
Settlement expense	59,500	-
Arbitration costs (Note 4)	202,431	1,835,382
Total operating expenses	1,644,737	2,866,286

Other (income) expense:
Change in fair value of notes payable in gold	64,162	(13,793)
Gain on settlement of accounts payable	-	(18,000)
Interest expense and finance costs	894,146	945,456
Loss on foreign exchange	20	-
Total other (income) expense	958,328	913,663

Net loss	(2,603,065)	(3,779,949)

Preferred dividends	(7,604)	(7,604)
Net loss available to common stockholders	$ (2,610,669)	$ (3,787,553)

Net loss per common share – basic and diluted	$ (0.02)	$ (0.03)

Weighted average common
shares outstanding-basic and diluted	139,573,798	137,042,253

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

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Goldrich Mining Company Consolidated Statements of Changes in Stockholders’ (Deficit)
	Common Stock		Preferred Stock		Additional
	Shares	Par Value	Shares	No Par Value	Paid-in Capital	Accumulated Deficit	Total
Balance, December 31, 2017	134,107,809	$13,410,781	151,053	$271,175	$14,016,932	$(29,110,761)	$(1,411,873)
Warrants issued with note payable					165,857		165,857
Shares issued for accounts and related party payables	3,615,989	361,599			(238,301)		123,298
Shares granted to directors and officers	1,850,000	185,000			(120,435)		64,565
Stock options granted to consultants					8,925		8,925
Net loss						(3,779,949)	(3,779,949)
Balance, December 31, 2018	139,573,798	$13,957,380	151,053	$271,175	$13,832,978	$(32,890,710)	$(4,829,177)
Warrants issued with notes payable					44,203		44,203
Warrants issued for finders fees					28,361		28,361
Net loss						(2,603,065)	(2,603,065)
Balance, December 31, 2019	139,573,798	$13,957,380	151,053	$271,175	$13,905,542	$(35,493,775)	$(7,359,678)

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

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Goldrich Mining Company Consolidated Statements of Cash Flows
	Year Ended December 31, 2019	Year Ended December 31, 2018
Cash flows from operating activities:
Net loss	$ (2,603,065)	$ (3,779,949)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,309	4,844
Change in fair value of notes payable in gold	64,162	(13,793)
Royalty interest adjustment	36,350	-
Share-based compensation - restricted stock	-	64,565
Share-based compensation - options	-	8,925
(Gain) on settlement of accounts payable	-	(18,000)
Amortization of discount on notes payable	90,938	523,448
Remediation obligation increase	-	50,000
Accretion of asset retirement obligation	13,911	13,376
Other asset allowance	13,671	14,117
Warrants issued for finders fees	28,361	-

Change in:
Prepaid expenses	25,557	(34,129)
Accounts payable and accrued liabilities	604,334	1,011,974
Interest payable	215,621	25,396
Interest payable – related party	402,527	171,366
Related party payables	142,420	88,827
Net cash used - operating activities	(963,904)	(1,869,033)

Cash flows from financing activities:
Proceeds from notes payable and warrants, net	64,000	200,000
Proceeds from notes payable and warrants – related party, net	824,000	1,260,000
Net cash provided - financing activities	888,000	1,460,000
Net decrease in cash and cash equivalents	(75,904)	(409,033)

Cash and cash equivalents, beginning of year	77,178	486,211
Cash and cash equivalents, end of year	$ 1,274	$ 77,178

Supplemental disclosures of cash flow information:
Cash paid for interest	$ 72,890	$ 215,879
Non-cash investing and financing activities:
Issuance of shares of common stock for accounts payable	-	$ 123,298
Warrants issued with notes payable	$ 44,203	165,857

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

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

Goldrich Mining Company (“Company”) was incorporated under the laws of the State of Alaska on March 26, 1959. The Company is engaged in the business of acquiring and exploring mineral properties throughout the Americas, primarily those containing gold and associated base and precious metals. During 2019, all of the Company’s activities were focused on the Chandalar property in Alaska. The Company’s common stock trades on the Over-The-Counter Bulletin Board (“OTCBB”) exchange under the ticker symbol GRMC.

Going Concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception and does not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and/or raising additional funds.

The Company currently has no historical recurring source of revenue and an accumulated deficit of $35,493,775 at December 31, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company may profitably execute a production business plan, and thereby, its ability to continue as a going concern may improve and become less dependent on the Company’s ability to raise capital to fund its future exploration and working capital requirements. The Company’s plans for the long-term return to and continuation as a going concern include the profitable exploitation of its mining properties and financing the Company’s future operations through sales of its common stock and/or debt.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation of and Accounting for Subsidiaries

The consolidated financial statements include the accounts of the Company and the accounts of its 100% owned subsidiary Goldrich Placer, LLC. This subsidiary is included in the accompanying financial statements by consolidation of the Statements of Operations and the Balance Sheets as of and for the years ended December 31, 2019 and December 31, 2018, with all intercompany balances and investment accounts eliminated.

Accounting for Investments in Joint Ventures

ASC 321 Investments – Equity Securities provides guidance for equity interests that meet the definition of an equity security, as well as other equity interests (such as investments in partnerships, unincorporated joint ventures, and limited liability companies) that are required to be accounted for like equity securities under ASC 321. The term “equity interest” refers to all equity instruments within the scope of ASC 321. Under ASC 321, all equity investments are to be accounted for at fair value. However, there is a measurement alternative for those investments without readily determinable fair values. As required by ASC 321-10-35-2, the appropriate method for investments without a readily determinable fair value is “cost less impairment”.

The Company has an equity interest in Goldrich NyacAU Placer LLC, a 50%-owned joint venture in which the Company does not have joint control or significant influence. See Note 4 Joint Venture. Additionally, the ownership interests of the joint venture are not traded on any established market, and the fair value of the joint venture cannot be readily determined or estimated. Therefore, the Company measures its investment in the joint venture at cost less impairment, adjusted for any distributions received during the period. The carrying amount of this investment was $nil as of December 31, 2019 and 2018, respectively.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

The Company performs a quantitative and qualitative assessment at each reporting date to determine whether the investment is impaired and an impairment loss equal to the difference between the carrying value and fair value is recorded within Other (income) expense on the Company's Consolidated Statement of Operations if an impairment has been determined. Because the carrying value of the joint venture is $nil, there were no impairment losses recorded during the years ended December 31, 2019 and 2018.

Earnings (Loss) Per Share

Net income (loss) per share is computed by dividing the net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted net income (loss) per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.

For the years ended December 31, 2019 and 2018, the effect of the Company’s outstanding convertible preferred shares, options and warrants, totaling 93,590,499 and 110,379,490 for the two years, respectively, has not been included in the Company’s net income (loss) per share as their inclusion would have been anti-dilutive.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Management does not expect the ASU to have a material effect on the Company’s financial statements.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Cash and Cash Equivalents

For the purposes of the statement of cash flows, we consider all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Reclassifications

Certain prior period amounts have been reclassified to conform to the 2019 financial statement presentation. Reclassifications had no effect on net loss, stockholders' equity, or cash flows as previously reported.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these financial statements include those assumed in estimating the recoverability of the cost of mining claims, joint venture distributions, accrued remediation costs, asset retirement obligations, stock-based compensation, deferred tax assets and related valuation allowances and uncertainties regarding the outcome of arbitration proceedings. Actual results could differ from those estimates.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Property, Equipment, and Accumulated Depreciation

Property and equipment are stated at cost, which is determined by cash paid or fair value of the shares of the Company’s common stock issued. The Company’s property and equipment are located on the Company’s unpatented state mining claims located in the Chandalar mining district of Alaska.

All property and equipment purchased prior to 2009 are fully depreciated. The Company’s equipment is located at the Chandalar property in Alaska, with a small amount of office equipment located at Company offices in Spokane, Washington. Assets are depreciated on a straight-line basis. Improvements which significantly increase an asset’s value or significantly extend its useful life are capitalized and depreciated over the asset’s remaining useful life.

When a fixed asset is sold at a price either higher or lower than its carrying amount, or undepreciated cost at the date of disposal, the difference between the sale proceeds over the carrying amount is recognized as gain, while a loss is recognized when the carrying amount exceeds the sale proceeds. The gain or loss is recognized in the Consolidated Statements of Operations.

Mining Properties, Claims, and Royalty Option

The Company capitalizes costs for acquiring mineral properties, claims and royalty option and expenses costs to maintain mineral rights and leases as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.

Exploration Costs

Exploration costs are expensed in the period in which they occur.

Income Taxes

Income taxes are recognized in accordance with Accounting Standards Codification (“ASC”) 740 Income Taxes, whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.

Uncertain tax positions are evaluated in a two-step process, whereby (i) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority would be recognized.

Revenue Recognition

The Company does not have joint control or significant influence over the joint venture; therefore, distributions from our joint venture are recognized using the cost less impairment method. In accordance with ASU No. 2014-09, the Company has determined that its revenue does not arise from contracts with customers, does not involve satisfaction of any performance obligations on the part of the Company, or require Company assets to be recognized or applied to determine costs to obtain or fulfill any contract generating revenue.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Stock-Based Compensation

The Company periodically issues common shares or options to purchase shares of the Company’s common shares to its officers, directors or other parties. These issuances are recorded at fair value. The Company uses a Black Scholes valuation model for determining fair value of options to purchase shares, and compensation expense is recognized ratably over the vesting periods on a straight-line basis. Compensation expense for grants that vest immediately are recognized in the period of grant.

Remediation and Asset Retirement Obligation

The Company’s operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible long-lived assets. A corresponding asset is also recorded and depreciated over the life of the long-lived asset using a units of production method. After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation. Determination of any amounts recognized is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates.

For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on management’s estimate of amounts expected to be incurred when the remediation work is performed.

Fair Value Measurements

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.

During 2019 and 2018, the Company determined fair value on a recurring basis and non-recurring basis as follows:

Balance

December 31, 2019

Balance

December 31, 2018

Fair Value

Hierarchy level

Liabilities

Recurring: Notes payable in gold (Note 7)

$ 406,319

$ 342,157

The carrying amounts of financial instruments, including notes payable, approximate fair value at December 31, 2019 and 2018. The inputs to the valuation of Level 2 liabilities are described in Note 7 Notes Payable in Gold.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

3.PROPERTY, EQUIPMENT AND MINING CLAIMS

Equipment

At December 31, 2019 and 2018, the Company’s equipment classifications were as follows:

	2019	2018
Exploration and mining equipment	$ 1,627,351	$ 1,627,351
Vehicles and rolling stock	390,140	390,140
Office and other equipment	65,549	65,549
Total	2,083,040	2,083,040
Accumulated depreciation	(2,082,324)	(2,081,015)
Equipment, net of depreciation	$ 716	$ 2,025

Of the Company’s equipment, $1,319,341 are being depreciated over lives of three and five years and $763,699 are being depreciated over seven and ten years, resulting in total depreciation expense of $1,309 for 2019. Assets of $1,319,341 and $763,699 being depreciated over corresponding periods, respectively, resulting in total depreciation of $4,844 for 2018.

Mining Properties and Claims, and Royalty Option

At December 31, 2019 and 2018, the Company’s mining properties claims, and royalty option were as follows:

	2019	2018
Chandalar property and claims	$ 264,000	$ 264,000
2003 purchased claims	35,000	35,000
Unpatented state claims staked	40,400	40,400
Asset retirement costs	⁽¹⁾37,028	242,766
Jumbo Basin royalty option (Note 4)	⁽²⁾250,000	286,350
Total	$ 626,428	$ 868,516

(1)Asset retirement costs will be amortized over the related long-lived asset using a units of production method. During 2019, the Company reduced its estimate of Asset retirement costs and Asset retirement obligation by $205,738 (see Note 9 Asset Retirement Obligation).

(2)During the year ended December 31, 2019, the arbitration panel awarded distributions from 2016 and 2017 to Goldrich from GNP that paid the balance of principal and interest of Loan3, a loan made to purchase the Jumbo Basin royalty options. While reviewing the carrying costs of the royalty option, management determined that its carrying value exceeded the contractual purchase price by $36,350, and adjusted the carrying value during 2019 as a charge to its Statements of Operations.

4.JOINT VENTURE

On April 3, 2012, Goldrich Placer, LLC (“GP”), a subsidiary of Goldrich, entered into a term sheet for a joint venture with NyacAU, LLC (“NyacAU”), an Alaskan private company, to bring Goldrich’s Chandalar placer gold properties into production as defined in the joint venture agreement (the “Operating Agreement”) which was subsequently signed with an effective date of April 2, 2012. In each case as used herein in reference to the JV, ‘production’ is as defined by the Operating Agreement. As part of the Operating Agreement, GP and NyacAU (together the “Members”) formed a 50:50 joint venture company, Goldrich NyacAU Placer LLC (“GNP”), to operate the Chandalar placer mines, with NyacAU acting as managing partner. Goldrich has no significant control or influence over the JV, and therefore accounts for its investment using the cost less impairment method.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Under the terms of the Operating Agreement, NyacAU provided funding to the JV. The loans are to be repaid from future production. According to the Operating Agreement, on at least an annual basis, the JV shall allocate and distribute all revenue (whether in cash or as gold) generated from the JV’s placer operation in the following order:

2.Members' Distribution - Ten Percent (10%) Portion. After payment of Operating Expenses, GNP will distribute in kind twenty percent (20%) of the remaining gold produced, equally, ten percent (10%) to NyacAU as a Member of the GNP and ten percent (10%) to Goldrich as a Member of GNP; provided; however, that, for so long as any secondary line of credit from NyacAU to GNP (“LOC2”) or loan from NyacAU to GNP to purchase the Jumbo Basin royalty (“Loan3”) are not paid in full, GNP shall retain one hundred percent (100%) of this distribution to Goldrich and shall apply such funds as payment to reduce the balance of LOC2 and Loan3 until they are paid in full.

3.LOC1 Payments. After payment of Operating Expenses and the Members' distribution, GNP will apply any remaining revenue to reduce the remaining balance of LOC1, if any, until it is paid in full.

4.Reserves. After payment of Operating Expenses, the Members' distribution, and payment of LOC1, the Company may fund Reserves in an amount that is consistent with the annual budget.

5.Member Distributions, LOC2 Payments and Loan3 Recovery. After payment of Operating Expenses, the Members', payment of LOC1, and funding of any Reserves, from any remaining gold production or revenue, the Company will distribute fifty percent (50%) to NyacAU as a Member of GNP and fifty percent (50%) to Goldrich as a Member of GNP; provided, however, that, for so long as LOC2 or Loan3 are not paid in full, GNP shall retain one hundred percent (100%) of the distribution to Goldrich and shall apply such funds as payment to reduce the balance of LOC2 and Loan3 until they are paid in full. LOC2 has never been funded or utilized.

As of December 31, 2018, the JV had not achieved commercial production as required under the Operating Agreement. As a result, GNP was dissolved during 2019 and, as of December 31, 2019, the liquidation of GNP was in process. The Company has calculated distributions under item #2 above for the 2018 production season using the same methodology as prior years’ distributions. NyacAU has challenged its responsibility to declare or pay any distributions of this type for 2018. The Company has refuted the challenge as well as certain changes to the financial statements (see Arbitration).

On June 23, 2015, the Company raised net proceeds of $1.1 million through the sale of 12.5% of the cash flows of GP, Goldrich’s subsidiary, receives in the future from its interest in GNP (“Distribution Interest”), paid in cash under items #2, to Chandalar Gold, LLC (“CGL”) and GVC Capital, LLC, (“GVC”), both of which are non-related entities. GP retained its ownership of its 50% interest in GNP but, after the transaction, subject to the terms of the GNP Operating Agreement, GP will effectively receive approximately 44%, CGL will effectively receive 6% (12% of Goldrich’s 50% of GNP = 6%) and GVC will effectively receive 0.25% (0.5% of Goldrich’s 50% of GNP = 0.25%) of any distributions produced by GNP. At December 31, 2019 and 2018, an amount of $35,794 has been accrued for the distribution which is included in accrued liabilities for distributions to the Company that were applied to Loan3 in 2016 and 2017. No additional amounts have been accrued for the 2019 and 2018 distributions due to uncertainties relating to realization of distributions from NyacAU, although during arbitration proceedings, Loan3 was determined and agreed to be paid in full (see Arbitration).

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

In 2012, the joint venture purchased, on Goldrich’s behalf, a 2% royalty interest, payable on all production from certain Goldrich mining claims at the Chandalar, Alaska property for $250,000 from Jumbo Basin Corporation. This transaction gave rise to Loan3, which was carried at an interest rate of the greater of prime plus 2% or 10%, and is to be repaid from distributions to Goldrich as defined in the Operating Agreement, prior to any distributions in cash to Goldrich. During the year ended December 31, 2019, the arbitration panel (see Arbitration below) awarded distributions from 2016 and 2017 to Goldrich from GNP. In accordance with terms of the Operating Agreement, the Company applied the distributions toward Loan3 and the balance of principal and interest for LOC3 were paid in full. While reviewing the carrying costs of the royalty option, management determined that its carrying value exceeded the contractual purchase price by $36,350 and adjusted the carrying value during 2019.

Arbitration

In December 2017, the Company filed an arbitration statement of claim against NyacAU and other parties. The claim challenged certain accounting treatment of capital leases, allocations of tax losses, charges to the JV for funding costs related to the JV manager’s financing, related-party transactions, and other items of dispute in a previous mediation that was unsuccessful in reaching an agreement. As a result, the Company participated in an arbitration before a panel of three independent arbitrators during 2018 to address these items. Through 2019 and the filing of this report in 2020, the Company has continued to respond to panel inquiries, make motions to prosecute or defend positions, answer motions made by the opposing JV partner and aggressively support the Company’s efforts toward success.

The Company records amounts for loss or gain contingencies when it is probable that a liability or an asset is realizable and can be reasonably estimated. To date, the arbitration proceedings are still in progress, with some rulings being issued for and against the Company’s positions. No assurance can be given that the arbitration will result in a successful outcome for the Company. Due to uncertainties relating to the pending outcome, the financial statements contain only adjustments for the final results of the arbitration that are estimable and probable. See Note 12 Commitments and Contingencies and Note 13 Subsequent Events for additional information and rulings subsequent to December 31, 2019. The Company incurred $202,431 and $1,835,382 in arbitration expenses during the years ended December 31, 2019 and December 31, 2018, respectively.

5.RELATED PARTY TRANSACTIONS

Beginning in January 2016 and through December 31, 2019, the salary of the Company’s Chief Executive Officer (“CEO”) has not been paid in full. Fees due to the Company’s Chief Financial Officer (“CFO”) have been accrued and remain unpaid:

CEO	Year ended 12/31/19	Year ended 12/31/18
Beginning Balance	$ 295,000	$ 192,500
Deferred During Period	180,000	180,000
Cash Paid During Period	(48,500)	(77,500)
Ending Balance	426,500	295,000

CFO
Beginning Balance	64,909	35,202
Deferred During Period	42,703	64,222
Cash Paid During Period	(28,968)	(34,515)
Ending Balance	78,644	64,909

Board fees payable	95,003	97,818
Total Related party payables	$ 600,147	$ 457,727

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

During the year ended December 31, 2018 the Company also awarded 1,850,000 shares of common stock to officers and a director as compensation. The value of the shares awarded was $64,565 based upon the quoted value of the stock at the time of the grant.

6.NOTES PAYABLE & NOTES PAYABLE – RELATED PARTY

At December 31, 2019, the Company had outstanding Notes payable of $1,020,000 and outstanding Notes payable – related party of $3,246,316. At December 31, 2018, the Company had outstanding Notes payable of $952,634 and outstanding Notes payable – related party of $2,378,947. The Notes payable and Notes payable – related party had matured on October 31, 2018. In November 2019, the Company and the holders of the notes amended the notes, and the notes are now due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder.

During the year ended December 31, 2019, the Company received additional tranches of the notes payable for a total of $934,737, discounted at 5% or $46,737, resulting in net proceeds of $888,000, of which net proceeds of $824,000 was from a related party, Nicholas Gallagher, a shareholder and director of the Company, who also holds the full balance of the Notes payable - related party described above. The notes are due upon demand; therefore, the discounts and related warrants issued with them were immediately expensed to finance costs.

During the years ended December 31, 2019 and December 31, 2018, the Company paid finder fees totaling $7,697 and $6,000, respectively, to related party entities, and incurred $26,640 and $25,520, respectively, of other finance and placement costs. Interest of $552,492 was expensed during the year ended December 31, 2019 of which $402,527 was to related parties. Interest of $734,922 is accrued at December 31, 2019 and is included in Interest payable, Interest payable – related parties, Interest payable in stock and Interest payable in stock – related parties. Interest due at December 31, 2019 was not timely paid and is due within 10 days of a demand notice by the holders. There has been no notice of default or demand issued by any holder.

The table below summarizes the total notes due, the amount received with discount, warrants issued for finders fees and cash expensed for finders fees for all periods related to the Notes payable and Notes payable – related party.

Tranche Date	Net amount after 5% Discount	Note Face Value	Warrants issued to holders	Finders fees in Warrants	Finders fees in Cash
Notes Payable
Dec. 22, 2017	$ 705,000	$ 742,105	3,896,047	311,684	$ -
Dec. 24, 2018	200,000	210,526	1,105,262	88,421	6,000
March 31, 2019	14,000	14,737	77,368	6,189	420
June 30, 2019	50,000	52,632	276,315	22,105	1,500
Total Notes Payable	969,000	1,020,000	5,354,992	428,399	$ 7,920

Related Party
Dec. 22, 2017	1,000,000	1,052,632	5,526,312	442,105	30,000
Dec. 24, 2018	1,260,000	1,326,316	6,963,155	557,052	37,800
March 31, 2019	71,000	74,737	392,368	31,390	2,130
June 30, 2019	135,000	142,105	746,051	59,684	4,050
Sept. 30, 2019	303,000	318,947	1,674,471	133,958	9,090
Oct. 31, 2019	50,000	52,632	276,315	22,105	1,500
Dec. 18, 2019	265,000	278,947	-	-	7,950
Total Notes Payable -Related Party	3,084,000	3,246,316	15,578,672	1,246,294	92,520
Total	$ 4,053,000	$ 4,266,316	20,933,664	1,674,693	$ 100,440

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

A total of 22,608,357 five-year Class T warrants have been issued in connection with the note issuances, of which 20,933,664 have been issued to holders and 1,674,693 have been issued for finders fees. The warrants have an exercise price of $0.03 per common share and expire on various dates from November 30, 2022 through December 19, 2024. During the year ended December 31, 2019, the Company issued 3,442,888 warrants in connection with the notes payable, of which 275,476 warrants were for finders fees. During the year ended December 31, 2018, the Company issued 8,713,890 warrants in connection with the notes payable, of which 645,473 were for finders fees.

The relative fair values of the warrants were estimated on the issue dates at $44,203 and $165,857 for 2019 and 2018, respectively, using the following weighted average assumptions:

	December 31, 2019	December 31, 2018
Market price of common stock on date of issuance	$0.007 - $0.0275	$0.02 - $0.035
Risk-free interest rate	1.34% - 2.51%	2.26% - 3.07%
Expected dividend yield	0	0
Expected term (in years)	5	5
Expected volatility	154.7% - 172.1%	155.5% - 162.4%

Effective November 1, 2019, the Company entered into an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) with Nicholas Gallagher (“Gallagher”), a related party and member of the Company’s Board of Directors, in his capacity as agent for and on behalf of the holders of the Notes payable. No compensation was paid or accrued for Mr. Gallagher, either in cash or warrants, for his services as agent for other holders. Pursuant to the Amended Agreement, in exchange for the secured promissory notes and other consideration:

1.Holders have loaned to borrower prior to November 1, 2019, an aggregate principal amount of $3,987,368;

2.Gallagher has agreed to make additional loans to borrower from and after November 1, 2019, totaling a maximum principal amount of $394,737 (the net proceeds of which to the Company will be $375,000);

3.With his consent, any new lender or existing holder may make an additional loan or loans under the Amended Agreement;

4.Any loans arising after July 1, 2018 by Mr. Gallagher and any loans made after November 1, 2019 by any new or existing Holder other than Gallagher, after Gallagher has consented in writing to such loan or advance, are Senior secured loans. Senior Notes are entitled to be repaid in full before any of the Junior Notes are repaid; and

5.The Company agreed to other terms, the most significant of which are as follows:

a.to pay, no later than February 28, 2021, (1) to the order of NGB Capital Limited (a company owned by Mr. Gallagher), a finder’s fee in the amount of $49,273, and (2) to the order of Capital Investments 4165 LLC a finder’s fee in the amount of $7,920. Of these amounts $6,500 and $nil were remitted in 2020; and

b.to reimburse Gallagher, no later than February 20, 2020, for up to $35,000 in legal fees and costs incurred by Gallagher in connection with the Amended Agreement. The Company accrued $32,644 at December 31, 2019 and paid the amount to Mr. Gallagher in 2020 under this clause.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Under the Amended Agreement, for each holder of the Notes payable, whether or not a related party:

1.The borrower and holder entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like.

2.The borrower and any holder may negotiate a separate agreement enabling the borrower to issue shares to the holder in satisfaction of some or all interest that may be due to that Holder.

3.The Company entered into a Guaranty whereunder, among other conditions, the Company unconditionally guarantees and promises to pay to the order of each holder:

a.the principal sum of each Note payable held by such holder when and as the same becomes due, whether at the stated maturity thereof, by acceleration, call for redemption, tender, or otherwise,

b.all interest payable on each such Note payable when and as the same becomes due, and

c.any other amounts owing by the Company to such holder under the Amended Agreement or any other loan document when and as the same becomes due.

In an agreement separate from the Amended Agreement, Goldrich and Mr. Gallagher agreed that Mr. Gallagher, at his option, has the right to convert outstanding but unpaid and future interest on his loan into stock of the Company at $0.015 per share. In another agreement separate from the Amended Agreement, Goldrich and holders, other than Mr. Gallagher, agreed to convert $36,813 of unpaid interest into stock of the Company at $0.015 per share. During 2020, a total of 13,719,248 common shares with a basis of $0.015 per share, were issued to the holders, reducing interest payable by $205,789 (see Note 13 Subsequent Events).

Several events of default were enumerated in the Amended Agreement, including the following:

a.the Company fails to pay (i) any portion of the principal amount of any Note when due or (ii) any accrued and unpaid Interest when due and such failure continues for three (3) Business Days or (iii) any other amount that is due and payable under this Amended Agreement, any Note, or the Deed of Trust and such failure continues for ten (10) Business Days after demand for such payment is made by the Holder;

b.the Company fails to observe or perform any other obligation, covenant, or agreement applicable to the Company under this Amended Agreement as and when due and fails to cure such failure within 10 Business Days of notice of such failure by the holder to the Company;

c.the Company fails to observe or perform any covenant or agreement applicable under the Guaranty and fails to cure such failure within 10 Business Days of notice of such failure by the holder to the Company;

d.an insolvency or liquidation proceeding or assignment is commenced with respect to the Company or its subsidiary; or

e.any alleged creditor other than the holders seeks to collect any amount allegedly due and owing to said creditor at that time.

7.NOTES PAYABLE IN GOLD

During 2013, the Company issued notes payable in gold totaling $820,000, less a discount of $205,000, for net proceeds of $615,000. Under the terms of the notes, the Company agreed to deliver gold to the holders at the

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

lesser of $1,350 per ounce of fine gold or a 25% discount to market price as calculated on the contract date and specify delivery of gold in November 2014.

During the year ended December 31, 2019, the Company renegotiated terms with the holders for a sixth time. A default condition arising from the non-delivery of the gold on March 31, 2019, was alleviated by agreements with the three note holders with the following amended terms:

·The fourth delayed delivery required quantity shall be delivered to the purchaser at the delivery point on the date that is sixty (60) days after the date that the purchaser gives notice to the Company that the required quantity must be delivered.

·Subsequent to February 28, 2019, the Company agreed to pay interest on the value of the fourth delayed delivery required quantity at an annual percentage rate of 10% from February 28, 2019, payable quarterly with any remaining interest due and payable on the delivery date for the required quantity. Interest shall be non-compounding, provided however, that any interest not paid in full by any required interest payment date, shall be added to the principal and shall be subject to interest at the interest rate until such late interest payment is made in full.

·The Company, at the Company’s sole discretion, has the option to pay or deliver the required quantity prior to receiving notice from the purchaser demanding payment of the required quantity or prior to sixty days after the notice date. If the Company exercises this option, in relation to the required quantity, the delivery date as set forth in the original agreement, was amended to be the date of actual payment or delivery.

·The value of the required quantity was reset on March 1, 2019 and was equal to the number of ounces of gold in the fourth delayed delivery required quantity multiplied by the original purchase price used to calculate the amount of gold due in the original agreement.

Through the date of the issuance of these financial statements, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. At December 31, 2019 and 2018, 266.788 ounces of fine gold was due and deliverable to the holders of the Notes.

Due to the change in the delivery terms provided in the sixth amendment, the Company estimated the fair value of the notes based upon the market price of gold on December 31, 2019 of $1,523 per ounce as quoted on the London PM Fix market, or $406,319, as of December 31, 2019. The valuation resulted in an increase in gold notes payable of $64,162 during 2019.

At December 31, 2019 and 2018, the fair value was calculated using the market approach with Level 2 inputs of gold delivery contracts based upon previous contractual delivery dates. At December 31, 2018, the Company had outstanding total notes payable in gold of $342,157, using a per ounce value of $1,283 as quoted on the London PM Fix market.

Interest of $35,025 and $34,182 was recognized during the years ended December 31, 2019 and 2018, respectively.

8.STOCKHOLDERS’ EQUITY

Common Stock:

On September 30, 2019, the Company changed transfer agents due to issues of communication, transaction delays and other matters being experienced with our long-standing transfer agent. The Company engaged Nevada Agency & Transfer Company (“NATCO”) to act as its transfer agent going forward. During the transfer of records, NATCO determined that a difference of 3,138,787 shares existed between the Company’s detail records and the share listings provided by the outgoing agent. The Company has researched, reconciled, and tested the shares of stock outstanding and believes its detail listing to be accurate. There is the possibility, however, that future information may become available that changes the number of shares the Company reports

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

as outstanding. Management does not believe that such information will have a material effect on the Company’s financial position or its results of its operations.

Series A Convertible Preferred Stock:

The Company has 150,000 shares of Series A Convertible Preferred Stock outstanding at December 31, 2019 and 2018. These shares were issued from the designated 1,000,000 shares of Series A Preferred Stock, no par value, with the following rights and preferences:

Liquidation Preference: Upon a liquidation event, an amount in cash equal to $2.00 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $300,000 at December 31, 2019 and 2018, together with declared but unpaid dividends to which the holders of outstanding shares of Series A Preferred Stock are entitled shall be paid prior to liquidation payments to holders of Company securities junior to the Series A Preferred Stock.

·Voting: Each holder of Series A Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series A Preferred Stock could be converted.

·Conversion: Any share of Series A Preferred Stock may, at the option of the holder, be converted at any time into six shares of common stock. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the third anniversary of its issuance if the weighted average trading price of the common stock exceeds $1.00 per share for ten consecutive trading days. The Company also has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the tenth anniversary from the date of issuance.

·Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from the surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year.

·Preferential and Cumulative. The Series A dividends shall be payable before any dividends will be paid upon, or set apart for, the common stock of the Company and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company.

·Payment of Dividend: If the Company shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by the Board in compliance with the Alaska Code and the Company’s Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if the Company is producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from the Company’s Chandalar property. We have total dividends in arrears of $84,958 as of December 31, 2019. Total dividends of $30,618 were declared and payable as a result of conversion of preferred stock during 2011 and 2016.

Conversion of outstanding shares of Series A Preferred stock would have resulted in dilution of 900,000 and 900,000 common shares for the years ended December 31, 2019 and 2018, respectively.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Series B Convertible Preferred Stock:

The Company has 200 shares of Series B Convertible Preferred Stock outstanding at December 31, 2019 and 2018. These shares were issued from the designated 300 shares of Series B Preferred Stock, no par value, with the following rights and preferences:

·Liquidation Preference: Upon a liquidation event, an amount in cash equal to $1,000 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $200,000 at December 31, 2019 shall be paid prior to liquidation payments to holders of Company securities junior to the Series B Preferred Stock. Holders of the Company’s Series A Preferred Stock shall be paid in advance of holders of the Series B Preferred Stock on the occurrence of a Liquidation Event.

·Voting: Each holder of Series B Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series B Preferred Stock could be converted. Holders of Series B Preferred Stock vote as a single class with the common shares on an as-if-converted basis. No holder of Series B Preferred Stock is entitled to pre-emptive voting rights.

·Conversion: Shares of Series B Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series B shares by $1,000, then dividing by the Series B conversion price of $0.07 per common share. The Series B conversion price is subject to adjustment in accordance with the provisions of the statement of designation.

·Dividend Rate: The holders of Series B Preferred Stock shall not be entitled to receive dividends.

Conversion of outstanding shares of Series B Preferred stock would result in dilution of 2,857,142 common shares for the years ended December 31, 2019 and 2018.

Series C Convertible Preferred Stock:

The Company has 250 shares of Series C Convertible Preferred Stock outstanding at December 31, 2019 and 2018. These shares were issued from the designated 250 shares of Series C Preferred Stock, no par value, with the following rights and preferences:

·Liquidation Preference: Upon a liquidation event, an amount in cash equal to $1,000 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $250,000 at December 31, 2019 shall be paid prior to liquidation payments to holders of Company securities junior to the Series C Preferred Stock. Holders of the Company’s Series A Preferred Stock and Series B Preferred Stock shall be paid in advance of holders of the Series C Preferred Stock on the occurrence of a Liquidation Event.

·Voting: Each holder of Series C Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series C Preferred Stock could be converted. Holders of Series C Preferred Stock vote as a single class with the common shares on an as-if-converted basis. No holder of Series C Preferred Stock is entitled to pre-emptive voting rights.

·Conversion: Shares of Series C Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series C shares by $1,000, then dividing by the Series C conversion price of $0.03 per common share. The Series C conversion price is subject to adjustment in accordance with the provisions of the statement of designation.

·Dividend Rate: The holders of Series C Preferred Stock shall not be entitled to receive dividends.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Conversion of outstanding shares of Series C Preferred stock would result in dilution of 8,333,333 common shares for the years ended December 31, 2019 and 2018.

Series D Convertible Preferred Stock:

The Company has 150 shares of Series D Convertible Preferred Stock outstanding at December 31, 2019 and 2018. These shares were issued from the designated 150 shares of Series D Preferred Stock, no par value. Conversion of outstanding shares of Series D Preferred stock would result in dilution of 5,000,000 common shares for the years ended December 31, 2019 and 2018.

Series E Convertible Preferred Stock:

The Company has 300 shares of Series E Convertible Preferred Stock outstanding at December 31, 2019 and 2018. These shares were issued from the designated 300 shares of Series E Preferred Stock, no par value. Conversion of outstanding shares of Series E Preferred stock would result in dilution of 10,000,000 common shares for the years ended December 31, 2019 and 2018.

Series F Convertible Preferred Stock:

The Company has 153 shares of Series F Convertible Preferred Stock outstanding at December 31, 2019 and 2018. These shares were issued from the designated 300 shares of Series F Preferred Stock, no par value. Conversion of outstanding shares of Series F Preferred stock would result in dilution of 5,100,000 and 5,100,000 common shares for the years ended December 31, 2019 and 2018, respectively.

Series D, E and F Preferred Stock were issued with the following rights and preferences:

·Liquidation Preference: Upon a liquidation event, an amount in cash equal to $1,000 per share (adjusted appropriately for stock splits, stock dividends and the like), shall be paid prior to liquidation payments to holders of Company securities junior to the Series D, E, and F Preferred Stock. Holders of the Company’s Series A, B and C Preferred Stock shall be paid in advance of holders of the Series D, E and F Preferred Stock on the occurrence of a Liquidation Event.

·Voting: Each holder of Series D, E and F Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series D, E and F Preferred Stock could be converted. Holders of Series D, E and F Preferred Stock vote as a single class respectively with the common shares on an as-if-converted basis. No holder of Series D, E and F Preferred Stock is entitled to pre-emptive voting rights.

·Conversion: Shares of Series D, E and F Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series D, E and F shares by $1,000, then dividing by the Series D, E and F conversion price of $0.03 per common share. The Series D, E and F conversion price is subject to adjustment in accordance with the provisions of the statement of designation.

·Dividend Rate: The holders of Series D, E and F Preferred Stock shall not be entitled to receive dividends.

·The Series D, E and F Preferred Stock includes a redemption feature as described above.

A related party and member of the Company’s board of directors, Nicholas Gallagher, holds and controls all of the outstanding shares of the Series A, B and C Preferred Stock, 50 shares of the Series D Preferred Stock, 280 shares of the Series E Preferred Stock and all of the Series F Preferred Stock.

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Warrants:

The following is a summary of warrants at December 31, 2019:

	Shares		Exercise Price ($)		Expiration Date
Class L Warrants: (Issued for Private Placement of Preferred Stock)
Outstanding and exercisable at January 1, 2018	2,857,142	0.10		Jan 23, 2019
Outstanding and exercisable at December 31, 2018	2,857,142
Expired	(2,857,142)
Outstanding and exercisable at December 31, 2019	-
Class M Warrants: (Issued for Note Payable)
Outstanding and exercisable at January 1, 2018	1,735,000	0.15		Jan 29, 2019
Outstanding and exercisable at December 31, 2018	1,735,000
Expired	(1,735,000)
Outstanding and exercisable at December 31, 2019	-
Class N Warrants: (Issued for Private Placement)
Outstanding and exercisable at January 1, 2018	13,863,042	0.11		Jun 6 to Jul 18, 2019
Outstanding and exercisable at December 31, 2018	13,863,042
Expired	(13,863,042)
Outstanding and exercisable at December 31, 2019	-
Class N-2 Warrants: (Issued for Finders Fees)
Outstanding and exercisable at January 1, 2018	2,701,386	.055		Jul 18, 2019
Outstanding and exercisable at December 31, 2018	2,701,386
Expired	(2,701,386)
Outstanding and exercisable at December 31, 2019	-
Class O Warrants: (Issued for Private Placement)
Outstanding and exercisable at January 1, 2018	5,000,000	.06		Mar 31, 2020
Outstanding and exercisable at December 31, 2018	5,000,000
Outstanding and exercisable at December 31, 2019	5,000,000
Class P Warrants: (Issued for Sale of GNP Distribution Interest)
Outstanding and exercisable at January 1, 2018	2,250,000	.07		Jun 23, 2020
Outstanding and exercisable at December 31, 2018	2,250,000
Outstanding and exercisable at December 31, 2019	2,250,000
Class P-2 Warrants: (Issued for Finders Fees)
Outstanding and exercisable at January 1, 2018	1,200,000	.05		Jun 23, 2020
Outstanding and exercisable at December 31, 2018	1,200,000
Outstanding and exercisable at December 31, 2019	1,200,000
Class Q Warrants: (Issued for Private Placement of Preferred Stock)
Outstanding and exercisable at January 1, 2018	8,333,333	.03		Dec 8, 2020
Outstanding and exercisable at December 31, 2018	8,333,333
Outstanding and exercisable at December 31, 2019	8,333,333
Class Q-2 Warrants: (Issued for Finders Fees)
Outstanding and exercisable at January 1, 2018	833,333	.03		Dec 8, 2020
Outstanding and exercisable at December 31, 2018	833,333
Outstanding and exercisable at December 31, 2019	833,333
Class S Warrants: (Issued for Private Placement)
Outstanding and exercisable at January 1, 2018	15,000,001	.045		Apr 6 to Dec 9, 2021
Outstanding and exercisable at December 31, 2018	15,000,001
Outstanding and exercisable at December 31, 2019	15,000,001
Class S Warrants: (Issued for Private Placement of Preferred Stock)
Outstanding and exercisable at January 1, 2018	5,100,000	.03		Dec 30, 2021 to Mar 30, 2022
Outstanding and exercisable at December 31, 2018	5,100,000
Outstanding and exercisable at December 31, 2019	5,100,000
Class T Warrants: (Issued with Senior Secured Notes Payable)
Outstanding and exercisable at January 1, 2018	9,422,359	.03		Dec 22, 2022
Warrants issued	8,068,417	.03		May 17 to Dec 24, 2023
Outstanding and exercisable at December 31, 2018	17,490,776
Warrants issued	5,117,581	.03		Jan 1 to Oct, 2024
Outstanding and exercisable at December 31, 2019	22,608,357
Warrants outstanding at December 31, 2018 were 76,364,013 with a weighted average exercise price of $0.057. Warrants and weighted average exercise price at December 31, 2019	60,325,024	.038

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Warrants issued in 2019 included 3,442,888 issued to holders of Notes payable and Notes payable – related parties for 2019 borrowings, and 1,399,262 warrants for finders fees for 2017 and 2018 issued in 2019. See table in Note 6 Notes Payable and Notes Payable – Related Parties. During the year ended December 31, 2019, 21,156,570 warrants expired, representing all Class L, M, N and N-2 warrants.

Stock Options and Stock-Based Compensation:

Under the Company’s 2008 Equity Incentive Plan, as amended by shareholder vote on November 27, 2013 (the “Plan”), options to purchase shares of common stock may be granted to key employees, contract management and directors of the Company. The Plan permits the granting of nonqualified stock options, incentive stock options and shares of common stock. Upon exercise of options, shares of common stock are issued from the Company’s treasury stock or, if insufficient treasury shares are available, from authorized but unissued shares. Options are granted at a price equal to the closing price of the common stock on the date of grant. The stock options are generally exercisable immediately upon grant and for a period of 10 years.

In the event of cessation of the holder’s relationship with the Company, the holder’s exercise period terminates 90 days following such cessation. The Plan authorizes the issuance of up to 9,550,672 shares of common stock, subject to adjustment for certain events, such as a stock split or other dilutive events. As of December 31, 2019, there were a total of 2,350,672 shares available for grant in the Plan, 6,125,000 shares issued or exercised in prior years, and 1,075,000 options exercisable and outstanding.

A summary of stock option transactions for the years ended December 31, 2019 and 2018 are as follows:

Activity for 2019 and 2018	Shares	Weighted- Average Exercise Price (per share)	Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding and exercisable at December 31, 2017	2,900,000	$ 0.23	2.25	$0
Issued in 2018	425,000	$ 0.02	9.98	$0
Expired in 2018	(1,500,000)	$ 0.20
Options outstanding and exercisable at December 31, 2018	1,825,000	$ 0.20	4.59	$0
Expired in 2019	(750,000)	$ 0.405
Options outstanding and exercisable at December 31, 2019	1,075,000	$ 0.06	6.24	$0

For the years ended December 31, 2019 and 2018, the Company recognized $nil and $8,925 and in total share-based compensation for consultants. During 2018, the Company issued 1,850,000 shares of common stock to officers and employees for compensation expense of $64,565. As of December 31, 2019, the intrinsic value of options outstanding and exercisable was $nil.

Accounts Payable Satisfied with Common Stock

During the year ended December 31, 2018, the Company issued 1,000,000 shares of common stock with a fair value of $32,000 at $0.032 per share and 2,615,989 shares of common stock with a fair value of $91,298 at $0.0349 per share, based on then-current market, to satisfy $141,298 of accounts payable and accrued liabilities, resulting in a gain of $18,000.

9.ASSET RETIREMENT OBLIGATION

Remediation, reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties as well as remediation costs for inactive properties. The Company uses assumptions about future costs, capital costs and reclamation costs. Such

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

assumptions are based on the Company’s current mining plan and the best available information for making such estimates.

On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ from those based on such estimates and assumptions. Changes to the Company’s asset retirement obligation on its Chandalar property are as follows:

	December 31, 2019	December 31, 2018
Asset Retirement Obligation – beginning balance	$ 347,778	$ 334,402
Reduction of Asset retirement obligation	(205,738)	-
Accretion	13,911	13,376
Asset Retirement Obligation – ending balance	$ 155,951	$ 347,778

During 2019, the Company reduced its estimate of Asset retirement asset and Asset retirement obligation by $205,738. Acres of disturbed property, which were included in the calculation of the previous Asset retirement obligation, were reduced due to consumption of the disturbed acreage by the mining activities of the JV, which expanded the mine pit and consumed acres previously identified. This reduction, based on estimates of remaining mine material by a third-party mining engineering firm retained by the Company to prepare a mine plan, brought the mine life to 10 years once mining resumes. Therefore, the required reclamation to be performed by the Company was reduced by any reclamation of the identified acres that became part and parcel to the asset reclamation obligation of the JV.

The mining activities of the JV have disturbed additional acreage for which an associated asset retirement obligation has arisen and is required to be accounted for by the JV. The asset and obligation of this asset retirement, as they will be affected by the dissolution of the JV, are not determinable until the arbitration panel makes its award. Due to the uncertainly of the outcome of arbitration, it is not possible at this time to reasonably estimate or quantify this asset and obligation or any change that may be required to amounts already recorded for the Company’s prior mining activities (see Note 4 – Joint Venture; Arbitration).

10.REMEDIATION

The Company is responsible to remediate areas disturbed by mining activities, with the exception of certain access roads, airstrips or other amenities that are permanent in nature and improve the general access and maintainability of state lands covered by the Company’s mining claims. The Company has accrued $100,000 and $100,000, respectively, for remedies required at a former owner’s mine site in addition to the asset retirement obligation as of December 31, 2019 and 2018.

11.INCOME TAXES

The Company did not recognize a tax provision for the years ended December 31, 2019 and 2018.

Following are the components of deferred tax assets and allowances at December 31, 2019 and 2018:

	2019	2018
Deferred tax assets arising from:
Capitalized exploration and development costs	$ 48,000	$ 45,000
Unrecovered promotional and exploratory costs	112,000	112,000
Accrued remediation costs	66,000	62,000
Share based compensation	278,000	278,000
Net operating loss carryforwards	12,547,000	12,101,000
Total deferred tax assets	13,051,000	12,598,000
Less valuation allowance	(13,051,000)	(12,598,000)
Net deferred tax assets	$ -	$ -

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

Management has determined that it is more likely than not that the Company will not realize the benefit of its deferred tax assets. Therefore, a valuation allowance equal to 100% of deferred tax asset has been recognized. The deferred tax assets were calculated based on an effective tax rate of 30% for 2019 and 2018.

During the year ended December 31, 2016, the Company filed amended tax returns to correct allocations of Joint Venture losses reported to the Company for the years ending 2012 through 2015, resulting in an increase in losses reported on its federal and state tax returns of $7.5 million and $6.8 million, respectively. For each year since 2015, the Company filed its federal and state tax returns with corrected allocations of losses from the Joint Venture. The Company’s and the Joint Venture’s federal returns for the 2015, 2016 and 2017 tax years are under audit by the Internal Revenue Service (“IRS”) to determine correct allocation of losses for the Joint Venture and its partners. In August 2020, the IRS issued an unfavorable ruling as it affects the Company in regard to the audit of the joint venture which, when the individual partners’ effects are communicated to the Company by the IRS, is probable to decrease the Company’s net federal and state net operating loss carryforwards (“NOL”) by totals of $2.0 million and $1.8 million, respectively for the years under audit. The change would not result in any current tax liability or refund unless and until the Company could utilize its net operating loss carryforwards. The 2018 tax return would require amendment with a reduction to taxable net operating loss of approximately $41,000.

At December 31, 2019, the Company had federal and state tax-basis net operating loss carryforwards, prior to giving effect to the probable changes resulting from the audit of the joint venture as described above, totaling $42.8 million and $39.5 million, respectively, compared with federal and state tax-basis net operating loss carryforwards totaling $40.3 million and $39.3 million for the period ended December 31, 2018. Of these net operating losses, $36.6 million will expire in various amounts from 2020 through 2037. Combined federal net operating losses of $6.2 million for the years 2019 and 2018 do not expire.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company does not expect that the NOL carryback provision of the CARES Act would result in a material cash benefit.

The CARES Act increases the amount of business interest expense that may be deducted for tax years beginning in 2019 and 2020 by computing the section 163(j) limitation. The CARES Act generally limits a taxpayer’s business interest deductions for a taxable year to the sum of: (1) 30% of the taxpayer’s adjusted taxable income for that year, (2) its business interest income and (3) floor plan financing interest. Any interest expense not deductible under 163(j) for any affected year may be carried forward without limitation. The Company does not expect that the change in the section 163(j) provision of the CARES Act would result in a material cash effect.

The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory tax rate of 21% were as follows:

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

	2019		2018
Federal income tax expense (benefit) based on statutory rate	$ (547,000)	21.0%	$ (798,000)	21.0%
State income tax expense (benefit), net of federal taxes	(227,000)	8.7%	(328,000)	8.6%
Non-deductible share-based compensation	-	-%	21,000	(0.5)%
Revision of NOL estimates, state apportionment factors and state effective tax rates	321,000	(12.2)%	492,000	(13.0)%
Increase (decrease) in valuation allowance	453,000	(17.5)%	613,000	(16.1)%
Total taxes on income (loss)	$ -	-%	$ -	-%

The Company has assessed its tax positions other than the NOL issue above and has determined that it has taken an uncertain tax position that is probable to affect its federal and state net operating loss carryforwards in amounts by $2.0 million and $1.8 million, respectively, as described above, but does not give rise to an unrecognized tax liability being reported. In the event that the Company is assessed penalties and/or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.

The Company files federal income tax returns in the United States only. Tax attributes, mainly net operating losses after 2014, can and probably will be adjusted as a result of an audit, as described above. The Company’s 2015, 2016 and 2017 tax filings are currently under examination. The Company is no longer subject to federal income tax examination by tax authorities for years before 2015.

12.COMMITMENTS AND CONTINGENCIES

We are subject to Alaska state annual claims rental fees in order to maintain our non-patented claims. In addition to the annual claims rental fees of approximately $125,945 due November 30 of each year, we are also required to meet annual labor requirements of approximately $61,100 due November 30 of each year. The Company is able to carry forward costs for annual labor that exceed the required yearly totals for four years. The Company has significant carryovers to 2020 to satisfy its annual labor requirements. This carryover expires in the years 2020 through 2024 if unneeded to satisfy requirements in those years

Arbitration

In 2017, the Company, its subsidiary and the joint venture, as claimants, filed an arbitration statement of claim before a three-member Arbitration Panel (“the Panel”), against our JV partner and its affiliates; NyacAU, LLC (“NyacAU”), BEAR Leasing, LLC, and Dr. J. Michael James, as respondents. In 2018, the respondents filed a counter-claim against the Company, its subsidiaries and certain members of the Company’s current and former management, the counterclaim respondents. The arbitration claim alleged, amongst other things, claims concerning related-party transactions, accounting issues including capital vs. operating leases, interpretation of the joint venture operating agreement, allocation of tax losses between the joint venture partners, and unpaid amounts due Goldrich relating to the Chandalar Mine.

It is possible that there could be either adverse or favorable developments in the arbitration pending with the Company and its JV partner. The Company records provisions in the consolidated financial statements for pending arbitration results when it determines that an outcome is probable, and the amount of loss can be reasonably estimated. At the present time, except as stated otherwise, while it is reasonably possible that a favorable or unfavorable outcome in the arbitration may occur, after assessing the information available, management is unable to estimate the possible loss, or range of losses, for the pending arbitration; and

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

accordingly, no estimated losses have been accrued in the consolidated financial statements for favorable or unfavorable outcomes. Legal defense costs are expensed as incurred. Favorable rulings would not result in the recognition of gains prior to offsetting against losses, due to the ruling being an estimate which must be constructively received prior to recognition.

During the year ended December 31, 2019, the Panel released various awards relating to the allegations of both parties. Some of which have been in favor of the Company’s positions some have been in favor of our JV partner and its affiliates. The arbitration is ongoing and the various parties to the claims and counterclaims continue to disagree on several matters.

On May 25, 2019, the Panel issued an Interim Award, which requested input from the parties on a small number of discrete issues, all input to be supported by references to the arbitration record.

On November 30, 2019, the Panel ordered the Partial Final Award and concurrently the Second Interim Award RE Dissolution/Liquidation of GNP and Related Issues (“the Second Interim Award”).

The Partial Final Award

The Partial Final Award addressed several matters including leases and the impact of their characterization on interim distributions. As a result, the Panel determined that the Company is entitled to an additional $214,797 in distributions for 2016 and an additional $198,644 for 2017, for a total of $413,442 from GNP. In like manner, the Panel determined that NyacAU is entitled to an additional $413,442 in distributions for these years. As the Company is uncertain as to the collectability of these distributions, no recognition of these revenues is included in its Statement of Operations for the year ended December 31, 2019.

The Partial Final Award also addressed the Company’s claim for payment of interest earned by LOC 1. The Panel determined that NyacAU should pay the Company 50% of the interest earned on LOC 1 actually received by NyacAU, or $126,666. The Company has not accrued a receivable or recognized interest income for the interest due to uncertainties surrounding its collectability.

The Panel ruled Goldrich was responsible to pay NyacAU for the 2012 reclamation work and NyacAU is also entitled to 5% interest on the award from the date the first invoice was sent to Goldrich in 2014. Goldrich has accrued a liability for this ruling on its consolidated balance sheet of $421,366 included in accounts payable and interest payable, however Goldrich has contested the party to whom payment should be made and whether additional amounts not invoiced by GNP should be included in the award.

The Partial Final Award found the Company liable for an act of negligent misrepresentation regarding the concealment of certain technical information from NyacAU. The Company has vigorously disputed the concealment and the finding of negligence. Nevertheless, as a result of the Panel’s determination, the Panel awarded Dr. J. Michael James a reimbursement of 17% of his previous $350,000 stock investment in the Company or $59,500 plus prejudgment interest of 5% and legal fees, for a total of $83,388. In addition, the Panel awarded Dr. James $9,858, plus interest at 5% and legal fees, for personal expenses incurred relating to GNP’s operations, for a total of $13,713. These amounts plus additional interest have been included in accounts payable and interest payable on the consolidated balance sheet at December 31, 2019.

The Second Interim Award

The Second Interim Award was necessitated by the fact that the dissolution/liquidation of the joint venture had not yet run its course. In the Second Interim Award the Panel ordered that:

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

consideration the obligation of GNP, or any transferee of the permit, to complete reclamation in accordance with NyacAU’s government-approved reclamation plan.

Neither order from the Second Interim Award was successfully executed by the parties on the dates specified by the Panel. The Second Interim Award confirmed the dissolution of GNP and noted that “no provision of the Claims Lease or the Operating Agreement speaks directly to the rights or obligations of GNP to transfer its mining permit, which is held in the name of the manager, NyacAU. Although GNP no longer has the right to mine, GNP and specifically NyacAU have the liability of reclamation.

Balance and payment of LOC1

The arbitration panel calculated a tentative balance of LOC1 at $16,483,271 as of June 2019. This balance will be adjusted for any additional costs incurred by GNP in the liquidation or awards and/or adjustments made by the arbitration panel. Upon liquidation of GNP, 50% of the LOC1 liability may be recorded on Goldrich’s balance sheet.

The arbitration panel ruled in the Final Post Award (see Subsequent Events below) that LOC1 cannot be increased for costs incurred after mining operations have ceased, including costs for reclamation. This deprives NyacAU of a security interest in 50% of future placer gold production at the site to repay reclamation expenses which it advances. Further, the panel ruled that the Operating Agreement does not impose an obligation on the Company to pay 50% of the reclamation fee, but that the reclamation obligation resides with the permit holder.

Right to Offset Damages or Distributions

The arbitration panel granted the request that any damages awarded to one party can be an offset to distributions (or damages) due to the other party.

13.SUBSEQUENT EVENTS

Subsequent to the year ended December 31, 2019, the Company received additional notes payable from a related party of $295,000, net of discount and additional notes payable of $40,000 net of discount.

In April of 2020, the Company applied for and received a loan under the Payroll Protection Program under the provisions of the CARES Act of $50,600. This loan may be converted to a grant and forgiven when the Company uses the funds for qualifying expenses and applies for forgiveness under the program.

During August through October of 2020, the Company received $439,000 cash as a result of exercise of Class Q, Class S, and Class T warrants at an exercise price of $0.03 per common share. Ownership of these warrants had been in the hands of a related party and were sold by him personally to unrelated parties. The unrelated parties then exercised the warrants for cash, resulting in the issuance of 14,633,330 common shares.

Effective September 16, 2020, the Company entered into a contract with Yabucoa Partners Corp, dba Street Smart, to provide market research and analysis services to the Company. The Company will pay a flat fee of

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Goldrich Mining Company

Notes to the Consolidated Financial Statements

$150,000 payable $75,000 upon signing and $75,000 in 3 months. In addition, the Company will pay a monthly fee of $1,500, paid 6 (six) months in advance.

Arbitration rulings subsequent to December 31, 2019

Final Post Award Orders

On September 4, 2020, the arbitration panel issued Final Post Award Orders, wherein the panel issued rulings on multiple issues, including but not limited to, those discussed below:

·Reclamation

The Company had previously filed a motion to compel NyacAU to correct accruals for certain expenses including reclamation, demobilization, equipment rental and utilities. Most notably, the Company contended that an accrual for reclamation liability was short of a much larger estimate prepared by independent professionals as engaged by Goldrich. The panel denied the Company’s motion and ruled that Goldrich does not have the authority to compel the establishment of any reserves on the GNP financial records.

The Company had previously filed a motion to compel NyacAU to reclaim the disturbed acres as required under the Operating Agreement and the mining permit issued to NyacAU in 2013, and to require NyacAU to fund the reclamation reserve from cash that had been distributed to NyacAU. The panel denied the Company’s motion and ruled that while there was express provision in the Operating Agreement to establish reserves necessary for contingent or unforeseen liabilities or obligations, which could conceivably include reclamation reserves, the agreement does not impose an express obligation to reclaim the project site.

·Mining Claims

All of the Company’s mining claims remain the property of the Company; however, NyacAU staked several claims contiguous to the claims owned by the Company. The Company had previously filed a motion to compel the transfer of NyacAU’s claims from NyacAU to the Company. The motion was granted in part in that the claims held in NyacAU’s name were ruled to be owned by the Company, but would not be transferred immediately. They would remain in the possession of NyacAU as manager of the liquidation until the property covered by the claims was not being used for liquidation activities and could be transferred without disruption to the liquidation activity.

Judgements issued by Superior Court

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements between the Company and its accountants regarding any matter or accounting principles or practice or financial statement disclosures.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out under the supervision of and with the participation of our management, including the Principal Executive Officer and the Principal Financial Officer of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Disclosure controls and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal control of financial reporting as discussed below.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (including its consolidated subsidiaries) and all related information appearing in our Annual Report on Form 10-K. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that:

1.	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
2.	provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of management and/or of our Board of Directors; and
3.	provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2019, based on the criteria in a framework developed by the Company’s management pursuant to and in compliance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, walkthroughs of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of December 31, 2019, because management

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identified a material weakness in the Company’s internal control over financial reporting related to the segregation of duties as described below.

While the Company does adhere to internal controls and processes that were designed and implemented by an experienced accounting firm, it is difficult with a very limited staff to maintain appropriate segregation of duties in the initiating and recording of transactions, thereby creating a segregation of duties weakness. Due to: (i) the significance of segregation of duties to the preparation of reliable financial statements; (ii) the significance of potential misstatement that could have resulted due to the deficient controls; and (iii) the absence of sufficient other mitigating controls, we determined that this control deficiency resulted in more than a remote likelihood that a material misstatement or lack of disclosure within the annual or interim financial statements may not be prevented or detected.

Management’s Remediation Initiatives

Management has evaluated, and continues to evaluate, avenues for mitigating our internal controls weaknesses, but mitigating controls to completely mitigate internal control weaknesses have been deemed to be impractical and prohibitively costly, due to the size of our organization at the current time. Management expects to continue to use reasonable care in following and seeking improvements to effective internal control processes that have been and continue to be in use at the Company. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.

Management’s remediation initiatives include having retained the Company’s Chief Financial Officer. He is well-versed in internal control environments, having implemented, documented and tested multiple control environments over 16 years and has served as a CFO in publicly-traded companies for 20 years. The offices of Principal Executive Officer and Principal Financial Officer have remained separate. The Company has only two employees, and management has concluded that minimal staffing continues to inhibit the effectiveness of the Company’s internal controls over financial reporting.

Attestation Report of the Independent Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only Management’s report in this Annual Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)), that occurred during our fourth fiscal quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Members of the Board of Directors and Executive Officers

Our directors hold office until the next annual meeting of the stockholders and the election and qualification of their successors. Officers are elected annually by the Board of Directors and serve at the direction of the Board of Directors. Each member of the Board of Directors was elected to membership on the Board on November 26, 2013. The Board of Directors held nine meetings in 2019 and five meetings in 2018.

The following table and information that follows sets forth, as of December 31, 2019, the names, and positions of our directors and executive officers:

Name

Age

Recent Business and Professional Experience

David S. Atkinson

Director

Mr. Atkinson became a Director of the Company on May 7, 2007. Mr. Atkinson spends about 15 hours a month on matters related to Goldrich. He is currently managing FG Investments, a Global Investment Advisor focused on commodities located in the Republic of Mauritius. In April 1999, he co-founded Forza Partners, L.P. and currently serves as portfolio manager. Forza Partners, L.P. is a hedge fund focused on the precious metals sector. In April 1997, he co-founded and, until December 1999, managed Tsunami Partners, LP, a fund located in Fort Worth, Texas. Mr. Atkinson has been an affiliate of the Market Technicians Association (MTA) since March 1994 and received MTA accreditation as a Chartered Market Technician (CMT) in July 2001. Mr. Atkinson received a B.A. in Economics from the University of Texas at Austin.

Nicholas Gallagher

Director

Mr. Gallagher became a director on November 1, 2016. Mr. Gallagher spends approximately 15 hours per month on matter related to Goldrich. In 2004 to the present, Mr. Gallagher incorporated NGB Capital, a private equity investment firm that manages personal and syndicated private equity and property investments in Europe, the United Kingdom and the United States of America. In 2000, Mr. Gallagher co-founded Powerscourt Capital Partners, a niche investment management firm structured to manage funds on behalf of high net worth individuals in the public and private equity markets. He served there until Powerscourt was acquired in 2004. He obtained a Bachelor of Law degree from the University of Newcastle in 1996. Mr. Gallagher then completed the Legal Practice Course at the College of Law in London and practiced as a solicitor at Memery Crystal, a law firm in the city of London from 1997 to 2000.

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Name

Age

Recent Business and Professional Experience

Garrick A. Mendham

Director

Mr. Mendham became a consulting director on August 12, 2013 and was appointed director on November 26, 2013. Mr. Mendham spends about 15 hours a month on matters related to Goldrich. Since May 2012 to the present, Mr. Mendham serves as Vice President of Operations and Project Development for RH Mining Resources, a Hong Kong based resources development company. From 2008 to 2012, he served as Director of Technical Services and General Manager of Technical Services for Regent Pacific Group in Hong Kong and Beijing, China, respectively. From 2006 to 2008, Mr. Mendham served as Manager of Technical Services for Rio Tinto Coal Australia, a subsidiary of Rio Tinto Group. From 2004 to 2006, he served as Manager of Mine Technical for Lihir Management Company in Papua, New Guinea. Prior to 2004, Mr. Mendham served in technical, corporate, planning and mining positions with Rio Tinto, BHP Billiton, Bond Corporation, and Queensland Nickel, including two years working in an Australian 20,000-ounces per year placer operation. Mr. Mendham brings over 30 years of mining experience in operations, technical work, and mining finance for both junior and large mining companies. Mr. Mendham is the Chairman of the Australasian Institute of Mining and Metallurgy Hong Kong branch. He received a Bachelor of Mine Engineering from the University of New South Wales, a Graduate Diploma in Finance from the Financial Services Institute of Australasia, and holds Mine Manager Certificates in Australia for both New South Wales and Western Australia.

William Orchow

Director

Mr. Orchow became a director on July 20, 2004. Mr. Orchow spends approximately 10 hours per month on matters related to Goldrich. He is currently a member of the board of directors of Cordoba Minerals Corp, a Canadian public company with projects in Colombia. Mr. Orchow sits on the boards of directors of several private junior mining companies. He served as a director of Revett Minerals, Inc., a Canadian company trading on the Toronto Stock Exchange, from September 2003 to June 2009. He also served as President and Chief Executive Officer of Revett Minerals from September 2003 to October 2008. Prior to Revett, Mr. Orchow took time off, from January 2003 to August 2003. From November 1994 to December 2002, Mr. Orchow was President and Chief Executive Officer of Kennecott Minerals Company, where he was responsible for the operation and business development of all of Kennecott’s mineral mines with the exception of its Bingham Canyon mine. From June 1993 to October 1994, he was President and Chief Executive Officer of Kennecott Energy Company, the third largest producer of domestic coal in the United States, and prior to that was Vice President of Kennecott Utah Copper Corporation. Mr. Orchow has also held senior management and director positions with Kennecott Holdings Corporation, the parent corporation of the aforementioned Kennecott entities. He has also been a director and member of the executive committee of the Gold Institute, a director of the National Mining Association and a director of the National Coal Association. Mr. Orchow is currently a member of the board of trustees of Westminster College in Salt Lake City and has been a member of the board of trustees, executive committee and past President of the Northwest Mining Association until December 31, 2011. He graduated from the College of Emporia in Emporia, Kansas with a B.S. in business.

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Name

Age

Recent Business and Professional Experience

Michael G. Rasmussen

Director

Dr. Rasmussen became a consulting director on April 15, 2013 and was appointed director on November 26, 2013. Dr. Rasmussen spends about 15 hours a month on matters related to Goldrich. In February 2013 to present, he launched a private consultancy providing geologist services to mining companies, including Goldrich, Kinross Gold Corp, Nevada Milling and Mining LLC and several others. From 2008 to 2013, Dr. Rasmussen served as the Vice President, Exploration and consulting geologist for Mines Management, Inc., a public company trading on the NYSE and TSX. From 2007 to 2008, he served as Vice President, Exploration for Aztec Metals Corp, and concurrently as consulting geologist for Endeavour Silver Corp, a Canadian public company trading on the NYSE and TSX, and Canarc Gold Corp, a Canadian public company trading on the FINRA OTCBB and TSX, From 2005 to 2007, Dr. Rasmussen served as Vice President, Exploration for Endeavour Silver Corporation and from 2004 to 2005 as Vice President, Exploration for International Wayside Gold Mines Ltd, a Canadian public company trading on the TSX. From 1990 to 2004, he held senior geologist roles at Echo Bay Mines and its parent Kinross Gold Corp, a public company trading on the NYSE and TSX. Dr. Rasmussen earned a PhD in Economic Geology from the University of Washington and a Master’s Degree in Geological Sciences from Loma Linda University. Dr. Rasmussen is licensed as a Professional Geologist by the Washington State Board of Geologists and the American Institute of Professional Geologists. Dr. Rasmussen has evaluated precious metals prospects and conducted exploration extensively throughout Mexico, Peru, British Colombia, and the western United States, and is credited with the discovery of the Emanuel Creek epithermal gold deposit for Echo Bay Mines.

William V. Schara

Chief Executive Officer,

Director

On October 19, 2009, Mr. Schara was appointed by the Board of Directors as Chief Executive Officer of the Company. From March 14, 2007 to October 19, 2009, Mr. Schara served as Chairman of the Board. Mr. Schara is a Certified Public Accountant, and has a Bachelor of Science Degree in Accounting from Marquette University. Mr. Schara spends fulltime on matters related to Goldrich. He was also appointed to the Company’s Audit Committee on February 13, 2006 and relinquished that position concurrent with his appointment as Chief Executive Officer. From October 2007 to September 2009, Mr. Schara served as President, Chief Executive Officer and Director of Nevoro, Inc., a Canadian company trading on the Toronto Stock Exchange. Beginning December 2004, he was employed as a management consultant for, and then from July 2005 to November 2007 as the Chief Financial officer of Minera Andes Inc., a Canadian development stage mining company listed on the Toronto Ventures Exchange and the FINRA OTCBB exchange. He previously worked for Yamana Gold Inc. and its predecessor companies from July 1995 to September 2003, the last four years of which were in the capacity of Vice President of Finance and Chief Financial Officer. Yamana Gold Inc. is a production stage Canadian public company trading on the Toronto Stock Exchange, the NYSE Amex and the London Alternative Investment Market Exchange. From September 2004 through April 2015, Mr. Schara served as a director of Marifil Mines Limited, an exploration stage Canadian public company traded on the Canadian Ventures Exchange. Mr. Schara has more than 30 years of experience in finance and accounting with extensive experience in business start-ups, international business, and managing small public companies and mining company joint ventures.

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Name

Age

Recent Business and Professional Experience

Stephen M. Vincent

Director

Mr. Vincent became a consulting director on August 12, 2013 and was appointed director on November 26, 2013. Mr. Vincent spends about 15 hours a month on matters related to Goldrich. Mr. Vincent has over 30 years of experience as a finance specialist. From February 2013 to the present, Mr. Vincent is principal of SMV Enterprises, Inc, providing financing services to clients. From 2005 to 2013, he worked at Northland Securities, providing investment bank services and developing a junior mining investment banking practice. From 1992 to 2004, Mr. Vincent worked at Allison Williams Company, providing structures and securitized financings including leasing and corporate debt. Prior to 1992, he held a range of positions with various companies including Moore Juran and Co., Miller and Schroeder Financial, and Piper Jaffray. His roles have included metals distribution, debt instrument structuring, and private equity financing. Mr. Vincent raised capital for companies developing the copper-nickel mining district of northeastern Minnesota. Mr. Vincent completed strategic equity investments for Duluth Metals Ltd., Franconia Minerals and Encampment Minerals. While at Northland Securities, Mr. Vincent completed a private placement financing for Goldrich in 2010. Mr. Vincent received a Bachelor’s degree in History from Boston College and attended the William Mitchell School of Law.

Ted R. Sharp

Chief Financial Officer

Mr. Sharp was appointed as our Chief Financial Officer, Secretary, and Treasurer effective March 2006. We have entered into a management consulting contract with Mr. Sharp, engaging him on a part-time basis. Mr. Sharp spends approximately 25% of his business hours each month on matters related to Goldrich. Mr. Sharp is a Certified Public Accountant, and has Bachelor of Business Administration Degree in Accounting from Boise State University. Since 2003, he has been President of Sharp Executive Associates, Inc., a privately-held accounting firm providing Chief Financial Officer services to clients. Concurrent with his position with Goldrich, from July 2012 through the present, Mr. Sharp is a principal and serves part-time as Chief Executive and Financial Officer of US Calcium LLC, a privately-held natural resource company. Concurrent with his position with Goldrich, from August 2018 through the present, Mr. Sharp serves part-time as Chief Financial Officer of Timberline Resources Corporation, a natural resource company trading on the OTCQB and TSX:V exchanges. Also concurrent with his position with Goldrich, from January 2019 through the present, Mr. Sharp serves part-time as Chief Financial Officer of US Gold Corporation, a natural resource company trading on the NASDAQ exchange. In the past, concurrent with his position with Goldrich, from May 2011 through January 2012, Mr. Sharp served part-time as Chief Financial Officer of Gryphon Gold Corporation, a natural resource company formerly trading on the FINRA OTCBB, and from September 2008 through November 2010, Mr. Sharp served part-time as Chief Executive Officer, President and Chief Financial Officer of Texada Ventures, Inc, a natural resource exploration company formerly trading on the FINRA OTCBB. Also concurrent with his position with Goldrich, from November of 2006 to June 2009, Mr. Sharp served part-time as Chief Financial Officer of Commodore Applied Technologies, Inc., an environmental solutions company formerly trading on the FINRA OTCBB. Prior to 2003, he worked for 14 years in positions of Chief Financial Officer, Managing Director of European Operations and Corporate Controller for Key Technology, Inc., a publicly-traded manufacturer of capital goods. Mr. Sharp has more than 35 years of experience in treasury management, internal financial controls, SEC reporting and Corporate Governance.

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Qualification of Directors

David S. Atkinson: Mr. Atkinson’s extensive experience in the capital markets and his specific experience in financing exploration stage mining companies as described above along with his current position as Investment Manager of Forza Partners and Forza Partners II, each of which are affiliates of the Company, led the Board to conclude that Mr. Atkinson should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.

Nicholas Gallagher: Mr. Gallagher’s extensive experience in legal matters and as an investment manager, as well as his numerous years as a significant investor and affiliate of the Company, led the Board to conclude that Mr. Gallagher should join the Board and serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.

Garrick A. Mendham: Mr. Mendham’s extensive experience as a manager in production companies and his specific experience with mining and exploration plans and analysis for both production and exploration stage mining companies as described above led the Board to conclude that Mr. Mendham should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to work with its joint venture partner at GNP in formulating and executing mining plans to extract gold from its Chandalar placer operations.

William Orchow: Mr. Orchow’s extensive experience in executive management of large production companies and his specific experience as a director on multiple industry organizations and mining companies as described above along with his current position as Chairman of the Board led the Board to conclude that Mr. Orchow should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.

Michael G. Rasmussen: Mr. Rasmussen’s extensive experience as a geologist with exploration stage companies and his skills in interpreting multifaceted geological date as described above led the Board to conclude that Mr. Rasmussen should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company with an extensive property with challenging geological traits.

Stephen M. Vincent: Mr. Vincent’s extensive experience in the capital markets and his specific experience in financing exploration stage mining companies as described above along with his current position as Chairman of the Audit Committee led the Board to conclude that Mr. Vincent should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.

William A. Schara: Mr. Schara’s extensive experience in finance and accounting and his specific experience in financing for both production and exploration stage mining companies as described above along with his current position as CEO of the Company led the Board to conclude that Mr. Schara should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.

Arrangements Between Directors and Officers

To our knowledge, there is no arrangement or understanding between any of our officers and any other person pursuant to which the officer was selected to serve as an officer.

Family Relationships

There are no family relationships between, or among any of our directors or executive officers.

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Other Directorships

No directors of the Company are also directors of issuers with a class of securities registered under Section 12 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or which otherwise are required to file periodic reports under the Exchange Act).

Code of Ethics

The Board of Directors considers and implements our business and governance policies.

On November 7, 2005, our Board of Directors adopted a Code of Business Conduct and Ethics for directors, officers and executive officers of Goldrich Mining Company and its subsidiaries and affiliates. All our directors and employees have been provided with a copy of the Code, and it is posted on our website at www.goldrichmining.com. The document is intended to provide guidance for all directors and employees (including officers) and other persons who may be considered associates of the company to deal ethically in all aspects of its business and to comply fully with all laws, regulations, and company policies. If we make any amendments to this Code other than technical, administrative or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of the Code to our chief executive officer, or chief financial officer, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies on our website. A copy of the Code will be sent without charge to anyone requesting a copy by contacting us at our principal office.

The Code is in addition to other detailed policies relevant to business ethics that we may adopt from time to time.

Committees of the Board of Directors

The Board of Directors has an Audit Committee, a Compensation Committee, a Corporate Governance and Nominating Committee, a Technical Committee, an Operating Committee, and a Financing Committee.

Audit Committee

The Corporation has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee during 2019 were Mr. Orchow and Mr. Vincent. Mr. Vincent is the Chairman of the Committee. Each of the Directors is considered “independent” as defined under Rule 5605(c)(2) of the NASDAQ listing rules and under Rule 10A-3 of the Exchange Act. The Committee operates under a formal written charter approved by the Committee and adopted by the Board of Directors. The Audit Committee held four meetings during 2019 and four meetings in 2018. The responsibilities of the Audit Committee include monitoring compliance with Company policies and applicable laws and regulations, making recommendations to the full Board of Directors concerning the adequacy and accuracy of internal systems and controls, the appointment of auditors and the acceptance of audits, and monitoring management's efforts to correct any deficiencies discovered in an audit or supervisory examination.

Compensation Committee

The members of the Compensation Committee during 2019 were Mr. Vincent, and Mr. Orchow; this Committee does not have a charter. Mr. Vincent is the Chairman of the Committee. This Committee receives and considers recommendations from the Chief Executive Officer for compensation for consultants, management and the Directors. Compensation matters regarding Mr. Schara and Mr. Sharp are recommended to the Board of Directors for their consideration. The Committee also is responsible for the administration of all awards made by the Board of Directors pursuant to the Restated 2008 Equity Incentive Plan (the “Plan”). The Compensation Committee makes recommendations to the Board of Directors regarding administration of the Plan. The Board of Directors, however, administers the Plan. The Company does not use compensation consultants. This Committee held no meetings in 2019 and 2018.

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Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee is composed of Mr. Orchow, Mr. Atkinson, and Mr. Schara. Mr. Orchow is the Chairman of this Committee. This Committee adopted a Charter at a meeting held May 7, 2007. The Charter does not include a policy with regard to consideration of director candidates recommended by shareholders. The Committee believes that it is in a better position than the average shareholder to locate and select qualified candidates for the Board of Directors, as the Company is a small gold exploration company that requires its directors to have knowledge regarding the risks and opportunities in the gold mining industry. The Committee did not hold any meetings in 2019 and 2018.

Operating Committee

The Operating Committee is composed of Mr. Orchow, Mr. Mendham, and Mr. Schara. Mr. Schara is the Chairman of this Committee. The Committee oversees the Company’s interest in GNP. The Committee held no meetings in 2019 and three in 2018.

Financing Committee

The Financing Committee is composed of Mr. Atkinson, Mr. Gallagher, Mr. Orchow, Mr. Schara, and Mr. Vincent. Mr. Schara is the Chairman of this Committee. The Committee advises the Chief Executive Officer on acquiring financing and evaluating financial alternatives. The Committee met once in 2019 and once in 2018.

Financial Expert

Stephen M. Vincent is Chairman of the Audit Committee and its designated Financial Expert as set forth in Item 401 of Regulation S-K, as promulgated by the SEC. Mr. Vincent is independent as defined under Rule 5605(c)(2) of NASDAQ listing rules and under Rule 10A-3 of the Exchange Act.

Recommendations to the Board of Directors

There have been no changes in the Company’s procedures by which shareholders of the Company may recommend nominees to the Company’s Board of Directors.

Legal Proceedings, Cease Trade Orders and Bankruptcy

Subsequent to the end of 2017, we filed a claim before an Arbitration panel consisting of 3 independent arbitrators against our joint venture partner to obtain relief from certain accounting practices employed by the manager of the joint venture. In response to our filing, the managing partner, NyacAU LLC, has filed an Arbitration Counter Claim against us, naming the officers and directors of the Company as they were constituted in 2012, at the time the JV’s Operating Agreement was signed by the respective partners. The arbitration hearing commenced during July and August of 2018.

Notes 4 Joint Venture, 12 Commitments & Contingencies and 13 Subsequent Events to the financial statements disclose in detail the rulings and awards that have been issued to date by the arbitration panel.

As of the date of this Annual Report, with the exception of the Arbitration Counter Claim described above, no director or executive officer of our Company and no shareholder holding more than 5% of any class of our voting securities, or any associate of any such director, officer or shareholder is a party adverse to us or any of our subsidiaries or has an interest adverse to us or any of our subsidiaries.

During the past ten years, no director, director nominee or executive of Goldrich has:

(a) filed or has had filed against such person, a petition under the U.S. federal bankruptcy laws or any state insolvency law, nor has a receiver, fiscal agent or similar officer been appointed by a court for the business or property of such person, or any partnership in which such person was a general partner, at or within two

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years before the time of filing, or any corporation or business association of which such person was an executive officer, at or within two years before such filings;

(b) been convicted or pleaded guilty or nolo contendere in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offences);

(c)been the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting such person's activities in any type of business, securities, trading, commodity or banking activities;

(d)been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any U.S. federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business, securities, trading, commodity or banking activities, or to be associated with persons engaged in any such activity;

(e)been found by a court of competent jurisdiction in a civil action or by the U.S. Securities and Exchange Commission, or by the U.S. Commodity Futures Trading Commission to have violated a U.S. federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

(f)been the subject of, or a party to, any U.S. federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any U.S. federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(g)been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the U.S. Commodity Exchange Act (7 U.S.C.1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers, directors, and persons who beneficially own more than 10% of the Company’s common stock (“10% Stockholders”), to file reports of ownership and changes in ownership with the SEC. Such officers, directors, and 10% Stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2019, all filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation Agreements and Summary of Executive Compensation:

William V. Schara, Principal Executive Officer:

We entered into an employment arrangement with William V. Schara on October 19, 2009 in conjunction with his appointment as our Chief Executive Officer. Mr. Schara is a Certified Public Accountant, and has a Bachelor of Science Degree in Accounting from Marquette University. His annual salary was fixed at $180,000 and 750,000

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options to purchase our common stock were issued to him, with 250,000 vesting immediately, 250,000 vesting on October 19, 2010 and 250,000 vesting on October 19, 2011. These options expired in October 2019. Mr. Schara has a three-year employment contract that is renewed and reviewed on an annual basis by the Board of Directors for appropriate changes in salary, benefits or other employment matters. Mr. Schara received only a partial salary in 2016, 2017, and 2018 due to the Company’s lack of finances. At December 31, 2019 a total of $426,500 of unpaid salary was accrued and included in payable to related parties, including $180,000 accrued during 2019.

Ted R. Sharp, Principal Financial Officer:

We entered into a written Independent Contractor Agreement, effective March 1, 2006, with Sharp Executive Associates, Inc. and the owner of that firm, Ted R. Sharp CPA, for Mr. Sharp to act as a Management Consultant to serve as Secretary, Treasurer and Chief Financial Officer and to provide through his extended staff and firm all services typical of an accounting department for a small company. Mr. Sharp is a Certified Public Accountant and his firm is an independent contractor, with business management and consulting interests with other companies that are independent of the consulting agreement he currently has in place with the Company. The term of the original Agreement was through December 31, 2006, and has been renewed on an annual basis, with the basis of fees changed from the monthly fee and to terms that would allow Mr. Sharp to bill the activities performed by members of his firm at hourly rates. In 2010, we hired an internal accountant to provide normal accounting functions for the Company and the use of Mr. Sharp’s staff was eliminated. Fees paid to Mr. Sharp’s firm subsequent to this date are for Mr. Sharp’s services only. When the ability to pay under a renewed agreement is assured, the terms of the contract will be reviewed and renewed. Either party may terminate the Agreement upon 15 days written notice. Mr. Sharp also will be reimbursed for reasonable expenses previously approved by us. Mr. Sharp is not an employee and serves on a part time basis. Mr. Sharp billed a total of $42,703 in fees in 2019, of which $78,644 remains unpaid at December 31, 2019.

Executive Compensation and Related Information

Summary Compensation Table

A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and the other named executives for the most recent two fiscal years is as follows:

Name⁽¹⁾ and Principal Position	Year	Salary ($)	Stock Awards ($)	Total
(a)	(b)	(c)	(e)	(j)
William V. Schara	2019	180,000	-	180,000
Principal Executive Officer	2018	180,000	45,390⁽²⁾	225,390
Ted R. Sharp	2019	42,703	-	42,703
Principal Financial Officer	2018	64,222	10,470⁽³⁾	74,692

a.No other executive or person earned more than $100,000 for the year. Columns for certain forms of compensation have been omitted from the table because no compensation was paid for those forms of compensation during the period reported.

b.Includes 1,300,000 common shares at a fair value of $0.035 per share.

c.Includes 300,000 common shares at a fair value of $0.035 per share.

Material factors necessary to an understanding of the compensation in this table are set forth in the description of the compensation agreements. No performance targets or grants were modified or waived during the last fiscal year.

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Outstanding Equity Awards at Fiscal Year-end (2019)

Stock Awards
Name	Number of Securities Underlying Unexercised Options⁽¹⁾ (#) Exercisable	Option Exercise Price ($)	Option Expiration Date
(a)	(b)	(e)	(f)
William V. Schara Principal Executive Officer	-	-	-
Ted R. Sharp Principal Financial Officer	-	-	-

Retirement, Resignation or Termination Plans

With the exception of the following, we sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our Company or as a result of a change in the responsibilities of an executive following a change in control of our Company.

The employment plan for Mr. Schara includes a two-year severance provision (or a three-year provision under a change in control), wherein the Company would be required to pay him a lump-sum severance equal of two years (or three years under a change of control) of his annual salary at termination due to reasons other than termination for cause.

Director Compensation

The Directors receive $500 for each board meeting and $300 for each committee meeting. Any officer who is also a board member does not receive fees for service on the board.

Stock Awards and Option Awards were made under our Restated 2008 Equity Incentive Plan. The fair values were computed in accordance with ASC 718. The grant, vesting and forfeiture information and assumptions made in valuation may be found in Note 8 to our consolidated financial statements for the year ended December 31, 2019 included in this Annual Report on Form 10-K. Grants to officers and directors under the 2008 Equity Incentive Plan are made as partial compensation for services rendered as well as to retain qualified persons in those positions and provide incentive for involvement and performance. Aggregate awards outstanding at December 31, 2019 are included in the Beneficial Ownership table and notes below.

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Name	Fees Earned or Paid in Cash ($)⁽¹⁾	All Other Compensation ($)(²⁾	Total ($)
(a)	(b)	(g)	(h)
David S. Atkinson(3)	4,800	-	4,800
Garrick A. Mendham(5)	3,500	-	3,500
William Orchow(4)	4,800	-	4,800
Michael G. Rasmussen(6)	4,300	-	4,300
Stephen M. Vincent(7)	4,800	-	4,800
Nicholas Gallagher (8)	4,800	-	4,800

(1)The Directors receive $500 for each board meeting and $300 for each committee meeting.

(2)Stock Awards and Option Awards, when made, are made under our 2008 Equity Incentive Plan. The fair values were computed in accordance with ASC 718.

(3)Mr. Atkinson holds no options to purchase shares of common stock. Other compensation includes payment for director fees earned in prior years paid in shares totaling 174,785 common shares.

(4)Mr. Orchow held options to purchase a total of 250,000 shares of common stock, all of which are vested, which expired on August 27, 2018. Other compensation includes payment for director fees earned in prior years paid in shares totaling 853,868 common shares.

(5)Mr. Mendham holds options to purchase a total of 50,000 shares of common stock, all of which are vested. Other compensation includes payment for director fees earned in prior years paid in shares totaling 368,424 common shares.

(6)Mr. Rasmussen holds options to purchase a total of 350,000 shares of common stock, all of which are vested. Other compensation includes payment for director fees earned in prior years paid in shares totaling 436,963 common shares.

(7)Mr. Vincent holds options to purchase a total of 50,000 shares of common stock, all of which are vested. Other compensation includes payment for director fees earned in prior years paid in shares totaling 610,029 common shares.

(8)Mr. Gallagher holds no options to purchase shares of common stock. Other compensation includes payment for director fees earned in prior years paid in shares totaling 171,920 common shares.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of November 4, 2020 by:

i.each director and nominee for director;

ii.each of our executive officers named in the Summary Compensation Table under "Executive Compensation and Related Information" (the "Named Executive Officers");

iii.all our executive officers and directors as a group, and, based on currently available Schedules 13D and 13G filed with the SEC, the beneficial owners of more than 5% of our common stock.

Title of Class	Name of Beneficial Owner	Address	Amount and Nature of Beneficial Ownership		Percent of Class (1)
Directors and Named Executive Officers
Common Stock	David S. Atkinson, Director	Via San Martino, No. 9 Feltre, Italy 32032	8,106,824	(2)	4.12%
Common Stock	Garrick A. Mendham, Director	PO Box 668 Kingsford, NSW 2032 Australia	1,348,943	(3)	*
Common Stock	William Orchow, Chairman, Director	67 P Street Salt Lake City, UT 84103	2,163,262	(4)	1.04%
Common Stock	Michael G. Rasmussen, Director	3311 S. Grand Blvd. Spokane, WA 99203	975,145	(5)	*
Common Stock	William V. Schara, Chief Executive Officer, Director	3221 S. Rebecca Spokane, WA 99223	3,397,804	(6)	1.73%
Common Stock	Ted R. Sharp, Secretary, Treasurer and Chief Financial Officer	15148 Pinehurst Way Caldwell, ID 83607	1,170,182	(7)	*
Common Stock	Stephen M. Vincent, Director	255 Maple Hill Rd. Hopkins, MN 55343	2,212,029	(8)	1.12%
Common Stock	Nicholas Gallagher, Director	5 Churchfields The K Club, Straffan Kildare, Ireland	77,977,415	(9)	34.12%
Common Stock	All current executive officers and directors as a group		97,351,604		43.96%
5% or greater shareholders
Common Stock	Forza Partners, L.P.	Via San Martino, No. 9 Feltre, Italy 32032	5,850,308	(2)	2.97%
Common Stock	NGB Nominees	5 Churchfields The K Club, Straffan Kildare, Ireland	31,207,104	(9)	14.14%
Common Stock	Randall & Christopher Johnson	8615 Eagle Creek Cir. Savage, MN 55378	25,344,369	(10)	12.85%

*Less than 1%.

(1) This table is based upon information supplied by officers and directors. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 167,926,376 shares outstanding on November 4, 2020, adjusted on a partially diluted basis for each shareholder as required by rules promulgated by the SEC.

(2) Mr. Atkinson is general partner and holds positions as director and general manager of Forza Partners, L.P. and Forza Partners II, L.P. Mr. Atkinson is the sole investment decision maker for Forza Partners, L.P. and Forza Partners II, L.P. The shares total includes 885,694 shares of common stock, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2021 held personally by Mr. Atkinson. Also includes 5,850,308 shares of common stock, held for the account of Forza Partners II. Mr. Atkinson is also a director to the Company. Because of Mr. Atkinson’s position as director and as general manager of Forza Partners, L.P. and Forza Partners II, L.P., the shares beneficially owned by Mr. Atkinson are listed twice in the table.

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(3)Includes 1,165,609 shares of common stock, 2 shares of Preferred E stock convertible into 66,667 shares of common stock, 50,000 shares of common stock acquirable upon exercise of vested options exercisable before August 12, 2023, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2021.

(4)Includes 2,029,928 shares of common stock, 2 shares of Preferred E stock convertible into 66,667 shares of common stock, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2021.

(5)Includes 625,145 shares of common stock, 50,000 shares of common stock acquirable upon exercise of vested options exercisable before July 7, 2023, and 300,000 shares of common stock acquirable upon exercise of vested options exercisable before December 19, 2024.

(6)Includes 3,264,470 shares of common stock, 2 shares of Preferred E stock convertible into 66,667 shares of common stock, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2021.

(7)Includes 1,170,182 shares of common.

(8)Includes 1,362,029 shares of common stock, 12 shares of Preferred E stock convertible into 400,000 shares of common stock, 50,000 shares of common stock upon exercise of vested options exercisable before August 12, 2023, 333,333 shares of common stock acquirable upon exercise of Class R warrants before November 2, 2021, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2021.

(9)Mr. Gallagher is general partner and holds positions as director and general manager of NGB Nominees, which is a greater than 5% shareholder. Mr. Gallagher is the sole investment decision maker for NGB Nominees. Includes 22,328,638 shares of common stock, 150,000 shares of Preferred A stock convertible into 900,000 shares of common stock, 200 shares of Preferred B stock convertible into 2,857,142 shares of common stock, 250 shares of Preferred C stock convertible into 8,333,333 shares of common stock, 50 shares of Preferred D stock convertible into 1,666,667 shares of common stock, 280 shares of Preferred E stock convertible into 9,333,333 shares of common stock, 153 shares of Preferred F stock convertible into 5,100,000 shares of common stock, 11,000,000 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2021, 4,633,337 shares of common stock acquirable upon exercise of Class S warrants before March 31, 2022, and 11,824,966 shares of common stock acquirable upon exercise of Class T warrants before October 4, 2024.

(10)Includes 24,915,970 shares of common stock and 428,399 shares of common stock acquirable upon exercise of Class T warrants before June 30, 2024.

We have no knowledge of any other arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of our company.

We are not, to the best of our knowledge, directly or indirectly owned or controlled by another corporation or foreign government.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

In October 2009, we employed one of our existing directors, Mr. Schara, to serve as our President and Chief Executive Officer. In connection with his employment the Company issued 750,000 options as described in Note 9 to our consolidated financial statements contained in Item 8 of this Annual Report. Subsequent to 2012, those options were canceled and reissued under the same terms, except the life of the new options is now 6 years and 8 months, effectively resulting in a total option life of 10 years, similar to the lives of options granted to other officers and directors. At December 31, 2019, $426,500 has been accrued for deferred compensation to Mr. Schara, of which $180,000 was accrued during the year ended December 31, 2019.

At December 31, 2019, $78,644 has been accrued for fees due to Mr. Sharp, the Company’s Chief Financial Officer, of which $42,703 was accrued during the year ended December 31, 2019.

At December 31, 2019, $1,302 has been accrued for expenses due to related parties for expenses, of which $nil was accrued during the year ended December 31, 2019.

A total of $93,700 has been accrued for directors and related party consultants, of which $25,200 was accrued during the year ended December 31, 2019.

At December 31, 2019, the Company had outstanding Notes payable of $3,246,316 to Nicholas Gallagher, a shareholder and director of the Company. At December 31, 2018, the Company had outstanding Notes payable of $2,378,947 to Mr. Gallagher. The Notes payable to Mr. Gallagher had matured on October 31, 2018. Effective November 1, 2019, the Company entered into an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) with Mr. Gallagher, in his capacity as agent for and on behalf of himself and other holders of the Notes payable. No compensation was paid or accrued for Mr. Gallagher, either in cash or warrants, for his services as agent for other holders. Under the Amended Agreement, the Company and Mr. Gallagher and the other holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like and the notes are now due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder. See Note 6 - Notes Payable & Notes Payable – Related Party in the financial statements for details concerning the note payable.

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In October 2020, Mr. Gallagher loaned an additional $10,000 to the Company as an increase of the secured senior note. Also in October 2020, an amount of $5,464.35, as partial payment of finders fees related to previous financings in 2018 and 2019, was paid to Mr. Gallagher.

Director Independence

Our Board of Directors has analyzed the independence of each director and nominee and has determined that the members of our Board of Directors listed below are independent as that term is defined under Rule 5605(a)(2) of the NASD listing rules. Each director is free of relationships that would interfere with the individual exercise of independent judgment. Based on these standards, the Board determined that each of the following non-employee directors, including nominated and continuing directors, is independent and has no relationship with us, except as a director and shareholder:

·Charles G. Bigelow

·William Orchow

·Michael G. Rasmussen

·Stephen M. Vincent

·Garrick A. Mendham

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The Board of Directors selected DeCoria, Maichel & Teague, P.S., 7307 N. Division, Suite 222, Spokane, WA 99208 as the independent registered public accounting firm to examine the consolidated financial statements of the Company and its subsidiary for the fiscal year ending December 31, 2019. DeCoria, Maichel & Teague, P.S. have audited the financial statements of the Company since the fiscal year ended December 31, 2003.

The following table summarizes the fees that DeCoria, Maichel and Teague, P.S. charged the Company for the listed services during 2019 and 2018:

Type of fee:	2019	2018		Description

Audit fees:	$47,733	$43,138	Services in connection with the audit of the annual financial statements and the review of the financial statements included in our reports on Forms 10-Q and 10-K.
Audit related fees:	-0-	-0-	For assurance and related services that were reasonably related to the performance of the audit or review of financial statements and not reported under “Audit Fees”.
Tax fees:	-0-	-0-
All other fees	688	-0-
Total	$48,421	$43,138

All of the services described above were approved by the Audit Committee.

The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent registered public accounting firm. The Audit Committee requires its pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. The Audit Committee considers whether such services are consistent with the rules of the SEC on auditor independence.

TABLE OF CONTENTS

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Documents Filed as Part of Report

Financial Statements

The following Consolidated Financial Statements of the Company are filed as part of this report:

Report of Independent Registered Public Accounting Firm.

Consolidated Balance Sheets – At December 31, 2019 and 2018.

Consolidated Statements of Operations – Years ended December 31, 2019 and 2018.

Consolidated Statements of of Changes in Stockholders’ (Deficit) – Years ended December 31, 2019 and 2018.

Consolidated Statements of Cash Flows– Years ended December 31, 2019 and 2018.

Notes to Consolidated Financial Statements.

See “Item 8. Financial Statements and Supplementary Data”.

Financial Statement Schedules

No other financial statement schedules are filed as part of this report because such schedules are not applicable or the required information is shown in the Consolidated Financial Statements or notes thereto. See “Item 8. Financial Statements and Supplementary Data”.

Exhibits

The following exhibits are filed as part of this Annual Report:

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation, incorporated by reference to Appendix C of the Company’s Definitive Proxy Statement on Schedule 14A (001-06412), as filed on October 23, 2013
3.2⁽¹⁾	Amended Bylaws incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014
4.1	Statement of Designation of Shares of Series A Preferred Stock, dated November 30, 2008, incorporated by reference to exhibit 4.1 to Form S-1/A (333-140899), as filed January 6, 2009
4.2	Statement of Designation of Shares of Series B Preferred Stock, incorporated by reference to exhibit 3.1 the Current Report on Form 8-K, as filed January 27, 2014
4.3	Form of Class L Warrant, incorporated by reference to exhibit 4.1 to the Current Report on Form 8-K, as filed January 27, 2014
4.4	Form of Class M Warrant, incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 16, 2018
4.5	Statement of Designation of Shares of Series C Preferred Stock, incorporated by reference to exhibit 4.10 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.6	Form of Class N Warrant, incorporated by reference to exhibit 4.11 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.7	Form of Class N-2 Warrant, incorporated by reference to exhibit 4.12 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.8	Form of Class O Warrant, incorporated by reference to exhibit 4.13 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016

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4.9	Form of Class P Warrant, incorporated by reference to Exhibit 4.12 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 16, 2018
4.10	Form of Class P-2 Warrant, incorporated by reference to exhibit 4.15 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.11	Form of Class Q Warrant, incorporated by reference to exhibit 4.16 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.12	Form of Class Q-2 Warrant, incorporated by reference to exhibit 4.17 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.13	Statement of Designation of Shares of Series D Preferred Stock, incorporated by reference to exhibit 4.18 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.14	Form of Class R Warrant, incorporated by reference to exhibit 4.19 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.15	Form of Class R-2 Warrant, incorporated by reference to exhibit 4.20 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
4.16	Form of Class S Warrant, incorporated by reference to exhibit 4.1 to the Current Report on Form 8-K, as filed January 11, 2017
4.17	Statement of Designation of Shares of Series E Preferred Stock, incorporated by reference to exhibit 3.1 to the Current Report on Form 8-K, as filed October 5, 2016
4.18	Statement of Designation of Shares of Series F Preferred Stock, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, as filed January 10, 2017
4.19	Form of Class T Warrant, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, as filed herewith^(a)
4.20	Description of the Registrant’s Securities
10.1	Goldrich Mining Company 2008 Equity Incentive Plan, incorporated by reference to Appendix B to Form DEF 14A (001-06412), as filed April 16, 2008
10.2	Independent Contractor Agreement, dated as of January 1, 2009, among Goldrich Mining Company, Ted Sharp, CPA and Sharp Executive Associates, Inc., incorporated by reference to exhibit 10.36 to Form 10-K (001-06412), as filed April 3, 2009
10.3	Oral agreement to extend Independent Contractor Agreement, dated February 10, 2010, among Goldrich Mining Company, Ted R. Sharp, CPA and Sharp Executive Associates, Inc., incorporated by reference to exhibit 10.38 to Form 10-K (001-06412), as filed April 6, 2010
10.4	Employment Agreement, dated as of December 20, 2010, between Goldrich Mining Company and William V. Schara, incorporated by reference to exhibit 10.46 to Form S-1 (333-171550), as filed January 4, 2011
10.5	Form of Alluvial Gold Forward Sales Contract Conversion Agreement, incorporated by reference to exhibit 10.1 to Form 8-K (001-06412), as filed February 8, 2011
10.6	Form of First Amendment to Alluvial Gold Forward Sales Contract, incorporated by reference to exhibit 10.2 to Form 8-K (001-06412), as filed February 8, 2011
10.7	Form of Fine Gold Forward Sales Contract Conversion Agreement - October 2010 Delivery, incorporated by reference to exhibit 10.3 to Form 8-K (001-06412), as filed February 8, 2011
10.8	Form of Fine Gold Forward Sales Contract Conversion Agreement - October 2011 Delivery, incorporated by reference to exhibit 10.4 to Form 8-K (001-06412), as filed February 8, 2011
10.9	Form of Binding Letter of Intent dated April 3, 2012, incorporated by reference to exhibit 99.1to the Form 8-K (001-06412), as filed April 10, 2012
10.10	Definitive Operating Agreement dated April 2, 2012, incorporated by reference to exhibit 10.1 for the Form 8-K (001-06412), as filed May 10, 2012
10.11	Mining Claims and Lease Assignment Agreement dated April 2, 2012, incorporated by reference to exhibit 10.2 for the Form 8-K (001-06412), as filed May 10, 2012
10.12	Form of Alluvial Gold Forward Sales Contract for Notes payable in gold dated March 13, 2013, incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 16, 2018
10.13	Form of Note Purchase Agreement by and between the Company and Gold Rich Asia Investment Limited dated effective January 24, 2014, incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014
10.14	Form of Note by and between the Company and Gold Rich Asia Investment Limited, incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014
10.15	Form of Finder’s Agreement dated effective January 24, 2014, incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014
10.16	Addendum to Note Purchase Agreement dated January 29, 2014, incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014

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10.17	Form of Guaranty dated January 24, 2014, incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014
10.18	Purchase Agreement between the Company, its subsidiary Goldrich Placer LLC, and Chandalar Gold LLC, incorporated by reference to exhibit 10.1 to the Current Report on Form 8-K, as filed July 02, 2015
10.19	Form of Second Amendment to Gold Forward Sales Contract, incorporated by reference to exhibit 10.19 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016
10.20	Form of Third Amendment to Gold Forward Sales Contract, incorporated by reference to exhibit 10.20 to the Company’s Annual Report on Form 10-K (001-06412), as filed June 9, 2017
10.21	Form of Fourth Amendment to Gold Forward Sales Contract, incorporated by reference to Exhibit 8.1 to the Current Report on Form 8-K, as filed December 11, 2017
10.22	Amended 2019 Loan Agreement, incorporated by reference to exhibit 10.1 to the Current Report on Form 8-K, as filed March 24, 2020
10.23	Senior Secured Promissory Note, incorporated by reference to exhibit 10.2 to the Current Report on Form 8-K, as filed March 24, 2020
10.24	Guarantee, incorporated by reference to exhibit 10.3 to the Current Report on Form 8-K, as filed March 24, 2020
10.25	Deed of Trust, incorporated by reference to exhibit 10.4 to the Current Report on Form 8-K, as filed March 24, 2020
21	Subsidiaries of the Corporation
31.1⁽¹⁾	Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act
31.2⁽¹⁾	Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act
32.1⁽¹⁾	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2⁽¹⁾	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95.1⁽¹⁾	Mine Safety Disclosure pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act
99.1⁽¹⁾	Interim Award, issued by Arbitration Panel, dated May 25, 2019
99.2⁽¹⁾	Partial Final Award, issued by Arbitration Panel, dated November 30, 2019
99.3⁽¹⁾	Second Interim Award RE Dissolution/Liquidation of GNP and Related Issues, issued by Arbitration Panel, dated November 30, 2019
99.4⁽¹⁾	Final Post Award Orders, issued by Arbitration Panel, dated September 4, 2020
99.5⁽¹⁾	Ruling of State of Alaska Superior Court, dated April 29, 2020

101.INS⁽¹⁾	XBRL Instance Document
101.SCH⁽¹⁾	XBRL Taxonomy Extension Schema Document
101.CAL⁽¹⁾	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF⁽¹⁾	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB⁽¹⁾	XBRL Taxonomy Extension Label Linkbase Document
101.PRE⁽¹⁾	XBRL Taxonomy Extension Presentation Linkbase Document

(1)Filed herewith.

+ - Management Contract or Compensatory Plan

ITEM 16. FORM 10-K SUMMARY

None.

Exhibit 21

Subsidiary of the Company	Percent Owned
Goldrich Placer, LLC	100%

Exhibit 31.1

CERTIFICATION

I, William Schara, certify that:

1.I have reviewed this annual report on Form 10-K of Goldrich Mining Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2020

By: /s/ William Schara

William Schara, Chief Executive Officer, President and Principal Executive Officer

A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 31.2

CERTIFICATION

I, Ted R. Sharp, certify that:

1.I have reviewed this annual report on Form 10-K of Goldrich Mining Company;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2020

By: /s/ Ted R. Sharp

Ted R. Sharp, Chief Financial Officer, Principal Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Goldrich Mining Company, (the "Company") on Form 10-K for the period ending December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William Schara, Chief Executive Officer, President and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Goldrich Mining Company.

/s/ William Schara DATE: November 4, 2020

William Schara, Chief Executive Officer and President

A signed original of this written statement required by Section 906 has been provided to Goldrich Mining Company and will be retained by Goldrich Mining Company to be furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Goldrich Mining Company.

/s/ Ted R. Sharp DATE: November 4, 2020

Ted R. Sharp, Chief Financial Officer

Exhibit 95.1

MINE SAFETY DISCLOSURE

Pursuant to Section 1503(a) of the recently enacted 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, issued under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) by the Mine Safety and Health Administration (the “MSHA”), as well as related assessments and legal actions, and mining-related fatalities.

The following table provides information for the year ended December 31, 2019.

Mine	Mine Act §104 Violations (1)	Mine Act §104(b) Orders (2)	Mine Act §104(d) Citations and Orders (3)	Mine Act §110(b)(2) Violations (4)	Mine Act §107(a) Orders (5)	Proposed Assessments from MSHA (In dollars $)	Mining Related Fatalities	Mine Act §104(e) Notice (yes/no) (6)	Pending Legal Action before Federal Mine Safety and Health Review Commission (yes/no)
Little Squaw Creek	0⁽⁷⁾	0	0	0	0	0	0	0	No

(1) The total number of violations received from MSHA under §104 of the Mine Act, which includes citations for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.

(2)The total number of orders issued by MSHA under §104(b) of the Mine Act, which represents a failure to abate a citation under §104(a) within the period of time prescribed by MSHA.

(3)The total number of citations and orders issued by MSHA under §104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards.

(4)The total number of flagrant violations issued by MSHA under §110(b)(2) of the Mine Act.

(5)The total number of orders issued by MSHA under §107(a) of the Mine Act for situations in which MSHA determined an imminent danger existed.

(6)A written notice from the MSHA regarding a pattern of violations, or a potential to have such pattern under §104(e) of the Mine Act.

(7)Two citations were issued, subsequently appealed and ultimately dismissed, resulting in no violations.

IN THE MATTER OF THE ARBITRATION
OF GOLDRICH NYACAU PLACER, LLC

GOLDRICH PLACER, LLC, GOLDRICH MINING COMPANY, and GOLDRICH NYACAU PLACER, LLC,

Claimants,

vs.

NYACAU, LLC, DR. J. MICHAEL JAMES, and BEAR LEASING, LLC,

Respondents.

INTERIM AWARD

GOLDRICH NYACAU PLACER, LLC, NYACAU, LLC, DR. J. MICHAEL JAMES, and BEAR LEASING, LLC,

Counterclaimants,

vs.

GOLDRICH PLACER, LLC, GOLDRICH MINING COMPANY, WILLIAM SCHARA, STEPHEN VINCENT, DAVID ATKINSON, CHARLES BIGELOW, KENNETH EICKERMAN, WILLIAM ORCHOW, MICHEL RASMUSSEN, THEODORE SHARP, JAMES DUFF, and RICHARD WALTERS,

Counterclaim
Respondents.

GOL032-0001 5800755

INTRODUCTION

In their respective pleadings, the parties put forth a number of claims or counterclaims supported by different alleged facts. Claimants’ claims included counts for (1) fraud in the inducement and negligent misrepresentation, based primarily on the contention that but for misrepresentations by Dr. James of his financial condition and mining experience, Goldrich would have sought more financial security before entering in the joint venture; and (2) breach of contract, and of the express covenant of good faith and fair dealing, against NyacAU and James, based on various alleged breaches of the Operating Agreement. Claimants also sought to have the Joint Venture dissolved and requested certain orders for the Panel to make in connection with the dissolution and liquidation process.

Respondents, on their part, counterclaimed against Claimants, alleging as follows: (1) action for breaches of contract in various particulars; (2) breach of fiduciary duty by Goldrich; (3) fraud, negligent and innocent misrepresentations by Claimants, which allegedly induced Respondents to enter into the Operating Agreement, as well as the Term Sheet and Placer Mining Claims Lease which proceeded it; (4) breach of said agreements by Claimants, as well as breach of a mining contract with Black Rock Drilling regarding some hard rock drilling performed by Goldrich at the site; (5) breach of fiduciary duty by Goldrich as a joint venture partner of NyacAU under the Operating Agreement; (6) unjust enrichment, by virtue of improvements made by Respondents NyacAU and Dr. Michael James (“James”) to the mining claims, beyond those specified by the Operating Agreement (7) Violation of the Alaska Fair Trade Practice Act by Goldrich and its Board of Directors, based upon allegations of deceptive acts and practices; and (8) alter ego against the Goldrich Board of Directors, alleging misuse by the Board of the Goldrich entity to commit the alleged misrepresentations and breaches of contract alleged in the counterclaim. Respondents also requested dissolution and certain orders in connection therewith.

However, in their final statements of damages and orders submitted at the Panel’s request at the end of the evidentiary hearing, the parties provided lists which did not encompass all of the claims that appeared in their respective pleadings. For example, Respondent James abandoned

08210-00001/10882066.1 1

claims against Goldrich related to amounts owed to Black Rock Drilling (68% owned by James) for rental of equipment used for hard rock drilling by Goldrich. Similarly, Claimants deleted in their damages list a request for any relief (other than a general prayer for punitive damages) based on fraud and/or negligent misrepresentation (Exhibits 426, 429). Accordingly, in analyzing the claims, the Panel has focused on the items of relief actually requested by the Parties as they relate to the claims/counterclaims, rather than the strict language of the claims/counterclaims themselves.

CLAIMS AND REQUESTS FOR RELIEF BY THE CLAIMANTS

I.Claimants’ Claim for interim distributions Based On The Allegation That All Equipment Leases Are Capital Rather Than Operating Leases

There is a sharp dispute between the parties as to whether Leases 1 through 7 are properly characterized as “capital” or “operating” leases. Claimants argue that all the Leases are capital leases, whereas Respondents contend they are “operating” leases. The parties do not dispute that this is a relevant issue which could impact the manner in which monies were handled under the Operating Agreement. Among other things, Claimants contend that if the Leases are capital leases, it would create a positive impact on Claimants’ right to interim distributions for 2016-17 under Article 10 of the Operating Agreement, which provides that only “Operating Expenses” for the year in question, along with payments due under LOC 2 and LOC 3, need be paid by GNP before the Members each receive a 10% distribution “in kind”, of the “remaining gold produced” (Section 10.1.2). This issue is addressed below.

A.Capital vs. Operating Leases

There were a total of seven equipment leases (“Leases 1-7”) entered into for the Little Squaw Mine operations. Each was a “form” lease, virtually identical in language to Lease 1, except for obvious differences in the equipment covered and the lease price. The parties to each lease were Bear Leasing (“Bear Leasing”) (a company owned and controlled by James) , as lessor, acting on behalf of NyacAU, and the joint venture, Goldrich NyacAU Placer, LLC (“GNP”) as lessee. James testified that the leases were run through Bear Leasing—a company owned and controlled by James--rather than negotiated directly with GNP by the owners of the

08210-00001/10882066.1 2

equipment--because GNP had neither the credit, the finances, nor the operations history to qualify as a direct lessee. Bear Leasing, on the other hand, did have the qualifications to lease (or purchase) the equipment from the owners, and to obtain necessary financing in connection therewith. Accordingly, James caused Bear Leasing to procure the equipment for Leases 1-7, and to in turn lease the equipment to GNP. Among other provisions, each Lease had a five year term from its inception, was cancellable at will (upon 30 days prior notice) and had a purchase option, triggered at the end of term, which allowed GNP to purchase the equipment, either at 10% of the cost of the equipment or a price agreed by the parties. (The cost of the leased equipment was stated in attachments to the Leases.

Section 2.28 of the Operating Agreement provides that “Operating Expenses” “shall not include capitalized equipment leases or purchases”. This question is of some importance, since (i) the categorization of Leases 1 -7 as either “capital” or “operating” leases is relevant to determining the parties’ rights to interim distributions under Article X of the Operating Agreement; and (ii) indirectly, in the circumstances, whether GNP should be deemed to have exercised the purchase option in any of the Leases which have run their terms, and thereby become the beneficial owner of the leased equipment.

There was no parol evidence submitted by the parties of discussions at time of contracting of the intended meaning of the term “capital lease”, and the term is not defined in the Operating Agreement. Accordingly, the Panel was left to interpret the language on its face, with help from the parties’ experts -- for the Claimants, Jeffrey Katz and Richard Daubenspeck, and for the Respondents, Scott Shaffer and Michael Tope.

1.The Minimum Lease Payment analyses for Leases 1 through 6.

The experts agreed that Leases 1, 3, 5 and 6 are capital leases. Both Dr. Katz and Mr. Shaffer pointed out that the issue is determined by the criteria under the Financial Accounting Standards Codification (“FASC”)), § 840-10-25-1. If any one of the following criteria under this standard is met, the Lease is to be regarded as a capital lease:

(i)Transfer of ownership. (The Lease transfers ownership of the property to the Lessee by the end of the Lease Term.)

08210-00001/10882066.1 3

(ii)Bargain purchase option. (The Lease contains a bargain purchase option, which allows the Lessee to purchase the equipment at the end of the Lease Term for substantially less than its fair market value.)

(iii)Lease Term. (The Lease Term is equal to 75% or more the estimated economic life of the Lease property.) and

(iv)Minimum Lease Payments. (The present value, at the beginning of the Lease Term, of the Minimum Lease Payments, excluding that portion of the payments representing executory costs such as insurance, maintenance and taxes to be paid by the Lessor, including any profit thereon, equals or exceeds 90% of the excess of the fair market value of the leased property to the Lessor at Lease inception over any related investment tax credit retained by the Lessor and expected to be realized by the Lessor).

As Mr. Shaffer testified, the formula for determining present value based on Minimum Lease Payments (subparagraph (iv), above), is not necessarily a constant. FASC Section 840-10-35-4 provides that, if at any time, the provisions of the lease are amended in a manner that would result in a different classification of the lease under the above criteria, the Amendment shall be considered a “new agreement” and the capital lease criteria shall then be applied “for purposes of classifying the new lease.” However, Mr. Shaffer explained that he did not have sufficient information to determine the impact of any amendment to the Leases, beyond the obvious increase in fair market value based upon new equipment added to the Leases by such amendments.

Dr. Katz did not comment on the right to recalculate minimum lease payments with a change in the lease; however, both experts agreed that Leases 1, 3, 5 and 6 are Capital Leases based on analyses performed, under subparagraph (iv), which showed that the present value of Minimum Lease Payments equaled or exceeded 90% of the excess of the fair value of the leased property to the Lessor at Lease inception. In this regard, Mr. Shaffer made an initial comparison of the fair market value as of the original date of the Lease (per Michael Tope’s report) with the present value of future Minimum Lease Payments using a 15% discount rate (Shaffer Report, paragraph 42). The analysis indicated that Leases 1, 3, 5 and 6 all met the “Minimum Lease Payments” criterion. Dr. Katz arrived at the same conclusion in his report regarding these Leases, but also concluded that Leases 2 and 4 met the Minimum Lease Payment criterion.

08210-00001/10882066.1 4

In response, Mr. Shaffer pointed out that Mr. Katz’s analysis of the Minimum Lease Payment criterion was incorrect because it erroneously compared the present value of Minimum Lease Payments with the equipment cost at the inception of the Lease instead of with the fair market value of the Leases at inception, and that if fair market value at inception had been used as the baseline (as calculated by Claimants’ expert Richard Daubenspeck) Leases 2 and 4 would not have met the Minimum Lease Payment criterion. (Shaffer Rebuttal Report, ¶¶ 30-31 and Tables 3 and 4).

The Panel believes that Mr. Schaffer’s rationale is correct. Contrary to Dr. Katz’s view in applying the Minimum Lease Payment criterion, the parties did not agree, at inception of the Leases, that the fair market value at the end of term would be the cost of the equipment; what they did agree was that the fair market value of each Lease upon expiration would be equal to 10% of the contract price. The only expert who performed a calculation of the fair market value of the Leases at inception was Claimants’ expert Mr. Daubenspeck, and Mr. Schaffer appropriately used his numbers in determining that Leases 2 and 4 did not meet the Minimum Lease Payment criterion. (Dr. Katz, at least implicitly, recognized the propriety of using Mr. Daubenspeck’s calculations, by doing so in his analysis, discussed below, of whether the purchase option prices for Leases 2 and 4 were “bargain” prices.)

2.The “bargain price” analysis for Leases 2, 4, and 7.

Dr. Katz also performed an analysis in which he concluded that all Leases qualified as capital leases under the “bargain purchase price criterion” of FASC § 840. By contrast, Mr. Shaffer stated that he did not have sufficient information to determine whether or not any Lease in fact did provide a bargain purchase price option to the Lessee at the end of term, since he did not have information on the transport costs of the equipment from Little Squaw to Fairbanks, whch, he opined, would have to be added to the purchase option price. However, even making allowance for reasonable transport costs (along the winter trail), Dr. Katz’s analysis indicates that the purchase option prices for Leases 2 and 4, although not for Lease 7, were still “bargain prices”.

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The issue with this calculation, as explained below, is whether the parties’ agreement on the fair market value of these Leases at end of term preempted this analysis.

Lease 2. In Lease 2, the parties agreed that at the end of term GNP could purchase the equipment for fair market value, which the parties set at 10% of the equipment cost of $900,000, unless the parties agreed on another option price. The parties did reach agreement, as shown by Exhibit A of the Lease, but the purchase option price specified was $90,000, which in fact equaled 10% of the equipment cost. By comparison, Claimants’ expert Mr. Daubenspeck estimated the fair market value of Lease 2 at inception at $535,000. Mr. Tope estimated the fair market value at end of term to be $1,120,000, but did not calculate fair market value at inception, as the accounting standards require. However, even using Mr. Daubenspeck’s lower number, an option to purchase the equipment for only $90,000 was clearly a bargain.

Lease 4. Lease 4 also states that 10% of the equipment cost shall represent the fair market value of the Lease at the end of term, and be the purchase option price, unless the parties otherwise agreed. The cost of the equipment for Lease 4, as amended, totaled $1,274,219, 10% of which is $127,421. However, Bear Leasing inserted in Exhibit A that the purchase option price (or fair market value of the equipment at the end of term) would be $477,430, 100% of the original equipment cost, and almost 30% of the amended equipment cost. By comparison, Mr. Daubenspeck estimated fair market value at Lease inception to be $1,117,750; Mr. Tope, again, did not calculate a fair market value, at inception, of the lease at end of term, but did calculate the fair market value at end of term of term to be $579,500, and, considering the equipment subsequently added to the lease under four (4) amendments, increased the number to $1,587,000. (As pointed out by Mr. Shaffer, discussed above, it is appropriate to consider the impact of these amendments on the determination of whether a lease is a capital or an operating lease, but neither Daubenspeck nor Tope calculated any change in fair market value at end of term at the time the amendments were signed.) However, using Mr. Daubenspeck’s number (which did not include the impact of the amendments), the option price of $477,430 would still have been a bargain.

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Lease 7. Dr. Katz also concluded that the purchase option price for Lease 7 was a “bargain price”. However, this conclusion was based on the unsupported assumptions that (i) the equipment cost reflected the fair market value of the equipment; at end of term; and (ii) the purchase option price was 10% of the equipment cost. Lease 7 sets forth the costs of the equipment at $197,404.00, and states that GNP will have the option to purchase the equipment for “fair market value”. Exhibit A references a “Purchase Price at Conclusion of Term”, and states “See attached”, but the attachment does not mention the purchase price. No evidence was provided of whether the purchase option price was to be 10% of the equipment cost, what the purchase price would be, or what the fair market value of Lease 7 would be at the end of term. Thus, the Panel can draw no conclusions as to whether the purchase option price for Lease 7 was a bargain price.

3.The impact of the parties’ agreements on the capital v. operating lease analyses.

Except for Lease 7, each of the Leases contains the standard language that, at end of term, “Lessor and Lessee hereby agree that the fair market value [of the Lease] shall be 10% of the amount Lessor paid for the item of Equipment at the time Lessor purchased Equipment, as established by receipts or other reasonable proof, unless a specific purchase price is agreed as demonstrated on the Exhibit A attached hereto.” This raises an issue which neither party presented at the hearing but which the Panel must consider, since all the Leases are exhibits which were part of the evidentiary record. If the parties’ agreement in this regard were to be honored, the fair market value of Leases 1 through 6 at end of term, calculated at the inception dates, would be set at only 10% of the equipment cost, which could impact the parties’ analyses as to whether Leases 2 and 4 are capital leases. Accordingly, within thirty (30) days of the date of this Interim Ruling the Panel invites the parties, at their options, to make submissions on the following issues: (i) whether and to what extent, under Alaska law, the parties’ agreement at inception of a lease of the fair market value of the leased equipment at the end of term would preempt or otherwise impact an analysis of whether the lease was a capital lease under authoritative accounting standards; and (ii) what impact enforcement of the parties’ agreements in this regard would have on the capital lease analyses performed by the experts. For any submission(s) made, the opposing

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party shall have fifteen (15) days to file a response. The Panel’s ruling on the issue will be incorporated into the Final Award, as well as used in conjunction with Section I.C.

4.Impact of the “cancellation at will” provisions

Molly Attala testified that she and the Respondents believed the Leases were Operating Leases because each of them contained a provision allowing the Lease to be cancelled at will, subject to a few conditions not here relevant; she also testified that the cancellation provisions were placed into the Leases intentionally by Respondents to ensure that the Leases were operating rather than capital leases.

However, both parties’ experts acknowledged that the four criteria for defining a lease as a capital lease do not include a right of cancellation. Additionally, Dr. Katz explained that although FASC § 840 does recognize generally that cancellable leases are operating leases, the lease would be deemed to be non-cancellable if the cancellation clause would cause the lessee to incur a penalty in such amount that continuation of the lease to end of term would appear, at inception, to be reasonably assured. A penalty under ASC § 840 is broadly defined as “any requirement that is imposed or can be imposed on the Lessee by the Lease Agreement or by factors outside the Lease Agreement” which would cause the lessee to incur unreasonable economic or related burdens.

Shaffer, in his report, also pointed out that cancellability is not a controlling factor in determining whether a lease is a capital or operating lease. Specifically, he confirmed that out of the four criteria set forth in ACS 840, only one must be satisfied in order for the Lease to be deemed a Capital Lease; and, as set for the above, these factors do not include cancellability. Mr. Schaffer also does not challenge Dr. Katz’s analysis that a lease will not be deemed cancellable at will, despite a provision to that effect, where exercise of the clause seems very unlikely at the lease’s inception.

In the Panel’s view, the evidence set forth below shows that, at the inception dates of all Leases except Lease 7, it was unlikely that the Lessee would exercise the cancellation clause.

1.Leases Numbers 1-4

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Leases 1-4 contain virtually identical terms. Each Lease has a 5 year term from inception (The inception dates of Leases 1-4 were: Lease 1 – August 1, 2012; Lease 2 – January 1 2013; Lease 3 – March 1, 2013; and Lease 4 – January 1, 2014). All these Leases contain identical clauses allowing cancellation at will by the Lessees on thirty (30) days prior notice. At the inception of Lease 1, NyacAU’s estimate was that it would take at least 4.67 years after mining operations commenced to achieve commercial production. This estimate had not changed on the inception dates of either of Leases 2 and 3, since actual mining operations did not commence until after those dates. The evidence was clear that under the US Corp of Engineers’ (“USACOE”) directive, and even though GNP was issued a general permit covering ten acres in August 2012, NyacAU could not begin mining operations at the desired level until it had been issued an individual permit, which did not occur until August 2013.

As of January 1, 2014, the Lease 4 inception date, it was the middle of the winter season, when no mining could occur. During a brief period in 2013, after receiving its individual permit, NyacAU had conducted limited mining operations on its 10-acre parcel using “Big Blue”, a wash plant which had been supplied by Goldrich in connection with the deal. However, NyacAU quickly discovered that Big Blue would have to be replaced by a new and larger wash plant in order to resolve problems with Big Blue’s screen and also the inability of its “grizzly” to handle large boulders during the washing process. Big Blue also had a limited capacity for processing “pay zone” material, which obviously reduced gold production.

The evidence established that NyacAU addressed these problems by deciding to design and build a new wash plant, which could process a much higher amount of pay zone material than Big Blue (500-600 yards of pay zone per hour, which ultimately was accomplished). By January 1, 2014, NyacAU was in the process of doing this, to the extent its financial resources would permit. Thus, mining production of the type contemplated to reach the “Minimum Production Requirement” under the Operating Agreement had not yet commenced; and NyacAU’s estimate of 4.67 years to meet this milestone had still not started to run.

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Given these factors, there was only a remote chance, as of the latest inception date, January 1, 2014, for any of Leases 1-4 to be cancelled before their ends of term. This effectively made cancellability a non-factor in determining whether these Leases were capital leases.

2.Lease Numbers 5-6.

Leases 5-6 also contain essentially identical five (5) year terms, and cancellation clauses which allowed the Lessee to cancel the Leases at will with 30 days written notice. Lease 5 was executed on March 1, 2015; Lease 6 on August 15, 2015. During part of this period, NyacAU was in the process of completing the new wash plant and working out initial problems that arose with production runs. Mining operations using the new wash plant did not commence until the middle of 2015. Thus, at this time, NyacAU’s estimate of 4.67 years to reach the Minimum Production Requirement had not changed and NyacAU was still anticipating that problems with the wash plant would be resolved and the plant would be able to process the necessary 500-600 yards of pay zone material per hour for the indefinite future. As such, the likelihood of GNP, the lessee, deciding on an early cancellation of Leases 5 and 6 as of their respective inception dates was still marginal, thereby effectively eliminating cancellability as a factor in determining whether these Leases were capital leases.

3.Lease Number 7.

The cancellability of Lease 7 was not analyzed by either Mr. Shaffer or Dr. Katz. Lease 7 was executed by the parties on May 1, 2017. As with the other Leases it had a 5-year term and a clause allowing the lessee to cancel at will with 30 days advance notice. At this time, the wash plant was up and running and enabled GNP to turn a profit for the first time, but the evidence showed that NyacAU nonetheless had doubts about the ability of NyacAU to achieve the Minimum Production Requirement required by the Operating Agreement. Thus, the evidence presented was insufficient to determine whether the cancellability of the Lease could be considered as a factor for determining if Lease 7 was a capital lease.

4.Other factors relevant to cancellability of the Leases

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The evidence also revealed other factors indicating the unlikelihood of cancellation at the inception dates of Leases 1-6, including the following, some of which were noted by Dr. Katz in his report: (i) it is improbable that Dr. James, acting through NyacAU on behalf of the Lessee, GNP, would cancel a Lease with his own company, Bear Leasing, thereby depriving Bear Leasing the full economic advantage of lease payments to the end of term; (ii) cancellation could give rise to costs of either storing the equipment or having it removed from the site and sold or leased to another party, the cost of which would be significant; (iii) GNP would have to replace the equipment with new equipment leased from Bear or another vendor, which would be likely to incur additional costs; and (iv) assuming the equipment were integral to mining operations, its replacement could potentially cause significant down time.

B.Impact of retroactive lowering of the Lease interest rates and reformulating the purchase option prices

The evidence also showed that, in 2016, the interest rates on Leases 1, 2 and 3 were lowered by NyacAU from 15% to 9.6%, both retroactively and going forward. Also, Leases 4, 5 and 6 were amended by eliminating the 10% purchase option and requiring exercise of the purchase option at the fair market value of the Lease at end of term. As Ms. Attala explained in her testimony, the purpose of these Amendments, which she orchestrated, was to respond to Goldrich’s stated position that all the Leases were capital leases, by creating Amendments which, in her view, ensured that the Leases indisputably could be characterized as operating leases. As a result of the amendments to Leases 1-3, Ms. Attala credited $1.5 million in excess interest payments by GNP (the overall difference between 15% and 9.6% interest charges) against LOC 1. Mr. Schara, testified that Goldrich never agreed to these amendments, or to the $1.5 million credit, and considered them invalid.

It was not disputed that Leases 1-6 were subject to § 4.3 and § 2.2 of the Operating Agreement, which provide that any transaction between GNP and the Manager (NyacAU) or an “Affiliate” of the Manager is subject to prior written approval by Goldrich. The Lessor under each of the Leases was Bear Leasing, a company owned by Michael James, who also owns NyacAU. Section 4.3 further provides that such transactions, in any event “shall not be void or voidable so

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long as the terms are reasonable and comparable to an arms-length transaction between unrelated persons.” In this case, it is quite clear to the Panel that the amendments promulgated by Ms. Attala were intended to benefit NyacAU and Bear Leasing in at least two ways: (i) insuring that all Lease payments could be characterized as Operating Expenses, thereby minimizing the opportunity of Goldrich to obtain interim distributions in accordance with § 10 of the Operating Agreement, since, as Operating Expenses, Lease payments for any year would have to be deducted before the parties could obtain any interim distributions for that year; and (ii) changing the purchase option formula from payment of 10% of the fair market value of the Leases at inception to payment of the entire amount of fair market value at end of term, which virtually insured that GNP would not have the financial wherewithal to exercise the purchase option on any Lease, thereby allowing NyacAU (through Bear Leasing) to renew the Leases for another term, possibly extending up to the end of mine life (estimated at between 11 and 13 years in the Martin Report).. It might well be argued that Ms. Attala’s amendments brought the Leases closer to the standard of “reasonable. . . arms-length transactions”, and provided GNP with a $1.5 million benefit at the same time. However, in the Panel’s view this is overcome by the material change in the purchase option formula, which effectively deprived GNP of its purchase option rights under Section 6.4 of the Operating Agreement. (Section 6.4 requires that any lease generated by NyacAU include a purchase option).Thus, the Panel holds that it was reasonable for Goldrich to withhold its approval from these unilaterally implemented amendments, and they therefore are deemed invalid.

Finally, it deserves notation that the reference to capital leases in the Operating Agreement is somewhat cryptic: “Operating Expenses shall not include capitalized equipment leases or purchases.” “[C]apitalized equipment leases or purchases” is not a defined term under the Operating Agreement, and the parties presented no meaningful parol evidence as to the precise meaning of the term which they mutually intended at the time of contracting. The Operating Agreement also requires, in Section 15.8, a unanimous vote of the Members to amend the Agreement. Thus, the parties could easily have clarified the definition of a “capitalized equipment

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lease or purchase” to avoid the uncertainty that led to the issue of how Leases 1-6 should be characterized.

C.Impact of Leases as Capital Leases on Claimants’ Right To Interim Distributions

The parties’ experts were at odds as to whether, assuming that the Leases were all capital leases, payments thereunder should have been recorded as “Operating Expenses” or as a debt liability on GNP’s books of account, along with a calculation of the yearly depreciation. Mr. Shaffer argued that, even if all the Leases were capital leases, the costs of the Lease, which Shaffer defines as including interest payments and amortization, should nonetheless be considered “Operating Expenses”. His stated rationale was that the payments under the Leases consist of and are identical to sum total of interest payments and amortization of the assets over the Lease terms. By contrast, Dr. Katz concluded that both lease payments and amortization should have been reflected as an expense on GNP income statements (Joint Exhibit 13, p. 27).

If Mr. Schaffer’s view were to be accepted, however, the exclusion of capital leases as “Operating Expenses” under Section 2.28 would have virtually no meaning. All payments made by GNP under any capital lease—i.e, Leases 1-6--would be treated as Operating Expenses, simply because those payments would equal the sum total of interest and amortization of assets at the end of the day. Fundamental rules of contract construction require the Panel to give meaning to every clause in a contract, and the clear meaning of the last sentence of Section 2.28 is that, for whatever reason, the parties agreed that “capitalized equipment leases”, which implicitly and necessarily includes the costs of such leases, would not be treated as “Operating Expenses”. Legally, this interpretation must prevail over any contrary interpretation based on the analysis of any expert, however erudite.

The analysis performed by Dr. Katz, not challenged by Mr. Shaffer or any other witness, confirmed that GNP made profits in 2016 and 2017. Article 10 of the Operating Agreement becomes relevant in such circumstances. Under Article 10.1, GNP is obligated to distribute revenue (in cash or as gold) generated from production by (i) under Section 10.1.1, first paying all Operating Expenses and liabilities incurred under LOC1 by GNP for the particular calendar year;

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(ii) under Section 10.1.2, distributing in kind 20% of the remaining revenue to NyacAU and Goldrich to be shared equally; and 3) deducting any liability of Goldrich under LOC 2 or LOC3 from its 10% share before a distribution is made (Article 10 also provides for subsequent distributions after this occurs, but those provisions are not relevant for the 2016-17 time period).

Profits in 2016 and 2017 resulted in interim distributions to the parties, equivalent to $67,580 for 2016 and $228,910 for 2017. NyacAU apparently received its distribution in cash or gold; but the payments due Goldrich for 2016 and 2017 were first used to pay off a substantial portion of a $250,000 obligation owing under LOC3, resulting in Goldrich obtaining no distribution in 2016 and a reduced distribution in 2017. In both years, the annual costs of the Leases were deducted, as Operating Expenses, prior to the distributions, on the assumption that they were all operating, as opposed to capital, leases.

However, the characterization of any leases as capital leases may require some recalculations under Article 10. All payments made, along with depreciation in the value of the equipment, under Leases determined to be capital leases that were in force during years of mining operations—2013, 2015, 2016 and 2017 - should be eliminated from the Operating Expenses calculation for those years, and recorded as liabilities on GNP’s books. If this results in the mining operations making a profit in 2013 and/or 2015, a determination should be made in accordance with Article 10 as to whether mining operations were profitable, and if so, whether Goldrich was entitled to any interim distributions for those years. As to the profitable years of 2016-17, the amount of distributions due Goldrich may need to be recalculated by excluding Lease costs and depreciation of the equipment for those years as Operating Expenses, and increasing both parties’ share of distributions in accordance with Article 10. If the Panel determines any Lease(s) to be capital leases following the parties’ briefing under Section I.A(3), then the parties will be asked to submit either a joint or separate calculations to the Panel of adjustments to distributions, considering such Leases, under Section 10.4 of the Operating Agreement, within fifteen (15) days, and the Panel’s determination in that regard shall be included in the Final Award. Any additional amounts to which Goldrich might be entitled as a result of such

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determinations by the Panel shall bear interest at the legal rate from the date by which such distributions should have been made. If any party contends that any additional recalculations of the parties’ accounting duties towards one another need to be made due to this aspect of the Panel’s decision, submissions on any such point may be made along with the calculations directed above.

Section 10.4 provides that notwithstanding any other section of Article 10, “distributions in liquidation of the [GNP] shall be made to each Member in the manner as set forth in Article 14” (which sets out the dissolution/liquidation process). However, it is the Panel’s view that Section 10.4 would apply only where a party had given notice of dissolution of GNP under one or more of the factors set forth in Article 14, or the parties had otherwise agreed to dissolution. No evidence was submitted showing that any party demanded, or that the parties agreed to dissolution before 2018, which makes Article 10.4 irrelevant to interim distributions before that.

It is critical that the above ruling not give either party a windfall. GNP’s liability to NyacAU, through Bear Leasing, for lease payments and depreciation of the equipment, will be a liability of GNP to NyacAU (as a creditor) through Bear Leasing, which must be paid to the fullest possible extent before any final distributions are made. And under Article 14.3, NyacAU, as the “liquidator”, has “full power and authority to sell assign or encumber any or all of [GNP’s] assets and to wind up and liquidate the affairs of [GNP] in an orderly and businesslike manner”, which in turn requires that the proceeds from GNP’s assets be first applied to payments of GNP’s liabilities and debts to creditors, including NyacAU. (Section 14.3.1).

II.Claimants’ Claim Regarding Ownership By GNP Of Leased Equipment and lease overpayments to Bear Leasing

The initial versions of Leases 1-7 between Bear Leasing and GNP all provided purchase options to GNP (the Lessee) at the end of the Lease terms, as follows:

1.Lease 1 (June 1, 2012 – June 1, 2017) purchase option was for 10% of cost of equipment, agreed to be $155,844 (cost of equipment $1,558,444).

2.Lease 2 (January 1, 2013 – January 1, 2018) purchase option was for 10% of cost of equipment, agreed to be $90,000 (cost of the equipment--$900,000).

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3.Lease 3 (March 1, 2013 – March 1, 2018) purchase option was for 10% of cost of equipment, agreed to be $277,384 (cost of the equipment--$2,773,384)

4.Lease 4 (January 1, 2014 – January 1, 2019) purchase option was stated to be for 10% of cost of equipment ($1,274,437), unless parties otherwise agreed. Purchase option price was set at $447,437. But neither number accounted for additional equipment added to the Lease through four later amendments, which, in the view of Respondents’ expert Michael Tope, raised the estimated fair market value at termination to $1,587,000, roughly 3 times the purchase option price (Shaffer Report, ¶¶ 30-31, Attachment C));

5.Lease 5 (March 1, 2015 – March 1, 2020) purchase option was for 10% of equipment costs ($690,098), unless parties otherwise agreed. Purchase option price set forth the in the Lease was $172,456, which exceeded 10% of the cost of the equipment. But neither number accounted for cost or value of additional equipment added to Lease by later amendments;

6.Lease 6 (August 15, 2015 – August 15, 2020) purchase option was for 10% of equipment cost unless parties otherwise agreed. But purchase option price set forth in the Lease was identical to cost of equipment under the Lease--$2,665,571, and does not appear to have taken into account the cost or value of later added equipment); and

7.Lease 7 (May 1, 2017 – May 1, 2022) purchase option price was fair market value of the equipment at end of term. Specific purchase option price was referenced to an attachment, but attachment contained no specific number.

On October 20, 2017, an attempt was made by NyacAU to cancel Leases 4-7 which by their terms had not yet expired, and to replace the Leases with a single, new rental agreement, effective November 1, 2017, that contained no purchase option. On March 23, 2018, NyacAU provided notice that the Leases 1-3, by their terms, had expired and informed Claimants that each of those Leases had been replaced by a new rental agreement. All these new rental agreements set a purchase option date at September 30, 2018. Claimants objected to and refused to approve any of the new rental agreements.

A.GNP’S Overpayments to Bear Leasing and beneficial ownership of certain equipment

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Under Section 6.4 of the Operating Agreement, NyacAU as Manager was given the right to “lease, with option to purchase, to [GNP] such personal property and equipment as may be reasonably necessary or desirable for efficient operation at the Claims.” Thus, it was clearly contemplated that any lease executed by NyacAU was required to include an option to purchase. As originally formulated, Leases 1-6 met this requirement. For Leases 1-3, at the end of the five (5 year GNP as the Lessee had the option to purchase the equipment for 10% of equipment costs, which the parties agreed would be the fair market value of the equipment at that point. The purchase option prices for Leases 4-6 exceeded 10% of equipment costs. However, the evidence showed that for Leases 1-3, NyacAU did not enable GNP to exercise its purchase option, but instead required GNP to enter into new “rental” agreements which essentially extended the Lease terms and either deferred or eliminated the purchase options.

1.Lease Numbers 1-3.

Leases 1-3 ran for their full terms without the exercise of a purchase option by GNP. In March of 2018, NyacAU’s counsel sent a letter to Goldrich with draft agreements which extended Leases 1-3 for one year, effective as of their respective expiration dates. GNP’s purchase options under the Leases were preserved but moved to new dates – exercise of the option for each Lease by September 15, 2018 and full payment of the option prices by September 30, 2018. The Amended Rental Agreements required the approval of Goldrich, under Section 4.3 of the Operating Agreement, and a space was provided for in each Agreement for Mr. Schara’s sign off, which he refused to do. Nonetheless, the Amended Rental Agreements were signed by the parties (Bear Leasing as Lessor and GNP as Lessee), and apparently put into effect. The purchase options under the Amended Rental Agreements for Leases 1-3 were never exercised, in part because the parties at that time were in the midst of this arbitration dispute and had mutually decided to dissolve GNP.

Dr. Katz performed an unchallenged analysis of the economic impact of the Amended Rental Agreements for Leases 1-3, which showed the following:

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Lease No. 1. As stated above, the purchase option under Lease No. 1 allowed GNP to purchase the equipment at the end of term for $155,844.43, which was the equivalent of 10% of the cost of the equipment at the inception of the Lease. However, the records also show that GNP was charged $20,957 per month as a lease payment under the Amended Rental Agreement, which totaled $167,663 up to January of 2018. In addition, Mr. Katz confirmed that if Lease payments had been made as required from February 2018 to September 2018, GNP would have been charged with additional Lease payments of $167,656, for a total of $335114. Thus, the continued lease payments by GNP exceeded the purchase option price, by $12,350 to January 2018, and assuming rental payments continued through December 2018, by approximately $180,000

Lease No. 2. The purchase option price agreed by the parties under Lease No. 2 was $90,000, which equaled 10% of the cost of the equipment at lease inception. However, the option was not exercised and GNP was charged with a Lease payment of $15,263 in January 2018. To the extent these payments continued from February and September, 2018 GNP would have paid another $115,200. The recorded extra charge for January 2018 is substantially less than the purchase option price, but well in excess of the purchase option price if GNP in fact made additional payments between February and September 2018.

Lease No. 3. Under Lease 3, the parties agreed to a purchase option price at termination of $277,384, which was 10% of the estimated value of the Lease at inception expressly set forth in the Lease. No evidence was submitted of any continuation of Lease payments under the Amended Rental Agreement, or of any amounts charged to GNP and recorded on its books after January 1, 2018 (the expiration date of Lease 3); however, Dr. Katz pointed out that if Lease payments had continued for the period between January 1 and September 30, 2018, they would have totaled $399,434, substantially more than the purchase option price.

The payments made under the Amended Rental Agreements for Leases 1-3 were of obvious benefit to NyacAU and Dr. James (through Bear Leasing), enabling them to continue to obtain Lease payments beyond the initial 5 years terms of the Leases, while still maintaining ownership of the leased assets. The Operating Agreement gave broad and exclusive powers to

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NyacAU to manage and control the business activities of GNP, but it is purposely circumscribed concerning transactions with related entities by requiring approval of Goldrich, acting in good faith, before those transactions are implemented. The only way around this would be for NyacAU to be able to show that the deal is “reasonable and comparable to an arms-length transaction between unrelated persons; and it is illogical to assume that a “reasonable person”, as a lessee under the Leases, would have agreed to give up the purchase option, at a “bargain price”, in favor of continuing to make lease payments well in excess of the purchase option price. ”Moreover, Section 6.4 of the Operating Agreement obligated NyacAU to include an enforceable option to purchase in any lease which it executed for the project.

The Operating Agreement also provided that NyacAU’s first duty was to GNP, not to one of NyacAU’s related companies. Section 7.6 expressly requires NyacAU, as Manager, “to discharge its duties and exercise any rights under [the Agreement] consistent with the contractual obligation of good faith and fair dealing.” This language is consistent with the universally recognized principle that the manager of the joint venture has a fiduciary duty to the venture to faithfully perform all of its responsibilities under the joint venture agreement. Relevant to this standard of conduct, it is the Panel’s view that NyacAU has not met these standards with respect to the Amended Rental Agreements for Lease 1, and possibly Leases 2 and 3. (depending on the amount of lease payments made from February to the present time). NyacAU could have facilitated GNP’s exercise of the purchase options under Leases 1-3 by funding the purchase option price through installment payments that equaled the monthly rental amounts charged under the Amended Rental Agreements until the option price was paid (increasing LOC 1 as appropriate), and then transferring title to the leased equipment to GNP. Since the purchase options in Leases 1-3 were triggered between June 2017 and March 2018, this potential course of action was made more feasible by the fact that GNP made profits in 2016 and increased profitability in 2017.

Both Dr. Katz and Mr. Shaffer have calculated that lease payments by GNP for Leases 1-3 under the Amended Rental Agreements either have or may have resulted in overpayments to Bear,

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when properly accounting for the purchase option prices. The Panel agrees with this methodology, but has reached a somewhat different conclusion in running the numbers. For Lease 1, after deducting the purchase option price of $155,844, GNP’ records show addition lease payments of $11,819 as of January 1, 2017. Per the Amended Rental Agreement, this amount would increase by $199,480.80 (totaling $208,369.59) if GNP had continued to make lease payments from February to September 2018. For Lease 2, GNP’s books show additional lease payments of $15,263.62, far less than the purchase option price of $90,000; but if lease payments were made by GNP from February to September 2018, per the terms of the Amended Rental Agreement, the overall lease payments by GNP would have increased by $115,200. The result, after deducting the purchase option price ($90,000) would be an overpayment to Bear Leasing of $40,463. For Lease 3, GNP’s books show no lease payments under the Amended Rental Agreement up to January 2018. But if lease payments were charged to GNP from January to September 2018, the total amount of those payments would have been $399,443.50. Deducting the purchase option price of $277,284, the overpayment to Bear Leasing would be $122,150. Thus, total overpayments to Bear Leasing for Leases 1-3 ranges from a low of $11,819 to a potential high of $370,983, excluding prejudgment interest, through September 2018. These amounts would obviously increase to the extent additional lease payments were made after September 2018.

The significant variable in the above calculations, of course, is what lease payments, if any, were made by or charged to GNP under the Amended Rental Agreement for Leases 1-3 from January to the present. This information is necessary to accurately determine the amount of overpayments made to Bear. Therefore, within 15 days from the date of this Interim Award, Respondents shall supply a copy of GNP records which show lease payments on Leases 1-3 from January through the present, and Claimants shall provide any response to the submission within fifteen (15) days thereafter. The Panel will determine the total amounts of overpayments to Bear Leasing from this information, which shall be incorporated in the Final Award, and said amount shall be deducted from LOC 1 in the context of the dissolution process.

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The above information is also needed to determine GNP’s beneficial ownership of equipment under Lease 1-3. For any Lease where GNP has made a higher dollar amount of lease payments under the Amended Rental Agreement than the purchase option price of the Lease, GNP shall be deemed the beneficial owner of the Leased equipment in connection with the dissolution process.

2.Lease Numbers 4-7.

Lease 4. Lease 4 was not approved by Goldrich, but except for the lease and purchase option amounts, was virtually identical to Leases 1-3, which Goldrich had approved. Possibly aside from stating a purchase option amount equal to 100% of the cost of the leased equipment at lease inception, no evidence was presented that the terms of the Lease were not otherewise fair and reasonable and negotiated at arms-length, which under Section 4.3 would make Goldrich approval unnecessary. Further, the evidence was quite clear that Goldrich fully accepted the benefits of the use of the equipment in mining operations, and no evidence was offered that any of the equipment was unnecessary for that purpose. The 15% interest rate charged under Lease 4 was the same as under Leases 1-3, which Goldrich had approved. Thus, in the Panel’s view, Goldrich’s non-approval of Lease 4 was not sufficient to invalidate it.

Lease 4 expired by its terms on January 1, 2019, triggering a purchase option price of $447,000 as set forth in the Lease. It is also noteworthy that this amount does not appear to take into account additional equipment which was added to the Lease subsequently, and which, in the view of Respondents’ expert Michael Tope, raised the estimated fair market value of the lease at termination to $1,587,000. There was no evidence presented that the agreed purchase option price was unreasonable after taking into consideration equipment added to the lease (to the contrary, Claimants asserted that it was a “bargain price”), or that lease payments were made by GNP after the Lease term which exceeded the purchase option price.

Lease 5. Lease 5 was executed on 3/1/15 with a 5-year period running to 4/1/20. It provided a purchase option for GNP at 10% of the cost of the equipment--$690,098-- at the Lease’s inception. However, the Lease also contained a specific agreement of an option payment

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of $172,456, which of course exceeds 10% of the cost of the equipment, but does not appear to account for equipment later added under the Lease as to which no calculations of additional fair market value were made. Again, no evidence was presented that the agreed purchase option price was unreasonable. Since the Lease term has not yet run its course, no evidence could have been presented of lease payments made by GNP in excess of the option price after the end of the Lease term,

Lease 6. Lease 6 was executed on 8/15/15, with an expiration date of 8/15/20. The Lease contained a purchase option for 10% of the cost of the equipment at inception ($2,665,571, unless the parties otherwise agreed, but then—curiously-- set forth that exact cost of the equipments as the purchase option price. This number also did not appear to take into account the cost or fair market value of later added equipment.

As with Lease 5, no evidence was presented that the agreed purchase price was unreasonable after taking into consideration equipment subsequently added to the Lease, and, since the Lease term has not yet run its course, no evidence could have been presented of lease payments made by GNP in excess of the purchase option price after the end of the Lease term.

Lease 7. Lease 7 was executed on 5/1/17, with a termination date of 5/1/22. The Lease contained a purchase option allowing GNP to purchase the equipment at fair market value. The Lease also referenced a specific option price set forth on the attachment, but the attachment submitted at the arbitration as an exhibit contains no specific number. The uncertainty of the purchase option price, combined with the fact that Lease 7 has not run for its full term, of course make it impossible to determine whether GNP made lease payments after end of term that exceeded the purchase option price.

On October 20, 2017, NyacAU sent a letter to Claimants cancelling Leases 4-7 and purporting to replace them with a 1-year, month-to-month Rental Agreement (“1-year Rental Agreement”) covering all such Leases, and eliminating the purchase options. As of the date of the letter, none of Leases 4-7 had run their full term, and therefore no purchase option had been triggered. Goldrich did not approve the 1-year Rental Agreement.

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Bear Leasing could not have been overpaid for Lease 4, and GNP could not have acquired beneficial ownership thereunder, unless GNP had been charged rent under the 1 year Rental Agreement after January 1, 2019 (the expiration date for Lease 4) which exceeded the purchase option price. The arithmetic demonstrates that this is questionable. The purchase option price inserted by Bear Leasing for Lease 4 is $447,000 and, at best, it appears that GNP would only have paid several months of rental payments after the expiration/purchase option date. Accordingly, within fifteen (15) days of the date of this Interim Award, the Respondent shall submit the exact amounts of rent paid for the Lease 4 equipment after the expiration of term on January 1, 2019; and Claimants may respond to the submission within fifteen (15) days thereafter. The Panel will then decide issues of beneficial ownership of the equipment by GNP and whether any such payments should be deducted from LOC 1.

As to Leases 5-6, exercise of the purchase option by GNP is a moot point. By their terms, none of the purchase options under these Leases will be triggered until GNP is in liquidation; thus, Article 14 will control the handling of all liabilities and distribution of all assets of GNP. Even if dissolution and liquidation had not been agreed by the parties, GNP would still be responsible to satisfy Lease payments under these Leases 5-6 until their expiration dates, and, to the extent that rental payments continued under the 1-year Rental Agreement, no evidence was presented that these rental payments were unfair or materially exceeded the monthly Lease payments. There was insufficient evidence to make any determination of whether rental payments under Lease 7 exceeded Lease payments, and the purchase option is not triggered until 2022 in any event. Thus, Claimants are not entitled to relief regarding Leases 5-7.

B.Interest charges on Leases 1-7

Claimants have also claimed that the 15% rate on Leases 1-3 was exorbitant, thus creating another argument that Bear Leasing was overpaid. However, the 15% rate on Leases 1-3 was approved in writing by Goldrich, without objection. Leases 4-7 carried on the 15% interest rate, and although Goldrich did not approve those leases, no evidence was presented showing that the 15% rate had suddenly become unreasonable. More objectively, the 15% rate compares favorably

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with other interest rates charged to NyacAU for project loans, including: (i) 15% interest rate on the GVC loan procured by NyacAU, with Goldrich’s help, to fund mining operations; (ii) 7.75% interest rate on the Alaska Growth Fund loan, based on a 30% down payment and personal guarantees by Dr. and Mrs. James (no down payment and no guarantees were made in connection with the Leases); (iii) 12% interest rate on an AEG loan procured by NyacAU (also with a 30% down payment and personal guarantees by Dr. and Mrs. James); and (iv) 10% interest rates on promissory notes for $50,000 executed by Bear Leasing to purchase the camp equipment from Global Services. Ms. Attala testified that rates on the Alaska Growth Fund and AEG loans would have been much higher, if those loans had been extended at all, without a substantial down payment and/or personal guarantees from the James. Accordingly, the Panel holds that the 15% interest rate on the Leases was reasonable, and did not result in any overpayments to Bear Leasing.

C. Lease charges for Arctic Camp purchased from Global Services

Bear Leasing purchased the Arctic camp in use at Little Squaw from Global Services during 2014 for $250,000, on credit. Global Services at the same time accepted promissory notes from GNP for outstanding lease payments incurred during 2014 and possibly before. There was no evidence presented to adequately explain why or if Global would not have also accepted credit from GNP for purchase of the camp, or why NyacAU did not otherwise arrange the transaction with GNP purchasing the camp directly, though the evidence was clear that Global later accepted $250,000 for the camp.

The evidence further demonstrated that from 2015-2017, Bear charged GNP lease payments of $577,927.52 for its continued use of the camp, and that lease payments continued into 2018. Section 6.4 of the Operating Agreement requires leases from the members and their affiliates to be at fair market value, based on depreciated book value. However, Molly Attala acknowledged in her testimony that lease rates charged by Bear for the camp exceeded its depreciated book value, which appears clear by comparing the purchase price to total lease charges through 2017. Because the amount of lease payments GNP made to Bear exceeds the dollar amount paid to purchase the camp from Global Services, GNP shall be deemed the

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beneficial owner of the camp in connection with the dissolution process. Additionally, within fifteen (15) days from the date of this Interim award, Respondents shall supply a copy of GNP records which show lease payments made by GNP to Bear for the camp from the purchase date through the present, and Claimants shall provide any response to the submission within fifteen (15) days thereafter. The Panel will determine the total amounts of overpayments to Bear Leasing from this information, which shall be incorporated in the Final Award, and said amount plus interest shall be deducted from LOC 1 in the context of the dissolution process.

III.CLAIMANTS’ CLAIM REGARDING TREATMENT OF LOANS AND INTEREST ON LOANS FOR THE PROJECT

A.Loans

During the course of the project, it was necessary for NyacAU to acquire various loans in order for it to perform mining operations at Little Squaw, including the funding of LOC 1 as required under Section 6.1 of the Operating Agreement. Ultimately, NyacAU obtained loans from i) Alaska Growth Capital (issued in three installments); ii) GVC Capital; iii) Edward and Deborah Koke; (iv) AEG; and (iv) two loans from Global Services (to finance purchase of the camp by Bear Leasing). Of course, interest in differing amounts was charged and paid by NyacAU on each of these loans.

The evidence showed that proceeds from the GVC Capital loan ($5.25 million) were used by NyacAU to fund LOC 1 (Shaffer Rebuttal Report, p. 9 (GVC loan increased GNP liabilities booked in 2015 under LOC 1 from $14.8M to $19.2M)), and the Alaska Growth Fund loan proceeds were used by NyacAU to fund LOC 1 sometime after it was issued. The evidence was not clear as to whether loans from Global Services, AEG or the Koke’s were used to fund LOC 1 or simply booked as direct liabilities of GNP to the various lenders on GNP’s accounting records, but as set forth in more detail below, the Panel does not believe this to be significant to how the loans should be dealt with under the Operating Agreement. The evidence indicated that NyacAU’s borrowing costs, including interest, closing costs and fees, were also treated and accounted for by NyacAU as sums advanced by NyacAU to GNP in funding LOC 1.

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Claimants have argued that the principal amounts of any loans cannot be regarded as Operating Expenses under the Operating Agreement. However, Claimants’ position disregards the clear terms of the Operating Agreement itself. Section 2.28 of the Agreement defines “Operating Expenses” as including but not limited to “all costs associated with extracting the gold from the Claims…,” including but not limited to an enumerated list of items which does not specifically refer to loans from third parties. In the Panel’s view, this broad definition of Operating Expenses included loans obtained by NyacAU from third parties which were necessary to fund mining operations. NyacAU had the unequivocal obligation to fund the mining operating, regardless of whether the loans were booked through LOC 1. This interpretation is further supported by Section 10.1.1 of the Agreement, which defines Operating Expenses which must be deducted before any annual distribution is paid to the Members. It provides that before distributions are paid, “the Company [GNP] will first pay all Operating Expenses as defined in Section 2.28 for Placer Mining operations at the Claims, within the current mining year.” The section goes on to provide separately for payment of LOC 1 obligations for the year,

The evidence was unchallenged that the loans taken out by NyacAU were necessary to fund mining operations, and that all such funds were in fact used to do so. Dr. James and Mr. Trowbridge each testified that NyacAU’s initial plan, discussed with Goldrich, was to invest $4.8 million in the Project, and if necessary take out a loan for an additional $1.9 million. Additional costs were to be paid from mining operations beginning in 2012, which were assumed to produce at least 1500 ounces per year—roughly the same amounts that Goldrich had extracted from its 2010 mining operations at the site. However, this plan was subsequently derailed by Goldrich’s failure to perform required reclamation for its 2009-2010 mining activities, which led to Goldrich being cited for violations of reclamation regulations by the USACOE and to orders that delayed NyacAU’s right to obtain mining permits until reclamation was completed. Goldrich contracted with NyacAU to do the great bulk of its reclamation work, which was completed by August 2012. NyacAU was issued a general permit at that time, but it was too late in the 2012 season to commence any mining. Also, as a result of the violations found by USACOE, findings were

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issued which precluded NyacAU from performing any mining operations until it secured an individual permit, which because of new regulations requiring cultural and wetlands analyses of the site, did not occur until August 2013. NyacAU was able to perform minimal mining operations, using the Big Blue wash plant (which proved to be inadequate) before the end of the 2013 mining season, but essentially two years of mining operations had been lost. Nonetheless, NyacAU was incurring significant costs during this period, for equipment, infrastructure work, and unreimbursed reclamation work performed for Goldrich.

The inevitable result of these developments was that NyacAU simply ran out of money, and had no choice but to seek funding from third parties. Goldrich realized and accepted this, as demonstrated by the fact that it helped NyacAU secure its first loan, $5.25 million from GVC.

The evidence was undisputed that all loan amounts were used to fund mining operations at Little Squaw, and that such funds were reasonable and necessary for this purpose. As Manager of GNP, NyacAU had “full and complete authority and power to take any and all actions reasonable and appropriate to manage and control the business, affairs, and properties of [GNP] and do any and all acts necessary and incident thereto”. Goldrich never raised an objection that obtaining loans for mining operations was outside of NyacAU’s power, or a breach of its contract obligations-- to the contrary, Goldrich accepted all benefits of the use of such funds on behalf of GNP for mining operations.

It would be inappropriate to narrow the broad definition of Operating Expenses expressly set forth in the Operating Agreement as excluding such loans under the above circumstances. To do so would create an obvious windfall for GNP as well as Goldrich, since NyacAU would then be responsible for repaying the loans (and honoring the personal guarantees of the James’ that were a basis for them being extended) without any hope of reimbursement from GNP or any other source. The broad definition of Operating Expenses, plus the parties’ mutual acknowledgment that loans were necessary to keep the project afloat, clearly contemplate that NyacAU would not be exposed to such a dire consequence. Accordingly, the Panel holds that principal amounts of all

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loans taken out by NyacAU for mining operations are fully reimbursable by GNP as Operating Expenses, either under LOC 1 or otherwise.

B.Interest and fees on loans

Claimants have likewise asserted that any borrowing costs, including interest, closing costs and fees incurred by NyacAU on loans cannot fairly be considered as Operating Expenses under the Operating Agreement. However, as with principal amounts of the loans taken out by Respondents’ the interest and fees on those loans also fit rationally within the broad definition of “Operating Expenses”. Certainly the parties knew that NyacAU and/or Dr. James would incur fees and interest charges on loans taken out for the benefit of the project, and no evidence was presented suggesting that NyacAU was not entitled to reimbursement of these amounts. To hold otherwise would be require the Panel to find that NyacAU, having been forced by Goldrich’s violations into the position of obtaining unanticipated loans to continue mining operations, nonetheless agreed to contribute interest and fees on loans as additional capital contributions to the GNP, or simply “gift” such amounts to GNP for no explained reason. Yet to interpret interest and fees as additional capital contributions by NyacAU would run afoul of Section 3.3 of the Operating Agreement, which states that “[n]o Member shall be required to contribute any additional Capital to the Company”. Thus, Claimants’ position is neither rational, under the circumstances, nor consistent with the express provisions of the Operating Agreement.

This conclusion finds further support in Section 6.4 of the Operating Agreement, which gives NyacAU, as Manager of GNP, as well as Goldrich, the right to “lease, with option to purchase, to [GNP] such personal property and equipment as may be reasonably necessary or desirable for efficient operations at the Claims. Consistent with this provision, NyacAU, through Bear Leasing, entered into the Leases discussed above to provide equipment and related property to GNP. NyacAU’s right to lease can be reasonably foreseen to have encompassed situations in which equipment would first have to be purchased (which it was through Bear Leasing) through financing arrangements, with the interest and fee charges being passed onto GNP as the lessee. Goldrich knew that NyacAU needed to purchase such equipment for Leases 1-7, approved Leases

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1-3 and had full knowledge of Leases 4-7, and fully accepted the benefits of GNP’s use of all leased equipment for mining operations. There was no evidence presented that, during this period, Goldrich ever complained about interest and fee charges from the equipment purchases—or for that matter the principal amounts of loans-- being passed onto GNP as Operating Expenses.

Claimants’ expert, Dr. Katz, argued that Section 6.1.2 of the Operating Agreement provided a “cap” on the amount of interest that could be charged to GNP based on funds advanced by NyacAU through LOC 1. However, in a majority of the Panel’s view, this is a misreading of the provision. Section 6.1.2 provided that the “LOC 1 shall earn interest at the AFR (short term) as of the date of the Term Sheet” (Emphasis added), and that Goldrich would be entitled to receive 50% of the interest earned. As such, the provision has no relevance to the interest and fees charged to GNP from loans secured on the project’s behalf.

Accordingly, all interest and fees charged on loans obtained by NyacAU for mining operations are chargeable to GNP as Operating Expenses under the Operating Agreement.

IV.CLAIMANTS’ CLAIM REGARDING FEES AND EXPENSES OF MOLLY ATTALA

Claimants have requested a reimbursement of fees and expenses paid to Molly Attala, the CFO of GNP, in the amount of $541,000. Respondents claim that Ms. Attala’s fees and expenses were reasonable and authorized under the Operating Agreement.

It is a majority of the Panel’s view that the fees and expenses paid to Ms. Attala were appropriate. Section 7.5 of the Operating Agreement provides that GNP “shall pay reasonable management salaries for the individuals managing the Company”, and that the initial management salary approved by the Members shall be $450,000 and shall automatically increase yearly in accordance with the Consumer Price Index. However, Section 2.8 of the Operating Agreement, defines “Operating Expenses” as including not only “management salaries,” but also expenses paid for “contract services” and “accounting expenses.” The evidence shows that Molly Attala was never a salaried employee of GNP but rather an independent consultant, even when she occupied the position of CFO. Her contract, dated January 13, 2013, was between “Attala Consulting Services” and NyacAU, and provided that Ms. Attala was to serve as an “independent

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consultant”, and would not be a salaried employee. She was to be paid a set fee for her services, identified as a retainer of $11,083 per month (Ms. Attala testified that she was actually paid $11,600 per month.) True to her consulting contract, Ms. Attala never received a payroll paycheck or any of the fringe benefits given to GNP employees. As such, Ms. Attala’s contract to consult for NyacAU was clearly for “contract services”, a term which is not defined in the Operating Agreement but can fairly be read as any services performed as a third-party independent contractor. Moreover, a significant amount of Ms. Attala’s services were “accounting services”, which also is expressly designated as an Operations Expense under Section 2.28.

As she testified, Ms. Attala’s duties included cash management, fundraising, forecasting, maintaining permanent documentation, transforming the GNP paperwork system into an electronic system, preparing monthly and annual reports, budgets forecast (which were required under the Operating Agreement), and serving as CFO for GNP. This work fits easily within the broad definition of Operating Expenses as including “all costs associated with extracting the gold from the Claims”, including but not limited to” the specifically mentioned expenses listed under Section 2.28.

Although Claimants asserted that Ms. Attala’s contract was never approved by Goldrich, since Ms. Attala’s contract did not make her a salaried management employee, there was no requirement under the Operating Agreement for any such approval. Consistent with this, Ms. Attala’s consulting contract had no space for written approval by Goldrich. In any event, Ms. Attala testified that she sent her contract to Goldrich (Mr. Schara) shortly after it was signed, and he approved it orally or by email before Ms. Attala took over as CFO in 2014. On his part, Mr. Schara claimed that he approved reasonable accounting expenses to be paid to Ms. Attala, of between $20,000-40,000 (apparently annually), but felt $11,600 a month was too much. However, the March 28, 2014 minutes of the Goldrich Board of Directors, (which Ms. Attala attended as CFO) reflect that Mr. Schara was well aware that Ms. Attala was a consultant, not an employee, and was performing some management tasks in that capacity. The minutes contain a proposal put forward by Goldrich to amend the Operating Agreement (not accepted by NyacAU), which,

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among other things, called for any managerial work performed by Ms. Attala to be a part of “management salaries” under the Operating Agreement—a clear recognition by Goldrich that Ms. Attala’s managerial work to that point was as an independent contractor, not subject to the overall $450,000 cap pertaining to Messrs. James and Trowbridge. The amendment was not accepted by NyacAU, and thereafter, Ms. Attala continued to send monthly invoices to Goldrich detailing work performed and hours spent, as Goldrich had requested, without receiving any objections from Goldrich as to the nature or extent of work performed, the amount of the invoice (always $11,600), or the quality of the work.^²

The evidence also showed that the consultant fees charged by Ms. Attala for her varied services as CFO of GNP were reasonable. It was undisputed that Ms. Attala charged a flat fee of $11,600 per month, plus expenses, and never received any bonuses or increases in pay, despite significant increases in annual hours worked for GNP. In 2013 and 2014, Ms. Attala split her time between GNP and other businesses (NyacAU and Bear Leasing), but devoted 100% of her time to GNP from 2015 onward. She testified that, beginning in 2015, she was working 10-12 hours per day and approximately 50 hours a week solely on GNP matters, and in 2015 alone devoted approximately 2500 hours to GNP work. But monthly invoices remained at $11,600. Mr. Shaffer, in his rebuttal expert report (page 11) did an analysis showing that Ms. Attala’s annual consulting fee was below the average salaries of CFOs of public and private companies, even more so because of the fact that she received no bonuses or employee fringe benefits.

The above evidence shows that Ms. Attala’s “contract services” were fully authorized under the Operating Agreement, that she was qualified to perform and did perform a range of services of benefit to both GNP and Goldrich as a Member of GNP, that such services were more than reasonably priced, and that Goldrich fully accepted the benefits of Ms. Attala’s work. Accordingly, Claimants’ request for partial reimbursement of Ms. Attala’s fees is denied.

^² Ms. Attala’s resume shows that she had the experience and was fully qualified to perform the work required of a CFO.

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V.CLAIMANTS’ CLAIM REGARDING INTEREST PAYMENTS TO LACOMBE BOOKKEEPING

As mentioned above, “Operating Expenses,” as defined in Section 2.28, include, without limitation “accounting expenses,” which in turn include bookkeeping. The evidence was undisputed that Lacombe Bookkeeping performed bookkeeping services for GNP, and was entitled to the payment of fees and expenses for said services, which was done through LOC 1. In the beginning of November 2014, there were monies due Lacombe that were shown on GNP’s books as accounts payable. However, during that period, the payables were reclassified as two loans, evidenced by promissory notes payable by GNP, with interest at 12% per annum. The notes accumulated interest totaling $34,560 for the period from 2015 to 2017 (Katz expert report, page 30). The principle and interest on the loans have now been re paid.

Ms. Attala and Dr. James both testified that the reason for the reclassification of Lacombe’s fees to notes payable in 2014 was because of unanticipated financial demands of the project. As a result of permitting delays caused by Goldrich’s failure to timely reclamate the site of its 2009-10 mining operations, NyacAU having to reclamate the site on Goldrich’s behalf without getting paid for it, and the very limited mining operations that NyacAU was allowed to conduct in 2012 and 2013, NyacAU had effectively run out of money, and was required to obtain loans in order to continue operations It therefore was not unreasonable for NyacAU, as Manager, to make a deal with Lacombe Bookkeeping which allowed amounts due to be paid off as loans, with interest, when the mine was finally operational and making a profit. No evidence was presented that the 12% rate on the promissory note was unreasonable or that NyacAU obtained any benefits from the interest charged.

As explained in Section III, it is the Panel’s view that interest on loans obtained by NyacAU for the benefit of GNP is reimbursable as an Operating Expense under Section 2.28 of the Operating Agreement. Accordingly, Claimants’ request for reimbursement of interest charges paid to Lacombe Bookkeeping is denied.

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VI.CLAIMANTS’ MISREPRESENTATION CLAIMS

In its initial pleading, Claimants included claims for fraud/deceit in the inducement and negligent misrepresentation, all based on alleged concealments of facts by Respondents which purportedly induced Claimants to enter into the Operating Agreement and proceed with the Little Squaw project. However, the damages and orders requested by Claimants in the action ultimately did not and do not include damages for fraud or negligent misrepresentation; therefore, the Panel concludes that these claims have been abandoned.³

In any event, it deserves mention that Claimants did introduce substantial evidence and argument at the hearing of alleged misrepresentations made by Dr. James that purportedly induced Goldrich to enter into the Joint Venture. These included alleged misrepresentations of James’ financial condition, alleged concealment of James’s lack of mining experience, and lack of due diligence performed by NyacAU before entering into the deal. Almost no evidence was produced in support of the first misrepresentation claim, other than an unsubstantiated suggestion that the placer gold in safe deposit boxes which Dr. James showed to Mr. Schara and stated had value of over $7,000,000, may not in fact have been worth that much. With respect to the other misrepresentation claims, Claimants spent some time in arguing that James had concealed from Goldrich a lack of mining experience and also a lack of due diligence allegedly required of NyacAU, including, notably, the failure to inform Goldrich that a prefeasibility and feasibility report was needed for the project. Claimants also emphasized that it was inappropriate for James to simply rely on the Martin Report and the drill core information in it as the sum total of his “due diligence”.

However, these arguments disregarded the facts that (i) James had operated a substantial and profitable placer mine at Bethel for the past 15-20 years, which Goldrich in fact toured with James as part of its due diligence before entering into the contracts and (ii) Goldrich’s

^³ Claimants do maintain a request for punitive damages, but this is a general claim not accompanied by a request for compensatory damages for alleged misrepresentations, and the evidence was insufficient to meet the high standard of misconduct required for a punitive damages award.

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representations and warranties in the Term Sheet, which were expressly incorporated into the Operating Agreement (Section 4.8) included a representation in which Goldrich acknowledged “that NyacAU and the NyacAU Parties are relying on the information contained in the [2009 Martin Report], attached as Exhibit 10, as the basis to enter into this Term Sheet and form and invest in the LLC.” (Term Sheet, ¶ 31). Paragraph 31 goes on to state the following representation and warranty by Goldrich:

“to the best of [its] knowledge, the information contained in the preliminary assessment [2009 Martin Report] is accurate and complete as of the date of the execution of this Term Sheet, has not been amended, and was prepared in full compliance with NI43-1 Sections 2.3(2) and 2.3(3), except that no report was filed with a Canadian authority since the date of the preliminary assessment, February 9, 2009, and neither Goldrich or GNP has received any information contrary to the information contained therein.”

In the Panels’ view, paragraph 31 of the Term Sheet defines the parameters of any due diligence which Goldrich could reasonably have expected Dr. James to perform-- i.e., review of and reliance on the 2009 Martin Report, and, as explaine below, other accessible reports referenced in then Martin Report. Dr. James confirmed such reliance in his testimony. Additionally, the Martin report itself states that it is not a prefeasibility or feasibility report, but merely a preliminary assessment, and neither the Term Sheet or the Operating Agreement anywhere requires that such studies be performed by NyacAU either before or after execution of the Operating Agreement.

The evidence also was undisputed that Goldrich was extremely anxious for mining operations to take place in 2012.^⁴ But this would have been impossible had NyacAU been obligated to perform prefeasibility and feasibility studies, which Claimants themselves acknowledged would have taken approximately two years to complete.

Finally, during testimony on the “due diligence” fraud issue, the Panel raised a concern about not understanding the basis of Claimants’ claim that NyacAU had a legal duty to perform

^⁴ Both Schara and James testified that Goldrich was very anxious to begin mining operations in 2012. .

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due diligence before signing the agreement and invited the Claimants to provide authority for the proposition. However, no such authority was received by the Panel.

Accordingly, it is the Panel’s view that the above facts were insufficient to establish actionable claims for fraudulent or negligent misrepresentations against Respondents.

VII.CLAIMANTS’ CLAIM OF OVERCHARGES FOR 2012 RECLAMATION

Claimants claim that Goldrich was overcharged by NyacAU/GNP for reclamation work performed by NyacAU, on Goldrich’s behalf in 2012, to cure the permitting violations issued by the USACOE based on Goldrich’s failure to reclamate the site after its 2009-2010 mining operations. The Parties agreed under the Operating Agreement that Goldrich would be solely responsible for such work. At Goldrich’s request and on its behalf, NyacAU performed all reclamation work, except for the removal of the tailings road to cure the wetlands violation (which it was agreed Goldrich would perform), and by August of 2012, reclamation was complete. Goldrich received its first invoice from NyacAU for the reclamation work in 2014. However, Mr. Schara, on behalf of Goldrich, took the position that Goldrich had been overcharged for the reclamation work, and refused to pay the reclamation invoice until the overcharges were deleted. (Schara, pp. 787, 795 and 800; Exhibit 360B). No reclamation charges had been paid at the time of the hearing, four years later.

Goldrich also claimed that they were owed rental payments for NyacAU’s use of Goldrich equipment during the 2012 reclamation process in the amounts of (i) $184,000 in equipment that Goldrich claimed was agreed to be leased to NyacAU, and (ii) $147,462 for other equipment that Goldrich contended was earmarked for use in the reclamation work. (Total $377,462)

The essential basis of Goldrich’s claim was that reclamation work had been performed by a single individual, Randy Cox, and that it was in any event impossible for more than one person or piece of machinery to perform reclamation in the mine pit at one time. The evidence, however, compels a different result. Mr. Trowbridge explained that all employees who worked on reclamation filled out daily time-cards, where they listed number of hours worked and the type of work they had done. Reclamation workers were paid between $20-$30/an hour and $18 per hour

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(CT, p. 1305), and the average number of workers per day on remediation was about six (6) people, each working twelve (12) hours a day. (Trowbridge, p. 1307).

Ms. Attala was responsible for itemizing the cost of the reclamation effort and did so by reviewing the time cards with Mr. Trowbridge and recording hours spent on reclamation by various personnel. A list of hours spent and personnel involved is detailed in Exhibit AM (Trowbridge, p. 1216).

Randy Cox testified by deposition, and the parties agreed that his transcript could be admitted as evidence at the arbitration hearing. Mr. Cox testified that a large part of the remediation work was performed by him working alone. However, he also had a vague recollection of the names of three or four other people who performed reclamation work in 2012. Mr. Cox was a credible witness, but had to rely solely on his memory of events which had occurred almost six years ago. Ms. Attala and Mr. Trowbridge, on the other hand, assembled their information on reclamation activity from daily time sheets which stated the hours worked on reclamation each day by all personnel at the site (including Mr. Cox). In the Panel’s view, the daily time records—which are obviously business records-- provide more accurate evidence of hours spent on the 2012 reclamation activity than Mr. Cox’s recollection; moreover, Mr. Cox’s recollection of others who performed reclamation work in 2012 was somewhat consistent with Molly Attala’s testimony based on the time sheets. Accordingly, Goldrich is responsible to pay the full amount charged by NyacAU for 2012 reclamation work, based upon hours worked, with no reduction.

With respect to Goldrich’s claim of compensation for NyacAU’s use of equipment during the 2012 reclamation process, there was no dispute at the hearing that NyacAU in fact used some of Goldrich’s equipment. However, Goldrich’s obligation to reclamate the site naturally would have extended to the cost of equipment (which included primarily earth moving equipment). Had NyacAU not been allowed to use Goldrich’s equipment, it would either have had to rent such equipment from Goldrich or a third party and undoubtedly would have charged any rental payments back to Goldrich. NyacAU being able to use Goldrich’s equipment for reclamation

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without charge simply avoided these unnecessary transactions and expenses. Accordingly, Goldrich is not entitled to any recovery for NyacAU’s use of Goldrich equipment in 2012 to perform Goldrich’s reclamation work.

Since the amount owed by Goldrich for NyacAU’s reclamation work in 2012 was certain, NyacAU is also entitled to 5% pre-judgement interest on the award from the date the first invoice for payment was sent to Goldrich.

VIII.CLAIMANTS’ CLAIM REGARDING RESPONDENTS’ REFUSAL TO LEASE EQUIPMENT TO GOLDRICH FOR 2015 RECLAMATION OF WETLANDS

The agreement made by the Parties in 2012 concerning the permitting violations cited to Goldrich by the USACOE provided that Goldrich would have full responsibility for the reclamation of the wetlands violation, which required removal of the tailings road which Goldrich had installed on the side of a hill adjacent to the mine site. Goldrich undertook this work in 2015, ultimately using services and equipment from Paul Manuel, a third party contractor.

In March of 2015, Mr. Schara emailed Dr. James, stating that Goldrich was going to have to expend $500,000 to rent equipment from a third-party for the reclamation effort, but that NyacAU could rent all of the equipment that was currently onsite to Goldrich for around $125,000. Mr. Schara proposed a lease of the equipment from NyacAU for that price. (Schara, p. 1403, Exhibit 362). Exhibit 362 showed that the amount of savings that could have been achieved if Schara’s proposal had been accepted by NyacAU was in the range of $335,000.

In response to Mr. Schara’s email, Ms. Attala wrote to Dr. James in 2015, explaining that none of the equipment requested by Goldrich for wetlands reclamation could be leased by NyacAU, because NyacAU was in the middle of the 2015 mining season and all of its equipment was needed for ongoing mining operations. (The wash plant was up and running at this time). Ms. Attala also pointed out in an earlier email to Ted Sharp, the CFO of Goldrich, that Ms. Attala had estimated the cost of the wetlands reclamation to be $770,000, in a joint board meeting with Goldrich and NyacAU representatives. This was comparable to Mr. Manual’s estimate, and yet none of Goldrich’s directors at the meeting raised a question about Ms. Attala’s estimate.

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The Operating Agreement provides that from time to time Goldrich will make available to GNP for rental or lease, selected personal property and equipment (Operating Agreement, 5.5). However, the Operating Agreement contains no provision which obligations NyacAU to lease any equipment to Goldrich for any purpose; thus NyacAU had no legal obligation to respond to Mr. Schara’s proposal. Nor did NyacAU have a general fiduciary obligation to do so, particularly since the evidence showed that the mining equipment of interest to Goldrich was already being used in ongoing mining operations in 2015.

Accordingly, neither NyacAU nor GNP can be charged for payment of any of the amounts expended by Goldrich in performing the wetlands reclamation work.

IX.CLAIMANTS’ CLAIM RE REPAYMENT OF LEGAL FEES TO GNP

Claimants have also asserted that a payment of $103,000 to GNP to its lawyers Bankston Gronning O'Hara, was improperly charged to and paid by GNP and should now be repaid to or credited to GNP by reducing LOC 1 in this amount.

However, in the Panel’s view, this request runs contrary to the Operating Agreement. In Section 2.28, the Operating Agreement describes “Operating Expenses” as broadly including “all costs associated with extracting the gold from the Claims, including but not limited to … legal fees …” The evidence showed that these legal charges to GNP were, as Section 2.28 requires, “associated with extracting the gold from the Claims”. Recoverable fees would not include fees incurred in connection with the arbitration dispute between the parties, but the evidence presented showed that these fees were not for such legal work. Accordingly, Claimants’ request is denied.

X.CLAIMANTS’ CLAIM FOR PAYMENT OF INTEREST EARNED BY LOC 1

Claimants have requested an award of $58,000 based upon their right to a 50% share of interest income earned by the amounts in LOC1. The claim has been made under Section 6.1.2, which provides that LOC1 “shall earn interest at the AFR (short term) as of the date of the Term Sheet” and further provides that NyacAU shall pay Goldrich 50% of any such income. There was very little evidence introduced on this issue at the hearing and the Panel has not been able to locate any specific calculation of amounts due the parties, if any, from the arbitration record.

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Accordingly, in connection with the dissolution process, and within thirty (30) days of the date of this Interim Award, the parties shall exchange and submit either joint or separate calculations of 1) the amount of income earned on LOC 1 to date; and 2) any prior distributions of such interest income to NyacAU, Goldrich, or any other Party, with the understanding that, at the end of the day, interest income earned under LOC 1 shall have been paid to the Parties in equal amounts.

XI.CLAIMANTS’ CLAIMS REGARDING ALLOCATION OF TAX LOSSES

Section 9.1 of the Operating Agreement provides that “[i]ncome from a gain, loss, deduction, and any other tax item of [GNP’s] activities shall be allocated to the Members in proportion to their respective Ownership Interest at the end of each fiscal year of [GNP] except as otherwise required by applicable provisions of tax law.” “Income” from a tax “loss” or “deduction” can rationally be interpreted as requiring the Members to share all tax losses 50/50, in accordance with their respective interests in GNP, unless the tax law requires otherwise.

At the hearing, Respondents took the position that NyacAU was entitled to take virtually all of the tax losses incurred for the Little Squaw Mining operation, since Goldrich was not at any economic risk in connection with the operations. Goldrich countered with a legal opinion letter from the firm of Dorsey & Whitney, which in essence stated that Goldrich was at economic risk in the sense that 50% of the gold located within the parameters of NyacAU’s individual permit belonged to Goldrich, whether or not it had been produced. The evidence presented and arguments made to refute the Dorsey & Whitney letter were not convincing to the Panel. Accordingly, in connection with the dissolution process, the Parties will take steps to ensure tax losses have been shared equally, as the Operating Agreement requires, but only during the periods where actual mining operations were being performed, since those rationally are the only periods in which both parties bore a material economic risk, in terms of the impact of mining operations on processed and unprocessed gold.

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CLAIMS AND RELIEF REQUESTED BY RESPONDENTS

XII.RESPONDENTS’ MISREPRESENTATION CLAIMS AGAINST GOLDRICH

Respondents have made claims for fraud, as well as “negligent or innocent misrepresentation”, all based on the same allegations, for which they seek damages, including punitive damages. More specifically, Respondents have put forth three misrepresentation claims: (1) that Claimants intentionally or negligently concealed that the deposit at Little Squaw mine was in the nature of an “aggregational” or "aggredational" deposit (both terms were used, apparently as synonyms, in the testimony and exhibits submitted), as opposed to a more typical “alluvial” deposit; (2) that Respondents intentionally or negligently concealed an updated draft report prepared by Paul Martin in 2010, which showed a dilution of the estimated pay grade of material at Line 11 of the mine of 16.91%; and (3) that Respondents intentionally or negligently concealed the fact that there were pending permit violations by Goldrich concerning the site which would have to be dealt with before Claimants could proceed with their mining operations. Each of these claims is discussed in more detail below.

A.Legal Standard for Proving Fraudulent or Negligent Misrepresentations

The elements of a misrepresentation claim are well established across U.S. jurisdictions, and the parties’ briefing did not suggest that the Alaska standard is any different. A party asserting such claims must show that (1) the representation or concealment was intentional or negligent; (2) the misrepresentation or concealment was material; (3) the party who is the target of the misrepresentation or concealment reasonably relied on it to that party’s detriment; and (4) damages were incurred as a proximate result of the misrepresentations. Any such damages must be proven to a reasonable standard of certainty and must not be speculative in nature. Further, and as the parties themselves acknowledged during the hearing, fraud claims require proof by “clear and convincing evidence” which is a level higher than the “preponderance of evidence” standard required by other civil law claims.

B.Analysis of Respondents’ misrepresentation claims

1.Alleged fraudulent nondisclosure of “aggredational” nature of deposit.

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Respondents presented evidence at the hearing that on May 5, 2008, well prior to the close of the transaction in 2012, James Barker, an engineer, provided a report to Claimants entitled “Evaluation of the Chandalar, Alaska Mining Property” (Joint Exhibit 1), which identified the gold deposit at Little Squaw as an “aggredational” deposit—i.e., essentially an uneven pattern of gold deposits in soil, caused by a combination of glacial deposits, soil erosion and varying geological patterns. On the other hand, Dr. James and Mr. Trowbridge testified that going into the deal, they had assumed that the placer gold deposits at Little Squaw were typical alluvial deposits--i.e., a roughly even pattern of gold bearing soil deposits--based on a 2009 Preliminary Assessment by Paul Martin (“Martin Report”). (As previously explained, Claimants had expressly represented and warranted in the Term Sheet (Para. 31), incorporated by reference into the Operating Agreement, that Respondents could place sole reliance on the Martin Report in entering into the deal.) James and Trowbridge added that they did not learn that the deposit was “aggredational” until approximately 2016, when they were engaged in mining operations in the southern end of the mine site. Dr. James also testified that, had he known that the true nature of the deposit was aggredational rather than alluvial in nature before entering into the deal with Goldrich, he probably would not have done so.

However, a review of the detailed findings of Mr. Barker in his Report, as well as the Martin Report, place this claim in a somewhat different light. First, in addressing the type of placer deposits located at Little Squaw (Barker Report, p. 23), the Barker Report stated that the deposits consisted of “pre-glacial deposits” from erosion of the highlands along with “glaciation” deposits (i.e., deposits caused by glacial movement), but that the glacial deposits were not of sufficient severity to destroy the pre-glacial deposits. The Report also stated that a common pattern of pre-glacier alluvial deposits was an “alluvial fan”, which spread the deposit out in a fan-like manner from a particular source. Such deposits, the Report concluded, although not caused by glacial movement, nonetheless can consist of thick, truncated deposits at various locations within the “fan.”

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The Report then proceeded to describe the placer mineralization of Little Squaw Creek in more detail (Barker Report, p. 38). It once again stated that the placer deposits consisted of pre-glacial fluvial, interglacial-glacial fluvial, and post-glacial fluvial deposits, but then explained that an alluvial fan of fluvial (pre-glacial) gravel extended downstream from the canyon at Little Squaw about 2,000 feet, with pay gravel ranging from 15-137 feet thick at a width of 1,262 feet. This “alluvial fan” was pictured in Table 15 of the Barker Report. It indicated that the bulk of the deposit at Little Squaw was a pre-glacial fluvial deposit, which--importantly— appeared to extend to the area (Line 1.2) where Respondents established their permanent mining operations.

The section of the Report entitled “Placer Drilling Program” (page 50) pointed out that the drill holes and cores taken (approximately 101 cores drilled and 78 taken) focused in the northernmost and southernmost sections of the anticipated mining footprint, with a significant number of cores taken from within the area of the alluvial fan, and close to Line 1.2. The results showed pay gravel thickness ranging from 15-125 feet in the area, with an average pay grade of between 0.128 and 0.424 in the area encompassing the main areas later mined by Respondents (Barker Report, pp. 53-56). From this drilling information, the Barker Report concluded that approximately 173,006 total ounces of fine gold could be recovered from the area of the alluvial fan and another 70,614 ounces from the canyon area of the mining footprint; thus, the that the bulk of the recoverable gold at Little Squaw was to be found in the pre-glacial fluvial deposits.

Reference to “aggredational” deposits did not find its way into the Barker’s Report until the very end, where Mr. Barker set forth his recommendations. In a section entitled “Placer Deposit Models” Mr. Barker summarized the pattern of deposits at Little Squaw, consistent with Table 15, and then referenced a proposal made by a geologist named Yuri Goldfarb, who suggested a reclassification of placer deposits in northern latitudes based on a number of factors, and proposing that such deposits be referred to as “aggredational” However, the Barker Report does not state whether Mr. Barker adopted this suggestion, and no comparison was made in the Report as to whether the deposit at Little Squaw contained all the conditions which Mr. Goldfarb believed would be present with an “aggredational deposit”. In any event, the Barker Report makes

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quite clear that a substantial portion of the deposit at Little Squaw, including the deposit in the area mined by Respondents, consisted of pre-glacial fluvial deposits, which, standing alone, do not appear to contain all the characteristics identified by Mr. Goldfarb of an “aggredational” deposit. Thus, in the Panel’s view, a genuine question of fact exists as to whether the Little Squaw deposit, particularly the area of the deposit mined by Respondents in 2016 and thereafter, can be classified as “aggredational”, as defined by Mr. Goldfarb.

It is also significant that Mr. Barker’s past reports were expressly referenced in the Martin Report. Both the Term Sheet and the Operating Agreement (which formed the Joint Venture) made specific reference only to the Martin Report (Operating Agreement, § 2.31; Term Sheet ¶ 31) However, past reports by Mr. Barker are specifically referenced in the Martin Report as being available on Goldrich’s website: “Mr. Barker, along with others, authored an original technical report on Little Squaw in 2004, and since then has prepared annual reports that are available on Goldrich’s web site, www.GoldrichMining.com”. The Martin Report also made clear that it relied on the same cores that were taken by and relied upon in the Barker Report, and even reproduced Table 15 of the Barker Report, showing the location of the “alluvial fan” of pre-glacial deposits, as well as the locations of all drill cores at the mine site. Consistent with this, the Martin Report stated that it in fact was co-authored by Mr. Barker.

In sum, the Martin Report not only put Respondents on notice of and gave them ready access to Mr. Barker’s prior reports, but relied on the same drilling information on which Mr. Barker made his characterization of the nature of the deposits at Little Squaw, including information showing the differences in the ranges of pay grade thickness and overburden thickness in the “alluvial fan”, and used a table from the Barker Report to show where different types of deposits were located. In the Panel’s view, (i) these facts were sufficient to put the Respondents on notice of the Barker Report, before Respondents entered into the joint venture with Goldrich and (ii) showed that the bulk of the deposits at Little Squaw—i.e, those within the “alluvial fan” area—were alluvial, as opposed to “aggredational”, deposits. .

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Based on the above, Respondents have not proved their misrepresentation claim regarding the “aggredational” deposit issue by clear and convincing evidence, and are not entitled to relief on that claim.

2.Alleged concealment of dilution of pay grade at Line 11.

In November of 2010, Mr. Martin prepared a draft update to his 2009 Report (“Updated Martin Report”), which incorporated the results of Goldrich’s 2009-2010 placer mining operations in the area of Line 11 of the mine site, located in the canyon area. Although Respondents later did placer mining for approximately 25 days (August 2013 until the season ended in September) at Line 5, also in or close to the canyon area, using the Big Blue wash plant, permanent mining operations were established by the Respondents at the opposite end of the site, in the area of Line 1.2.

Based on its incorporation of the Goldrich data, Mr. Martin made at least one material change to the initial Martin Report-- the pay grade at Line 11 was reduced from .0689 to .0572, a reduction of 16.87% (Updated Martin Report, Goldrich 004208-004209). The Updated Martin Report emphasized the importance of this information by adding it to the list of “Concerns” from the Martin Report, as follows: “2009-2010 grade reconciliation to model predicts lower actual mining grade – possible dilution.”

Respondents contended that Claimants never provided to them the Updated Martin Report or the dilution information in it, and there was no convincing evidence which suggested otherwise. In fact, Claimants’ primary argument was that they had no duty to provide the Updated Martin Report, since it was a draft document, not officially signed or stamped by an engineer. However, although the Report clearly is a draft, no evidence was presented which suggested that the results of Goldrich’s placer mining operations set forth in the draft were incomplete or inaccurate. Thus, regardless of whether the Updated Martin Report was signed and stamped, actual calculation of the dilution at Line 11 was unchallenged.

Respondents claim that they relied entirely on the Martin Report as an inducement to form the joint venture (GNP), and the contract documents bear this out. In this regard, representations

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and warranties in the Term Sheet, which are incorporated by reference into the Operating Agreement (Operating Agreement, §§ 4.8, 2.33), include the following:

“Notwithstanding any disclosure or due diligence occurring after the date this Term Sheet is executed, Goldrich and GMC understand and acknowledge that NyacAU and the NyacAU Parties are relying on the information contained in the Goldrich Mining Company Preliminary Assessment, Data Analysis and Mining Methods Summary, Little Squaw Creek Alluvial Gold Deposit, Chandalar, Alaska, dated February 9, 2009 [Martin Report] attached as Exhibit 10 as the basis to enter into this Term Sheet and form and invest in the LLC [GNP]. Except for tax information and assumptions made in the [Martin Report], adjustments for gold mined in 2009 and 2010, normal cost increases since completion of the [Martin Report] and the average grade of gold being 84% instead of 87% as assumed in the [Martin Report], Goldrich and GMC represent to NyacAU and the NyacAU Parties that, to the best of either’s knowledge, the information contained in the [Martin Report] is accurate and complete as of the date of the execution of this Term Sheet, has not been amended and has been prepared in “compliance with [applicable regulations] except [that]no report was filed with a Canadian Authority. Since the date of the [Martin Report], February 9, 2009, neither Goldrich nor GMC has learned any information contrary to the information contained therein.”[Emphasis added]

Based on this evidence, it was also reasonable for Respondents to assume that no contrary information had been learned by the Claimants since the date of that Report-- certainly no information that was later identified as an express “concern” of Mr. Martin. It is true that the Term Sheet representation, above, expressly excluded “adjustments for gold mined in 2009 and 2010”, which arguably could be interpreted as a somewhat cryptic reference to the Updated Martin Report, but at the hearing Claimants did not contest that the Updated Martin Report had never been provided to Respondents; moreover, the above representation ends with an unconditional statement that since the Martin Report, neither Goldrich nor GMC had learned any information contrary to it.

Claimants’ expressed justification for not producing a “draft” report, coupled with the exclusion of “adjustments” for “gold mined” in 2009-010 in the Term Sheet representations and warranties cited above, raise an issue of whether the failure to produce the Updated Martin Report

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was an intentional or reckless act by the Claimants, as would be required to sustain a claim of fraud, or a negligent act.. In the Panel’s view, the standard of “clear and convincing” evidence has not been met regarding the fraud claim, but has been satisfied with respect to the negligent misrepresentation claim. The evidence also was sufficient to prove breach of contract by Goldrich with regard to Paragraph 31 of the Term Sheet, and, in turn, Section 4.8 of the Operating Agreement.

The analysis of whether non-speculative damages were proximately caused by the facts alleged in these “dilution-based” claims presents more difficult issues. Respondents’ expert Ronald Greisen, estimated damages at $1,596,000 for Line 11 dilution, and a much larger number-- $4,817,280-- based on an assumption of 16% dilution throughout the mine site. (Greisen Report, Exh. 27). However, Mr. Greisen’s opinions are based entirely upon calculations of the difference between the expenses incurred by Respondents in the mining operations which were of long term benefit to GNP and those which were not, adjusted to create damage numbers assuming 16.87% dilution at all Lines and only as to Line 11. However, Mr. Greisen does not adequately explain the causal link between his methodology and the Line 11 dilution. More specifically, the Greisen Report does not take into account the following factors:

(i)Respondents’ expert Randy Clarkson opined that there could have been as much as 14% dilution of the gold mined by Goldrich, as compared to the gold content predicted in the Martin Report, as a result of inefficiencies in processing pay material through the small trommel used as a wash plant by Goldrich in 2009-010. (Both James and Trowbridge acknowledged that the trommel was inadequate for future mining operations by GNP). If true, this could account for almost all of the dilution reported in the Updated Martin Report;

(ii)Mr. Greisen’s estimate does not appear to account for the fact that Respondents’ permanent mining operations were conducted at the opposite end of the site from Line 11, at: Line 1.2, the northernmost area of the mine site, using a custom made wash plant that was of a much higher quality and much more efficient than Big Blue. Respondents’ plan was to mine the “alluvial fan” area (originally identified in the Barker Report, referenced in the Martin Report and even mentioned by Mr. Clarkson), gradually working their way through the alluvial fan to the canyon area where Line 11 is located. No evidence was presented as to how long it would take Respondents to reach Line 11 under its mine plan, in the context of the projected 13-year life-of-mine in the Martin Report. Thus, the Panel is

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unable to determine with reasonably certainty when, if ever, NyacAU intended to mine in the area of Line 11; and

(iii) There is some question as to whether Respondents would have chosen to mine Line 11 at all, given the fact that it is the only line referenced in the Martin Report which has only “inferred” resources (the lowest and most uncertain level of estimation of pay material above the cut-off grade). Each of the other Lines referenced in the Report contained substantial quantities of “measured” and “indicated” estimates (“measured” being the highest level of estimation probability, and” indicated” falling next in line); and

(iv)Table 15 of the Barker Report, reproduced in the Martin Report, indicated that the deposits at Line 11 might be a combination of pre-glacial fluvial, glacial, and post/glacial soils, and thus closer to ‘aggredational” deposit as defined by Mr. Goldfarb. The uneven nature of these deposits could conceivably be a contributing cause of the dilution at Line 11;

(v)Respondents produced no evidence of dilution at or around the area they were mining (Line 1.2), although many of the drill cores referenced in the Martin Report, and examined and relied on by James in entering into the joint venture, were taken from that general area.

Given these factors, and without impacting its holding that Goldrich is liable for negligent concealment of the dilution reported in the Updated Martin Report, it is the Panel’s view that damages, if any, proximately caused or reasonably foreseeable due to such concealment are too speculative to calculate—put another way, that the negligent concealment by Goldrich of the dilution at Line 11 was not concealment of a material fact. The evidence presented did not provide a clear answer to the cause of dilution at Line 11; nor did it show that Line 11 dilution could be assumed to reflect dilution throughout the mine site. Accordingly, the Panel has no choice but to deny Respondents’ request for damages on these grounds, except with respect to James’ request for reimbursement of the $350,000 he paid to acquire Goldrich’s stock, as explained more fully in Section XVII 1.

3.Alleged concealment of permitting violations.

Respondents’ final misrepresentation claim is that Claimants concealed from them permitting violations concerning Goldrich’s 2009 and 2010 mining operations that were pending when the Joint Venture deal was made. The evidence was disputed as to when Respondents were informed of such violations and whether information given at various points in time was at least sufficient to put the Respondents on notice that violations had occurred. The relevant evidence, which was generated over time, is summarized in the following chronology:

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1.On February 24, 2010, Goldrich submitted to the United States Army Corps of Engineers (“USACOE”) an application for a General Permit, which was approved, and allowed Goldrich to conduct mining operations on a defined 10-acre parcel at Little Squaw;

2.In February of 2011, Mr. Schara received an email from Ms. McAlee of the USACOE, discussing the permitting requirements and providing information on how to obtain an individual permit (Exhibit 171);

3.In June 2011, ADMA—a governmental agency involved with the permitting process--issued a report indicating that reclamation of the Goldrich site would be performed in 2011. Goldrich acknowledged that no reclamation had been done at the time the report was issued but proposed to perform remediation later in 2011, and also stated that the mine was on “reclamation on a maintenance basis” (Exhibit 171);

4.In July 2011, Charles Trowbridge visited the site and noted unstable conditions in the mining pit that Goldrich had created and sloughing of water from the pit walls into a pond on the pit floor. Mr. Trowbridge recalled telling Richard Walters, whom it appeared was representing Goldrich during the site visit, that Goldrich needed “get a hold on water”, which apparently referred to the water seepage from the pit walls and the pond on the pit floor(CT, pp. 962-66);

5.Trowbridge also asked Mr. Walters directly if Goldrich had any agency problems. Walters responded that the only agency problem Goldrich had was that its mining operations had exceeded the 10-acre footprint (CT, p. 1229)^⁵ Mr. James gave similar testimony with respect to the July 11 site visit. Like Mr. Trowbridge, James recalled Walters saying that Goldrich had no agency issues. In addition, he recalled Walters telling him that Goldrich had approvals from the State of Alaska and therefore didn’t care about USACOE permitting. (WJ, p. 2622). But Mr. Trowbridge did testify that, during the visit, he saw all the problems that USACOE later identified as permitting violations. James also testified that the conditions which he observed in

^⁵ Although the evidence was somewhat unclear on this point, in July 2011 Mr. Walters may no longer have been an officer or director of Goldrich. Nonetheless, the evidence showed that he was at least the apparent agent of Goldrich in connection with his dealings with Mr. Trowbridge. Thus, Walters’ statements during the site visit may be attributed to Goldrich.

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the 2011 site visit still existed in 2012 and were the basis for the violations issued by USACOE at that time (WJ, pp. 2663-63).

6.In July 2011, and as a result of the site visit, Mr. Trowbridge formed the conclusion that the problems he had observed would have to be corrected, but testified that he thought Goldrich would do this work (CT, p. 966) and that he did not think these problems or Goldrich’s approach to solving them would interfere with an IP being issued to NyacAU or GNP (CT, p. 1077);

7.On April 3, 2012, the parties entered into a written Term Sheet regarding the joint venture. The Term Sheet had several provisions relevant to the permitting process. Claimants represented and warranted, in Paragraph 32(e), that they “had disclosed prior to the execution of this Term Sheet all information that either has knowledge of or with the exercise of reasonable diligence would know with respect to any legal disputes, environmental disputes, environmental hazards, material violation(s) and of any local, state or federal laws or regulations, including notices from any source or any violation or alleged violation related to or arising out of use or activities on or near the claims.” Paragraph 23, entitled “Placer Permitting”, made the Joint Venture responsible for obtaining and maintaining all necessary permits for exploration development and mining of the claims, “including without limitation resolution of matters with USACOE related to prior violation(s) of authorization to operate under General Permit 2006-1944 (the Goldrich General Permit)”. Paragraph 23 also gave NyacAU the right, if these permitting issues were not resolved in 2012, to either dissolve the joint venture or elect to extend by one year the Minimum Production Requirement.. This indicates that the parties had already discussed the USACOE’s recognition of Goldrich’s violations before the Term Sheet was signed.

8.On April 30, 2012, Charles Trowbridge attended a meeting with the USACOE. At the meeting, Mr. Trowbridge informed USACOE that there was an unstable condition in the mine pit at Little Squaw and that dirty water from mining operations was breaching a bypass ditch and running directly into Little Squaw Creek. The reaction of Leslie Tose, who represented USACOE at the meeting, was a confirmation that these conditions violated permitting regulations and would

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have to be resolved. She then suggested that a cease-and-desist order might be necessary to get Goldrich’s attention regarding the need to correct the violations. Ms. Tose added that, in the interim, NyacAU would not be able to obtain an individual permit in 2012 and, up to the point that it did receive an individual permit would be restricted to mine operations in only a 10-acre parcel under a General Permit that would be granted by USACOE to NyacAU after reclamation work under the Goldrich permit was completed. Mr. Trowbridge testified that the April 30^th meeting was the first he had learned that the problems he had observed at the mining site previously were recognized by USACOE as violations of permitting regulations. (CT, p. 1072).

9.On April 30, 2012, Ms. Tose sent a letter to Goldrich (to Mr. Schara attention), setting forth the violations Goldrich had committed at the site and making clear that the violations would have to be corrected promptly (Exhibit 165).

10.On May 3, 2012, Mr. Walters was told by Ms. Tose of a “wetlands” violation in the area of the tailings road of the Little Squaw Mine. Walters responded by saying that he did not believe there was a wetlands violation (Walters, p. 323), and sent Goldrich’s entire permitting file regarding Little Squaw to Tose (Walters, p. 169) for examination. Tose explained that she was unable to open the file. Walters also testified that he told Schara about his position on the wetlands violation and emphasized that Goldrich did not need any further permitting from USACOE);

11.On May 22, 2012, Mr. Schara responded to USACOE’s 2012 letter by promising to resolve the violations and requesting that USACOE hold off on issuing a cease-and-desist order. (Exhibit 171; Schara,. p. 717).

12.On May 25, 2012, a meeting was held at USACOE offices with Leslie Tose, Charles Trowbridge and Michael James (representing NyacAU), and Bill Schara (representing Goldrich). At the meeting, Mr. Trowbridge proposed having Goldrich put in a lined ditch to replace the bypass that Goldrich had installed and avoid polluted water draining directly into Little Squaw Creek, to reactivate settlement ponds to get mud out of the water, and to stabilize the side slopes of the mine pit. Schara stated that he had not previously been aware that these and other

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matters observed by Mr. Trowbridge during his 2011 visit were violations of permitting regulations, but reiterated that Goldrich was willing to correct them.

13.Following the May 25, 2012 meeting, USACOE and Ms. Tose wrote a formal letter to Goldrich laying out the permitting violations and stating corrective measures to be taken. The stated violations included:

(i) material, especially sidewalls in the mining pit, were in an unstable condition;

(ii) dirty water from mining operations was draining into Little Squaw Creek;

(iii) there had been an improper reclamation effort by Goldrich (in 2011) regarding stream diversion;

(iv) there was a wetlands violation in the area of the tailings road; and

(v) Goldrich had abandoned the site without reclamation. (Exhibit E8).

The letter also informed Goldrich that its violations could all have been avoided with proper planning. (Exhibit H).

The corrective measures required by the USACOE included:

(i) close down the 2600 feet bypass previously constructed by Goldrich and construct a new spillway to channel water from mine operations;

(ii) repair “seeper” on the eastern pit wall and install rip-wrap on the apron and culvert;

(iii) reshape walls to a stable condition and seed with native grass mixture; and

(iv) present a time table for removing the tailings road and putting material back into the mine pit.

14.Following the May 25, 2012 meeting, Ms. Tose explained to NyacAU that individual permitting requirements had recently changed, in that an applicant was now required to obtain “a cultural and anthropology rating” and a determination of whether wetlands existed at the site, before an individual permit would be issued

15.On June 29, 2012, Ms. Tose wrote a letter which again described the citation issued to Goldrich by USACOE and explained that NyacAU would be confined to operations within a

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10-acre parcel in 2012 (through a general permit to be granted to NyacAU), and would not obtain an individual permit in 2012.

16.On August 12, 2012, after NyacAU had completed its reclamation work, a General Permit was issued to NyacAU for a 10-acre parcel which overlapped substantially with Goldrich’s 10-acre General Permit.

17.NyacAU/GNP applied for an individual permit in the latter part of 2012, which included the newly required “cultural and anthropology” report and wetlands analysis, but, because of the length of time necessary to obtain approvals of such reports, the individual permit was not issued until August 2013.

From the above chronology, it is clear that both Goldrich and NyacAU knew about the problems at the site which ultimately became the basis of violations cited by USACOE before the Term Sheet was signed, in early April of 2012. Paragraph 32 of the Term Sheet, which sets forth the representation and warranties of Goldrich [and its affiliate corporation GMC], contains the following representation and warranty on “Disclosures”:

“Goldrich and GNC (its affiliate corporation), had disclosed prior to the execution of this Term Sheet all information that either has knowledge of or with the exercise of reasonable diligence would know with respect to any legal disputes, environmental disputes, environmental hazards, material violation(s) and of any local, state or national laws or regulations, including notices from any source or any violation or alleged violation related to or arising out of use or activities on or near the claims.”

Read in isolation, Paragraph 32(e) could be interpreted as charging Goldrich with the knowledge that the conditions which existed in 2011 at the site were in fact violations of permitting regulations, even though no formal finding of violations had yet been made by USACOE; and Goldrich’s failure to impart such knowledge to NyacAU would arguably have been a misrepresentation or breach of warranty under this provision. This in fact was the primary argument pressed by Respondents as a basis for their misrepresentation claims. However, as stated above, the Term Sheet also contains a paragraph on “Placer Permitting”, which makes the Joint Venture (GNP) responsible for obtaining and maintaining all necessary permits for mining

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operations at Little Squaw, including, without limitation: “resolution of matters with the Army Corp of Engineers related to prior violation(s) of authorization to operate under [Goldrich’s General Permit]…”. The paragraph goes on to provide that if these prior violations are not resolved by 2012, “then NyacAU may dissolve [GNP] as provided in Section 3(c), or elect to extend by one (1) year all Minimum Production Requirements.”

These provisions of the Term Sheet are consistent with a discussion, testified to by Mr. Schara, between Schara and Dr. James before the Term Sheet was signed, about how the permitting violations issue could be resolved. Mr. Schara stated that he offered, and James agreed, that NyacAU would reclamate all conditions on which the violations were based, except for the wetlands violation in the area of the tailings road, which would be Goldrich’s responsibility. It was also agreed that Goldrich would bear full financial responsibility for NyacAU’s reclamation work. Finally, according to Mr. Schara, the parties agreed to allow NyacAU to extend by one year all Minimum Production Requirements to compensate for the time it would take NyacAU to perform the reclamation work.

The permitting issue was effectively put to rest by the later executed Operating Agreement. The Operating Agreement first incorporated all of Goldrich’s representations and warranties under the Term Sheet. (Section 4.8). It also carried forward the Parties’ agreement in the Term Sheet regarding the time period for achieving the Minimum Production Requirement by stating, in paragraph 7.3.8, that “if GNP is unable to obtain an individual permit from the USACOE for placer mining by July 1, 2012, then NyacAU, as Manager, “may elect to extend by one (1) year all Minimum Production Requirements.” The Operating Agreement also contained a new section which clearly reflected a further agreement by the parties regarding the impact of Goldrich’s prior permitting violations on the Joint Venture’s operations: Article XIV of the Operating Agreement dealt with dissolution and termination of the Joint Venture. Within that Article, Section 14.1.7, provided that the Joint Venture could be dissolved at NyacAU’s sole discretion, if “[GNP] cannot resolve matters with the US Army Corps of Engineers in 2012 related to prior violations of authorizations to operate under [Goldrich’s General Permit]; or related permits with respect to

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placer mining on the claims.” The Section went on to provide that if NyacAU chose to dissolve GNP on these grounds, it shall: “(1) be authorized under Alaska Law to take certain actions in the course of winding up [GNP]; (ii) have priority for payment of all lines of credit and loans to GNP prior to distribution of the assets in the course of winding up; (iii) Goldrich shall continue to be solely responsible for repaying LOC 2 and LOC 3 to NyacAU; and (iv) Sections 4.6 and 4.7 shall otherwise govern the dissolution.”

Of the two options regarding Goldrich’s permitting violations given to NyacAU under the Operating Agreement, the evidence is clear that NyacAU chose the latter --it moved forward with the rectification of the USACOE violations issued in 2012 (with the understanding that Goldrich would fully bear the expense of such work), applied for and obtained an Individual Permit in August of 2013, and extended the Minimum Production Requirement by a year when it learned from USACOE that it would not be issued an individual permit in 2012.

There also were also points in time, well prior to the execution of the Term Sheet, where NyacAU easily could have backed out of the deal--for example, following the July 2011 site visit, after observing conditions at the site and realizing that reclamation work would have to be done at least with regard to the water issues. Dr. James did testify that he had invested nearly $2 million in the project up to the time the Term Sheet was negotiated and signed, to purchase equipment, build a winter road and transport equipment along the winter road to the mining site, and for that reason was very reluctant to lose that investment by rejecting the deal based on permitting violations. . But all of this was done with full knowledge of the problematic conditions (except, arguably, for the wetlands issue), which James admittedly knew would have to be reclamated in any event, and which, as he and Trowbridge had predicted in 2011, later became the basis of the citations and reclamation requirements issued by USACOE. Even after those citations had been issued, and knowing that an individual permit would not be issued to NyacAU in 2012. Dr. James could have opted to make Goldrich do all the reclamation work, reassessed the situation at the end of the 2012 season, dissolved the Joint Venture under the Operating Agreement, and initiated a proceeding against Goldrich to try and recover his investment. Goldrich’s permitting violations also gave

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James leverage that might have allowed him to hold out for even a better deal, perhaps guaranteeing repayment of his $2 million investment to that date. But at the end of the day, James decided to move ahead, satisfied that the concessions in the Operating Agreement relating to permitting violations were sufficient to deal with the issue.

Accordingly, Respondents’ claim that it was defrauded by Goldrich intentionally, recklessly or negligently concealing what it should have known to be outstanding permitting violations has not been proven by clear and convincing evidence. Nor by virtue of the above-cited contractual provisions, has it been shown that Goldrich breached a contractual obligation in this regard.

4. Misrepresentation damages sought by Respondents

Respondents’ damages expert, Ronald Greisen, articulated in his expert report several categories of damages sought by Respondents based on their misrepresentation claims: (i) monies allegedly expended by NyacAU in the years 2012-2014 which did not benefit GNP ($2,094,294 in 2012, $5,656,597 in 2013, and $2,034,304 in 2014), plus prejudgment interest thereon, (ii) lost profits at Little Squaw mine from 2012-2014 ($2,281,500), plus prejudgment interest thereon; and (iii) lost profits from the Bethel mining operation for 2014-17 ($5,609,960), plus pre-award interest thereon (Greisen Reports, Joint Exhibit 27).

Based on the above analyses, these damage requests are denied, except with respect to Dr. James’ claim for reimbursement of his $350,000 stock purchase (See Section XVIII 1.).

XIII.RESPONDENTS’ CLAIM FOR BREACH OF PLACER MINING CLAIMS LEASE REGARDING USE OF INFRASTRUCTURE (CAMP)

Respondents claim that Claimants have breached the Placer Mining Claims Lease (“Claims Lease”), which was entered into effective April 2, 2012, very close to the same date that the parties signed the Term Sheet (Joint Exhibit 2.5). The claim is based on Section 12 of the Claims Lease, which states, in part, that “GNP and its employees, contractors, visitors, invitees, agents and representatives (collectively “GNP Parties”) will have unrestricted, nonexclusive use of all Infrastructure existing at the claims as of the effective date of the lease.” Section 12 goes on to also provide that GNP and the “GMC Parties” (which includes Goldrich) will meet yearly, no later

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than March 15, to discuss the use of existing Infrastructure for the upcoming mining season and “will use their best efforts to amicably resolve any conflicts in use, with the GMC parties having priority to use existing Infrastructure if there is a dispute.” Under Section 12(d), the GMC parties were responsible for maintaining, repairing or replacing any Infrastructure which existed as of the effective date of the Claims Lease unless otherwise agreed by the parties; but this responsibility was to be allocated between GNP and GMC to the extent that GNP used any of the existing Infrastructure.

Consistent with this provision of the Claims Lease, Dr. James testified that he anticipated using the existing camp infrastructure which Goldrich had constructed at Little Squaw before he entered into the deal, and then expanding the camp, as needed, as more people came in over the years to work the mine (James, pages 26-27). Mr. Schara’s testimony was that, even though he acknowledged the Claims lease gave GNP the right to use existing Infrastructure when it otherwise was not being used by Goldrich, he refused to allow GNP to use the camp facilities because Goldrich was “contemplating” performing hard rock drilling at the site in 2012 and also had some pieces of equipment stored in some of the tents.

The evidence showed that Goldrich had spent $1.4 million in hard rock mining in 2011 (Exhibit CD-524 2011 BOD Minutes), which of course required it to use its camp facilities. In a Board of Directors meeting held on March 29, 2012, Mr. Schara presented a proposed contract for 2012 drilling, but the Board did not approve it, and subsequent Board meeting minutes make no reference to hard rock drilling in 2012, or for that matter in any year thereafter. It was undisputed that Goldrich in fact performed no hard rock drilling or other operations at the site in 2012 or afterwards, until Goldrich, in 2015, performed reclamation work—through a third party subcontractor-- on the hillside to remove the tailings road, long after NyacAU had constructed a new camp. In an email to Dick Huebner (the GVC principal with respect to the GVC loan transaction) dated November 26, 2012, Mr. Schara acknowledged that Goldrich had done no drilling at the site in 2012 because of lack of financing. Thus, with the possible exception of some tents necessary to secure equipment (although this is not certain because the evidence indicated

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that Goldrich had no use for the equipment after 2011), the evidence showed that the Goldrich camp was in fact available in large part for GNP to use during the 2012 mining season and for years thereafter.

However, the evidence also indicated that Mr. Schara made his representation about the unavailability of the camp to Dr. James before the Claims Lease was signed (April 2, 2012), when it in fact was “contemplated” that Goldrich would use the camp for hard rock drilling in 2012. The drilling equipment that Goldrich had used in 2011 was still on site, and at some point in early 2012 (the exact date was not identified), Goldrich had employees on the site for hard rock drilling operations, as confirmed by James’ testimony that he was able to use some of Goldrich’s employees to help with NyacAU’s 2012 reclamation work.

When the Board of Directors failed to approve hard rock drilling for 2012 on March 29, it became clear that Goldrich no longer “contemplated” using its camp in 2012, However, based on Schara’s earlier representation, James had been required to promptly take alternative action, which he had done by leasing camp facilities (the “Arctic Camp”) from a third party (Global Services) early enough in 2012 to allow the facilities to be transported to the site on the winter trail.

Based on this evidence, it cannot be said that Schara’s representation to James breached the Claims Lease, (which had not yet taken effect when the representation was made), or that the representation was false or inaccurate. Accordingly, Respondents are not entitled to relief based on Mr. Schara’s statement that Goldrich “contemplated” using the camp facilities in 2012.

Once the Claims Lease was signed (April 2, 2012), however, Goldrich had a responsibility to make the camp available when it was not in use, which was the situation from 2012 until at least 2015, when Goldrich—through a third party—performed reclamation work on the tailings road. The evidence showed that Goldrich did not make the facilities available to NyacAU during this period, but the evidence was unclear as to whether NyacAU had any need to use the Goldrich camp or incurred any damages from being denied access to it.

Respondents’ damages expert, Ronald Greisen, calculated damages incurred by Respondents from being denied access to the Goldrich camp based on (i) the cost of laying the

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concrete pad for the new camp, and constructing water and septic tank systems ($198,444—Greisen Report, Ex. 2.5, page 3 and schedule 1.1); (ii) payments to third party vendors to assemble the Arctic camp ($124,286)—Id.); (iii) lease payments made by GNP to Global Services for rental of the Arctic camp from 2012-2015 ($1,579,598--Greisen Report, page 3; GNP Schedule 1.1).; and (iv) prejudgment interest (5%) commencing on the date of the Claims Lease. However, these calculations are based on the assumption that Mr. Schara’s pre-Claims Lease representation was inaccurate and became a breach of the Claims Lease once it was signed, and that Respondents were wrongfully forced to lease and install the Arctic camp based on the alleged misrepresentation.

However, since it is the Panel’s view that Mr. Schara’s representation was accurate at the time it was made, the question then arises as to what damages, if any Respondents suffered after they entered into the lease with Global Services, when the Claims Lease had been signed and the Goldrich camp was not being used and no longer “contemplated” to be used in 2012. The Panel assumes, that, at this time, the Arctic camp had been leased, either had been delivered or was in the course of being delivered on the winter trail, and that NyacAU had no power to undo the deal with Global Services.

Mr. Greisen’s damages analysis did not address whether any expenses were incurred by Respondents beyond those arising from the lease and installation of the Arctic camp. Accordingly, and disregarding expenses associate with the Arctic camp itself, Respondents may, at their option, submit a claim for any costs, expenses, or other damages allegedly incurred by Goldrich not making its camp available to NyacAU after the Claims Lease was signed (April 2, 2012), based on exhibits submitted in the arbitration. Any such submission shall be filed within thirty (30) days of the date of this Interim Award, and Claimants shall have thirty (30) days to respond to the submission. The Panel will incorporate its decision on Respondents’ claim into the Final Award.

XIV.RESPONDENTS’ CLAIM FOR BREACH OF THE OPERATING AGREEMENT BY GOLDRICH ALLOWING THE CLAIMS TO LAPSE

Respondents claim that Goldrich breached the Operating Agreement by failing to make the filings and pay the amounts necessary to maintain the Claims (as well as the assignment thereof to

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GNP under the Claims Lease) in good standing. In this regard, Section 5.2 of the Operating Agreement states that “Goldrich or its designee shall file with the State of Alaska Affidavits of Annual Labor and pay the annual rate for the Claims”. It also obligates Goldrich to provide GNP copies of said Affidavits and proof of rental payments within at least thirty (30) days prior to the filing deadlines. In this case, Goldrich admittedly missed the filing deadline of December 9, 2013 and gave no advance notice to GNP that it might not complete the necessary paperwork in time to meet the deadline. (William Schara pages 1355-1356). In fact, Schara learned of Goldrich’s missing the filing date from Goldrich’s own claims service advisor (Id.)

The parties conceded that under relevant Alaska mining regulations, the failure to timely file affidavits and make rental payments necessary to keep the claims in force automatically triggered a 45 day period after the due date in which the claims were “open”, meaning that any third-party could come onto the property and stake its own claim.

Fortunately for the Parties, no third-party stakeholder appeared. At this same time, Dr. James and the project needed financing, and James was courting a potential investor (Clark Gillam) to provide a $5.7 million loan with an accelerated payback and a 10% minority equity interest in NyacAU’s 50% interest in GNP. Dr. James claimed that the “open claims” issue caused Gillam to back out of the deal. However, Claimants point out correctly that Gillam stated that he was not interested in making the deal on December 2, 2013, as shown by his email to James of that date (Exhibit 68), approximately a week before Schara became aware that Goldrich had missed the required filing date to keep the Claims in force. Further, both James and Ms. Attala testified of general frustration in negotiating with Mr. Gillam because of the difficulty of closing a deal with him. Thus, it cannot be said that Goldrich’s failure to maintain the mining claim caused the potential deal with Gillam to crater.

Dr. James also claims that he is entitled to $10,416, plus pre-judgment interest thereon at 5%, for payment of interest on a short term $500,000 bridge loan from Gillam to mitigate the impact of Gillam backing out of the contemplated investment of $5,700,000. However, as set forth above, the evidence shows that Mr. Gillam chose to back out of the loan before the Claims

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issue arose. Also, to the extent that the bridge loan was used to purchase equipment or for other project purposes, both the principal and interest on the loan could have been added to LOC 1 when paid by NyacAU. Beyond this, Dr. James is not entitled, individually, to recover interest paid on the $500,000 bridge loan.

GNP’s claim that it is entitled to recovery of legal fees and costs of $14,930, plus pre-judgment interest at 5%, is also not well taken. These charges appear to have been for the filing of a lien to protect GNP from damages caused by the open claims problem. However, paragraph 15 of the Claims Lease provides that “GNP and GMC shall keep the Claims free and clear from all liens or encumbrances for labor, materials, or other indebtedness of any kind”, and further states that any Party who fails to do so will have to bear the costs incurred by the other Party in expunging the lien. Thus, the lien generated by the legal services in issue is invalid (and should be expunged by Respondents if that has not already incurred), and Respondents are not entitled to recover attorneys’ fees concerning the lien as damages for Claimants’ breach of the Operating Agreement.

Dr. James testified that a particular need he had for the Gillam funding was to enable the purchase of six haul trucks for the project, needed for the 2014 season. The records show that NyacAU, through Bear Leasing, in fact was able to purchase six A40 haul trucks late in 2013 for use in 2014 (although it was not clear whether the Gillam bridge loan was used for this purpose). However, the open claims period effectively prevented the trucks from being transported on the winter road in 2014--instead, the equipment had to be stored in Fairbanks. Respondents claim that they incurred damages from inaction by Claimants’ that led to the “open claims period, by (i) being unable to lease the six purchased trucks to GNP for the 2012 season, in the amount of $158,544, less amounts Bear was able to earn by renting four of the six trucks, resulting in a net damages figures of $107,900; and (ii) having to pay storage costs for the trucks in Fairbanks ($3000). (Greisen Report, page 6, Bear Leasing Schedule 1.0) Yet the evidence showed that NyacAU in fact had no use for these trucks at the site in 2014, since they lacked financing to perform any significant mining operations; therefore, NyacAU had no grounds to charge GNP rent

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for the use of the trucks. Storage costs as well were more the result of lack of financing than the “open claims” period. Thus, Respondents are not entitled to relief on this claim.

XV.RESPONDENTS’ CLAIM FOR RECOVERY OF BOOK ENTRY OF INTEREST UNDER LEASE FOR WASH PLANT

Respondents have also presented, through their expert Mr. Greisen, a claim by NyacAU, (through Bear Leasing) for an entry on GNP’s books of an unpaid and unbilled interest expense of $66,180 under the appropriate Lease, incurred during the period of construction of the wash plant. This request shall be corrected by adding as damages to Respondents the amount of $66,180 as unpaid interest under the appropriate Lease for the wash plant, which shall be booked as a debt liability on GNP’s books, consistent with the Panel’s ultimate determinate on whether Leases 1-6 are capital leases. In the dissolution process, NyacAU (through Bear Leasing) shall be treated as a third party creditor with respect to the recovery of this amount from GNP.

XVI.RESPONDENTS’ CLAIM FOR VIOLATION OF ALASKA UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION ACT

Respondents have counterclaimed that Goldrich, as well as a number of its officers and Directors individually, should be held liable under the Alaska Unfair Trade Practices Act (the “Act”). Section 45.50.471 of the Act expressly prohibits a wide array of specifically defined acts, focused primarily on certain types of fraud, misrepresentations, and concealments.

None of these appear to fit Respondents’ claims, and Respondents do not contest this. Rather, as explained in their arbitration brief, Respondents rely on Section 45.50.545 of the Act, which states that “[i]n interpreting AS 45.50.471, due consideration and great weight should be given the interpretations of 1 U.S.C. 45(a)(1) (§ 5(a)(1) of the Federal Trade Commission Act” (“Federal Act”). Respondents then cite a case decided under the Federal Act, State v. O’Neill Investment, Inc. 609 P.2d 520, 535 (Ala. 1980) for the proposition that any “unfair or deceptive practices” are within the Federal Trade Commission’s enforcement powers, and, by virtue of Section 45.50.471, within the purview of the Act as well. Respondents also claim that the individual officers and directors can be held liable for “unfair and deceptive practices” under the case of Federal Trade Commission v. Publishing Clearing House, Inc, 104 F 3d 1168, 1170 (9^th

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Cir. 1996), which held the President of a telemarketing company which she had founded to have engaged in unfair and deceptive practices.

Setting aside the question of whether the Federal Act is legally binding on the Act, both of the above cases involved extreme examples of unfair and deceptive practices. In State v. O’Neill, the Attorney General brought an action against a debt collection agency, which alleged a litany of egregious actions by debt collectors who worked for the company, including coercion, threats and intentional misrepresentations to debtors to induce them to pay outstanding balances on their debts. In FTC v. Publisher’s Clearinghouse, the court found that the company president had full knowledge of and participated in a “solicitation script” used for potential customers that contained a number of material misrepresentations designed to obtain customer sign-ups, sometimes accompanied by payments of money.

By contrast, in this case the Panel has found Goldrich liable for only one act of negligent misrepresentation—concealment of dilution information in the Updated Martin Report, and has denied most of the damages claims asserted based on that misrepresentation. All other liability found and damages awarded to Goldrich or GNP are based on the Panel’s reading of the Operating Agreement and related evidence, which, at the most, are contract violations.

Additionally, no evidence was produced that individual officers and directors of Goldrich had knowledge or intentionally or recklessly engaged in, a pattern of unfair and deceptive practices with regard to Respondents.

The Act—and the Federal Act—by their terms, do not pertain to or proscribe a single negligent misrepresentation of fact by a party, nor are they activated by breaches of contract.

Accordingly, Respondents’ claims for violation of the Act are denied.

XVII.RESPONDENTS’ CLAIM FOR IMPOSITION OF ALTER EGO LIABILITY

Respondents have also claimed that the corporate entity—Goldrich—should be disregarded for purposes of liability and damages, and that the officers and directors named in the counterclaim should be held individually responsible for damages imposed against Goldrich. Respondents rely solely on the case of L.D.G. v., Brown, 211 P.3d 1110 (Ala. 2009) to set the

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legal standard for their claim. LDG was a dram shop case brought by the representative of the estate of a woman who had been shot and killed by an intoxicated man, against a bar (a corporation) and the bar’s sole shareholder, as an individual. The allegation was that the bar had served the man drinks while they knew he was intoxicated, which caused him to commit the crime. The individual shareholder of the company that owned the bar was dismissed from the case on a directed verdict at trial, and the representative appealed. The appellate court, while recognizing that alter ego liability was a remedy to be used only in “exceptional circumstances”, held that the facts were sufficient to raise a jury question as to alter ego liability, and remanded the case to the trial court on that basis. The court articulated two standards for imposing alter ego liability: the “mere instrument” test, consisting of six factors to show that the corporate entity was used as an instrument of a shareholder, and a more general standard that a party cannot hide behind the corporate form to avoid liability when to do so would “defeat public convenience, justify wrong, commit fraud, or defend crime”. The court then held that that the following evidence concerning the individual shareholder was sufficient to raise a jury question re alter ego liability under the latter standard: (i) failure to honor corporate formalities; (ii) payment of employees’ salaries out of shareholder’s own pocket, and sometimes under the table; (iii) commingling of corporate and personal funds, and personal use of corporate funds; (iv) manipulating the business in and out of the corporate form to avoid taxes; and (v) undercapitalizing the company.

Respondents’ alter ego claim against individual officers and directors of Goldrich falls short of this standard. Goldrich is a public company which, during all relevant periods, maintained a board of directors and officers, made required public filings, and, albeit imperfectly, held annual board of directors and shareholders meetings where minutes were taken and later circulated. With respect the Little Squaw mine, it cannot be said that Goldrich was undercapitalized. The Operating Agreement provided, in Section 3.3, that “[n]o Member shall be required to contribute any additional capital to the Company” beyond amounts initially contributed, and that “[n]o member shall have any personal liability for any obligation of the

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Company”. Further, Respondents’ alter ego claim is based primarily on claims of misrepresentation by Goldrich, but the Panel has found that no misrepresentations were proven other than in connection with Line 11 dilution, as to which damages were speculative; other liability against Goldrich was based on failures to comply with the Operating Agreement. Further, other than William Schara, no members of Goldrich’s board of directors were deposed or called to testify, and no evidence was offered as to any of them which suggested that they had used, or had the power to use, Goldrich to accomplish the unsavory objectives necessary to impose alter ego liability. The extraordinary remedy of alter ego recoveries against these individuals cannot lie in such circumstances.

CLAIMS AND RELIEF REQUESTED BY MICHAEL JAMES

XVII.MICHAEL JAMES’ DAMAGES CLAIMS

Dr. James, individually, has made three claims against Goldrich: (i) for reimbursement of $350,000 paid by James to purchase Goldrich’s stock; (ii) for reimbursement of an expense which James incurred personally in connection with the reclamation work by NyacAU of Goldrich’s permitting violations in 2012; and (iii) a claim for recovery of interest on a $500,000 bridge loan obtained from the Gillam, which has been dealt with in Section XV, above.

1.Claim for Repayment of $350,000 Stock Purchase.

Article 14 of the Term Sheet provided that, upon execution of the Claims Lease and the Operating Agreement, James “agreed to purchase Three Hundred Fifty Thousand Dollars ($350,000 US) of publically traded common stock of GNC.” This obligation is incorporated into the Operating Agreement under Section 4.8, and was fully complied with by Dr. James when the Operating Agreement was signed.

James’ claim is based on the misrepresentation counts in Respondents’ pleading, for fraud and negligent or innocent misrepresentation. He testified that, had he known the true facts regarding dilution in the grade of material in the pay zone, that the deposit was an “aggregational deposit” rather than an “alluvial deposit” and/or that Goldrich had committed permitting violations at the site by not appropriately reclamating its 10-acre parcel upon termination of Goldrich’s

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mining activities in 2011, he would not have entered into the deal and certainly would not have purchased Goldrich stock. As previously explained, the Panel does not believe that Respondents met their burden of proof to establish actionable misrepresentation claims with respect to the “aggregational” issue or the “permitting violations” issue, but did meet the “clear and convincing” standard with respect to negligent concealment of 16.87% dilution reported in the Updated Martin Report draft. The Panel has denied damages for this claim on grounds that they were too speculative. We conclude, however, that this concealment claim raises different causation and damages issues in the context of Dr. James’ claim for recovery of his stock purchase payment.

The Panel is not certain that information from the Updated Martin Report on the dilution at Line 11 would have prevented James from entering into the deal altogether, but in the Panel’s view, the uncertainty raised by the dilution on the quality of the deposit at the mine site likely would have caused James concern, as it did with Mr. Martin. It is reasonably foreseeable, in the Panel’s view, that this would have impacted how much James would have been willing to pay up front for the purchase of Goldrich stock. Regrettably, precise calculation of damages in this regard is difficult. However, the Panel believes it is reasonable to assume that, had James known the true facts about dilution at Line 11, and its potential indication of dilution in other areas of the site, he would have reduced the price paid for his purchase of Goldrich stock by at least 17%, the amount of dilution at Line 11 reported in the Updated Martin Report that James was never provided. Accordingly, James is entitled to reimbursement from Goldrich of 17% of his $350,000 stock investment, which equals $59,500. Prejudgment interest will not be awarded, because this amount cannot be calculated with certainty.

2.Personal Payments of Expense Related to 2012 Reclamation.

As explained previously, NyacAU bore the costs of the reclamation effort made in 2012 on Goldrich’s behalf, conditional on Goldrich reimbursing NyacAU for all those expenses. Goldrich did not deny this obligation, but claimed that GNP had overcharged Goldrich for the work. On July 20, 2012, Dr. James purchased “tundra fabric”, which was used for lining of the bypass and stabilization of the pit walls, and in doing so incurred personal expenses of $9,858. Mr. Greisen

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also determined the amount of pre-judgment interest on this amount at 5% through August 22, 2015 of $3,015. (Greisen Report, p. 8, Dr. James’s Schedule 1.2) There is no dispute that this amount was paid by James, or that the fabric was used in the reclamation effort. Therefore, Dr. James is entitled to repayment by Goldrich of this expense, plus prejudgment interest thereon at 5%, as calculated by Greisen.

DISSOLUTION AND LIQUIDATION

XVIII.THE PARTIES’ REQUESTS FOR ORDERS REGARDING DISSOLUTION/ LIQUIDATION OF GNP

Both parties have requested various orders from the Panel which bear some relation to the dissolution/liquidation process to be carried out (under the Panel’s supervision as requested by the Parties) following issuance of this Interim Award. As set forth in more detail below, the Panel has issued rulings regarding some of these orders and deferred ruling on others which it believes are more properly dealt with in the course of the dissolution process.

A.Orders Requested by Claimants

The orders requested by Claimants are set forth in Exhibit 426. The Panel’s rulings in connection therewith are as follows:

1.Order appointing Goldrich to replace NyacAU as the Manager of the dissolution/ liquidation process.

The dissolution/liquidation process for GNP is laid out clearly in Article XIV of the Operating Agreement. Article XIV provides that the “Manager”, NyacAU, is responsible to “effect the dissolution of [GNP]” by filing and publishing a proper notice as required by the Alaska Revised Limited Liability Company Act (Operating Agreement, §§ 14.2, 14.3 and 2.1), and thereafter to “act with due diligence as liquidator to wind up the Company within one (1) year or such longer period as may be agreed in writing by the Members”. If NyacAU fails to accomplish the liquidation of GNP within one year or any extension agreed by the Parties, the “Member that is not the Manager,” Goldrich, then has the right to complete the liquidation process, including, if not already done, establishment of reserves for “contingent or unseen liabilities”, followed by final distributions, if any, to the Members. Since the Panel has

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jurisdiction over the dissolution/liquidation process, it is also empowered to replace NyacAU with Goldrich or even a third party (if appropriate) if NyacAU fails to perform its duties. To date, however, NyacAU has complied with all processes put in place by the Panel for liquidation (through third party sales of certain equipment), and there is no evidence indicating that NyacAU will not continue to do so. Thus, at this time there is no basis to consider the replacement of NyacAU as Manager of the dissolution and liquidation of GNP.

Claimants have argued that NyacAU should be replaced by Goldrich for this purpose, based upon NyacAU’s alleged failure to perform its obligations under the Operating Agreement. However, and on balance, there was insufficient evidence presented at the hearing to support this contention.

2.Claimants Requested Orders 1 through 5.

The orders requested by Claimants are set forth in Exhibit 426. Requested Orders 1-5 are addressed elsewhere in this Interim Award: (i) Requested Order 1—Section III; (ii) Requested Orders 2 and 3—Section 1; (iii) Requested Order 4 (actually two requested orders)—Section II; and (iv) Requested Order 5—Section XI.3.

3.Claimants’ Requested Order No. 6.

Requested Order 6 asks the Panel to order that all equipment leased or rented to or owned by GNP be sold at fair market value to Goldrich, with final payment for such equipment being made on 8/31/19 and interest on the purchase paid at the same rate that is being charged by Alaska Growth Fund on its $4,000,000 loan to NyacAU to fund mining operations. However, Goldrich has no legal right, under the Operating Agreement, including the liquidation process set forth herein, to require that sales of all equipment be made to it, as opposed to some other third party purchaser. Respondents have acknowledged that Goldrich has the right to purchase any and all equipment for cash at fair market value, in the amounts calculated by Michael Tope in his Expert Report. However, NyacAU’s obligations in connection with the liquidation program are to ensure that it obtains the best prices possible for sales of the equipment, sufficient to pay off any encumbrances on the equipment and hopefully provide GNP with some net recovery. Goldrich

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has no contractual right of first refusal with respect to any such sales, although it certainly can put in its cash bid for any piece of equipment when it is auctioned and hope it emerges as the highest bidder.

4.Claimants’ requested order for NyacAU to escrow interim distributions paid to NyacAU.

Requested Order No. 7 asks for an order requiring NyacAU to escrow all revenue it has been paid as an interim distribution under Section 10.1.2, and use it to pay off all encumbrances on leased or purchased equipment. However, Article 10 of the Operating Agreement does not impose any obligation on Members, including NyacAU, who are actually paid interim distributions under Section 10.1.2, to use those distributions in a certain way, whether to pay off encumbrances or reinvest them in the mining operation. Accordingly, the Panel denies this request.

5.Claimants’ requested order for GNP to retain $100,000 for liquidation costs and for Respondents to pay any and all liquidation costs in excess of this amount.

Requested Order No. 8 asks for the establishment of a $100,000 reserve for liquidation costs and an order requiring Respondents to pay any overage themselves. But again, this request finds no support in the Operating Agreement. The dissolution procedure in Article 14.3 is clear that during liquidation, the Manager is obligated to first pay the debts and liabilities of GNP, including any amounts owed to the Members (but excluding Capital Accounts) and “the expenses of liquidation in the order of priority set forth herein”. After that, the Manager may establish, at its discretion, any reserves deemed necessary for “contingent or unforeseen liabilities or obligations of [GNP]”, which conceivably could include anticipated future liquidation expenses. Thus, as this process unfolds, it will be up to the Manager to determine if a reserve for liquidation costs is appropriate after payment of accrued liquidation expenses, subject to oversight by the Panel to resolve any potential disputes. NyacAU itself has no legal obligation to fund liquidation costs for GNP.

6.Claimants requested order No. 9 that ownership of the plant be transferred to GNP.

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This requested order is addressed in Section XIV A. 3, above. Also, it deserves mention that Goldrich has recently agreed that the wash plant may be disassembled by NyacAU and stored in Fairbanks, despite the fact that such action (at least according to Respondents’ expert Michael Tope), would significantly diminish the plant’s value on the market.

7.Claimants requested order preventing Respondents from removing small tools or items purchased by GNP for the project site.

The Panel has issued previous orders, which it now confirms, concerning transfer of equipment and other items owned by GNP to Fairbanks for storage in order to maximize their value on the market. The same order applies to any other items, including pieces of equipment and tools owned by GNP, unless it can be shown that there is some economic advantage related to the liquidation to leaving these items on site, and that they will not lose value if they are not moved to Fairbanks.

8.Claimants request for orders transferring mining permits and mining claims to Goldrich.

In Requests nos. 13 and 14, Claimants request an order requiring Respondents to transfer all mining permits and mining claims (as defined in the Placer Mining Claims Lease and Assignment) to Goldrich. However, recent briefing by the parties on this issue suggest that transfer of assignment of such rights is not a simple matter, but may require analysis and approval by Government agencies. Accordingly, it is the Panel’s view that this issue be deferred until the liquidation process gets underway and that the Parties investigate and meet and confer as to how a transfer of these rights could be made, in accordance with relevant governmental regulations.

B.Orders Requested By Respondents

The orders requested by Respondents and the Panel’s rulings in connection therewith are as follows:

1.Respondents’ requested order confirming dissolution.

Respondents request an order from the Panel confirming the dissolution of the Joint Venture under Article XIV. The Panel grants this request, conditioned upon NyacAU promptly

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filing and publishing a Notice of Dissolution in accordance with Section 14.2 of the Operating Agreement.

2.Respondents’ requested order denying GNP an automatic right to purchase equipment.

The extent of GNP’s rights to purchase equipment are addressed in Section XIX.A.3.

3.Respondents’ requested order concerning booking of Alaska Growth Fund claim.

As has been discussed, Alaska Growth Fund made a significant loan to NyacAU to fund mining operations. At this time, there is apparently $2,000,000 outstanding on the loan, which of course will have to be addressed by NyacAU in accordance with the liquidation process (Article 14.3 of Operating Agreement). The loan may not be booked as a capital contribution (or in any other manner) on GNP’s books, sincde it is a loan of funds subject to repayment under LOC 1 and Article 14.3.1.. On this condition, the request is granted.

4.Respondents’ requested order for Tobin Creek reserve.

Respondents have also requested an order requiring Goldrich to establish a $30,000 reserve for Tobin Creek. This apparently is the estimated amount it would take to remove mercury and otherwise clean up the Tobin Creek site so that a mining permit of some kind can be issued. However, the Operating Agreement does not impose upon any Party obligations with regard to Tobin Creek, and no mining operations took place there from 2012 to the present. NyacAU argued in the hearing that they should be entitled to $124,000 in lost profits regarding the mining of Tobin Creek, based upon an indication of interest received from a third party that it might wish to do such mining at Tobin Creek in the future. However, this amount is not part of Respondents’ current damages claims and, in any event, would be too speculative for the Panel to award.

5.Respondents’ requested order that any damages awarded to them are actually an offset to distributions (or damages) due Goldrich.

This request is granted in favor of both parties and shall be applied reciprocally.

6.Respondents’ requested order to determine balances of all lines of credit.

The Panel considers this request to be part of the liquidation process and subject to determination by the Manager (with Goldrich’s right to provide input) as part of its duty to ensure

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that all debts and liabilities of GNP are paid on a priority basis, including amounts due NyacAU as a creditor under any letters of credit Accordingly, within twenty (30) days of the date of this Interim Award, NyacAU shall, in writing, provide its position on the balances of LOC 1 and LOC 2, as of March 31, 2019, and then apply any offsets or credits established by this Interim Award, listing each such offset or credit separately. Goldrich shall file any response within fifteen (15) days thereafter.

C.Panel’s Continuing Jurisdiction Over the Dissolution/Liquidation Process

The parties have requested that the Panel’s jurisdiction in this matter continue throughout the process of dissolving and liquidating GNP. The Panel agrees to continue its jurisdiction for this purpose, noting that the arbitration clause of the Operating Agreement (paragraph 15.10), extends to the dissolution and liquidation process under Article XIV.

As an initial matter, to ensure that the dissolution and liquidation process is carried out fairly to all parties, NyacAU, as Manager of the dissolution/liquidation process, shall do the following:

i.If it has not done so already, NyacAU shall immediately file and publish a Notice of Dissolution and Liquidation in accordance with Section 14.2 of the Operating Agreement;

ii.After the transport of equipment from the site to Fairbanks has been completed (with the exception at the site needed for reclamation work), NyacAU shall provide a written inventory of such equipment and its location in Fairbanks;

iii.For any equipment or other items that are remaining on site for reclamation, NyacAU shall ensure that such equipment has been adequately protected from winter conditions so as to be fully operational when reclamation begins and during the reclamation process;

iv.NyacAU shall provide to the Panel and to Claimants a list of all debts and liabilities of GNP, including debts and liabilities owed to NyacAU or Claimants in accordance with this Interim Order, including identification of the creditor and the amounts due. NyacAU shall also provide any estimate of liquidation expenses that it may have prepared (although NyacAU is not required to prepare any such estimate);

v.For any sale of the equipment, NyacAU shall provide the Panel and to Claimants at least ten (10) days advance notice in writing of the proposed sale, and Goldrich shall be allowed to either meet the proposed price by the payment of a cashier’s check or wire transfer, or object to the proposed price if Goldrich has a reasonable grounds to believe that the proposed amount of the sale is less than fair market value and that a better price may be obtained from Goldrich or another third party;

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vi.NyacAU shall keep a current written record of all such sales, which shall include identification of the buyer and the amount of the sale, the amount of any encumbrance on the items sold, proof that the encumbrance has been removed by payment to the appropriate creditor from the sale proceeds, and use of net proceeds. NyacAU shall also keep a written record of liquidation expenses;

vii.All amounts derived from the sales of equipment or other assets in the liquidation process shall be deposited in a separate account, from which outstanding debts and liabilities of GNP and the expenses of liquidation shall be paid, in accordance with Section 14.3.1. NyacAU shall provide to the Panel and to Claimants notice of any amounts remaining in the account after all such debts, liabilities and liquidation costs have been paid, and any such amounts shall remain in the account pending further order of the Panel;

viii.NyacAU shall provide notice to the Panel and to Claimants of any reserves which NyacAU proposes to establish under Section 14.3.2 of the Operating Agreement, and Claimants shall have a right to object or comment on the proposed reserve(s) before they are implemented; and

ix.NyacAU shall give notice to the Panel and to the Claimants of monies and properties, if any, to be distributed to the Members in accordance with Sections 14.3.3 and 14.3.4 of the Operating Agreement. The proposed amounts shall be distributed and the allocation thereof shall be approved by the Panel before they are made.

The Panel may issue other orders in connection with the dissolution and liquidation process, as necessary, to resolve any procedural questions or issues between the parties.

XIX.PARTIES’ CLAIMS REGARDING ATTORNEY’S FEES, COSTS AND EXPENSES, AND PUNITIVE DAMAGES

A.Attorney’s Fees, Costs And Expenses under “Prevailing Party” clause of Operating Agreement

Both parties have requested recovery of attorneys’ fees, costs and expenses pursuant to Section 15.9 of the Operating Agreement. That Section provides, in relevant part, that if any arbitration proceeding is commenced, “for the purpose of interpreting or enforcing any provision of this agreement, the prevailing Party in the proceeding will be entitled to recover a reasonable attorney’s fees in the proceeding or any appeal relating thereto to be set by the court or arbitrator without the necessity of hearing testimony or receiving evidence, in addition to the costs and disbursements allowed by law.”

In addition, Section 8.1 of the Operating Agreement provides that, with an exception not here relevant “[GNP] shall indemnify any person who was or is a party or is threatened to be made

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a party to any threatened, pending or completed claim or action by reason of the fact that such person is or was a Manager or a Member of [GNP],against expenses actually or reasonably incurred by such Manager or Member in connection with the defense or settlement of such claim or action, if such Manager or Member acted in good faith and in a manner such Manager or Member reasonably believed to be in, or not opposed to, the best interests of [GNP]”. Section 8.1.2 provides that GNP will have no indemnity obligations for the conduct arising from the “gross negligence or willful misconduct” or “reckless disregard” of the Manager or Member in the performance of duties under the Operating Agreement.

It is conceivable that the Indemnity Clause could apply to some of the costs of defense incurred by either Party with respect to any claims that were successfully defended against the other. The impact would be that any such defense costs would become a liability of GNP, and therefore payable in the liquidation, before the establishment of reserves or payment of distributions, if any, to the Members. However, the Panel appreciates that this particular issue was not identified or argued by the Parties during the course of the arbitration

B.The Panel’s Ruling

In accordance with the foregoing, thirty (30) days from the date of this Interim Award, the parties shall submit briefing on (i) their respective positions, supported by authorities under Alaska law, of whether either of them should be deemed the prevailing, or (if applicable) partially prevailing party, or whether no party has prevailed in the arbitration; (ii) whether and to what extent either party is entitled to indemnity from GNP under Section 8.1.2 of the Operating Agreement; and (iii) whether any authority the Tribunal may have to award fees and costs under the attorneys fees and/or indemnity provisions is mandatory or discretionary in nature. Within ten (10) days thereafter, the parties shall file any responses to the briefing. The Panel will promptly consider these issues and rule on them in a supplement to the Interim Award, and, if any award is to be made, will set a briefing schedule for the parties to submit precise amounts of attorneys’ fees, costs and expenses to which they claim entitlement as the prevailing or partially prevailing

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party in the arbitration, and/or under the indemnity clause. The rulings of the Panel on such issues will then be incorporated into the Final Award.

C.Punitive Damages

Both parties have also requested an award of punitive damages. In addition, Respondents have requested an award of treble damages under the Alaska Unfair Trade Practices Act. It is the Panel’s view that no party’s acts or omissions in connection with this matter rise to the level required under Alaska law for a punitive damage award. Accordingly, the Panel denies all requests for punitive damages. Since Respondents have failed to state a cause of action under the Alaska Unfair Trade Practices Act, their request for treble damages is moot.

XX.MISCELLANEOUS

All other claims for relief not specifically addressed or reserved herein are denied.

Since the Final Award has not yet been issued, it is not intended that this Interim Award be regarded as final or subject to review pursuant to either federal or state arbitration statutes or in any other judicial proceedings in connection therewith.

IT IS SO ORDERED.

DATED: May___, 2019	Jason Kettrick
	Jason Kettrick, Arbitrator (subject to his separate filing of a concurrence and dissent)

DATED: May ___, 2019	Thomas Brewer
	Thomas J. Brewer, Arbitrator

DATED: May ___, 2019	Fred G. Bennett
	Fred G. Bennett, Panel Chair

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IN THE MATTER OF ARBITRATION
UNDER THE ALASKA ARBITRATION ACT

GOLDRICH PLACER, LLC, GOLDRICH MINING COMPANY, and GOLDRICH NYACAU PLACER, LLC,

Claimants,

vs.

NYACAU, LLC, DR. J. MICHAEL JAMES, and BEAR LEASING, LLC,

Respondents.

PARTIAL FINAL AWARD

GOLDRICH NYACAU PLACER, LLC, NYACAU, LLC, DR. J. MICHAEL JAMES, and BEAR LEASING, LLC,

Counterclaimants,

vs.

Counterclaim
Respondents.

TABLE OF CONTENTS

Page

INTRODUCTION1

CLAIMS AND REQUESTS FOR RELIEF BY THE CLAIMANTS4

I.CLAIMANTS’ CLAIM FOR INTERIM DISTRIBUTIONS BASED ON THE ALLEGATION THAT ALL

EQUIPMENT LEASES ARE CAPITAL RATHER THAN OPERATING LEASES4

A.Capital vs. Operating Leases5

B.Impact of Retroactive Lowering of the Lease Interest Rates and Reformulating the Purchase Option Prices15

C.Impact of Characterization of Leases on Claimants’ Right to Interim Distributions17

II.CLAIMANTS’ CLAIM REGARDING OWNERSHIP BY GNP OF LEASED EQUIPMENT AND LEASE

OVERPAYMENTS TO BEAR LEASING20

A.Impact of GNP’S Continued Rental Payments for Equipment After Cancellation /Termination of the

Leases on Exercise of the Purchase Options22

B.Interest Charges on Leases 1-730

C.Lease Charges for Arctic Camp Purchased from Global Services31

III.CLAIMANTS’ CLAIM REGARDING TREATMENT OF LOANS AND INTEREST ON LOANS FOR

THE PROJECT32

A.Loans32

B.Interest and Fees on Loans35

IV.CLAIMANTS’ CLAIM REGARDING FEES AND EXPENSES OF MOLLY ATTALA37

V.CLAIMANTS’ CLAIM REGARDING INTEREST PAYMENTS TO LACOMBE BOOKKEEPING40

VI.CLAIMANTS’ MISREPRESENTATION CLAIMS41

VII.CLAIMANTS’ CLAIM OF OVERCHARGES FOR 2012 RECLAMATION43

VIII.CLAIMANTS’ CLAIM REGARDING RESPONDENTS’ REFUSAL TO LEASE EQUIPMENT TO

GOLDRICH FOR 2015 RECLAMATION OF WETLANDS46

IX.CLAIMANTS’ CLAIM RE REPAYMENT OF LEGAL FEES TO GNP47

X.CLAIMANTS’ CLAIM FOR PAYMENT OF INTEREST EARNED BY LOC 148

XI.CLAIMANTS’ CLAIMS REGARDING ALLOCATION OF TAX LOSSES48

CLAIMS AND RELIEF REQUESTED BY RESPONDENTS49

XII.RESPONDENTS’ MISREPRESENTATION CLAIMS AGAINST GOLDRICH49

A.Legal Standard for Proving Fraudulent or Negligent Misrepresentations50

B.Analysis of Respondents’ Misrepresentation Claims50

XIII.RESPONDENTS’ CLAIM FOR BREACH OF PLACER MINING CLAIMS LEASE REGARDING

USE OF INFRASTRUCTURE (CAMP)68

XIV.RESPONDENTS’ CLAIMS BASED ON GOLDRICH’S BREACH OF THE OPERATING AGREEMENT

BY ALLOWING THE CLAIMS TO LAPSE77

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XV.RESPONDENTS’ CLAIM FOR RECOVERY OF BOOK ENTRY OF INTEREST UNDER LEASE

FOR WASH PLANT81

XVI.RESPONDENTS’ CLAIM FOR VIOLATION OF ALASKA UNFAIR TRADE PRACTICES AND

CONSUMER PROTECTION ACT82

XVII.RESPONDENTS’ CLAIM FOR IMPOSITION OF ALTER EGO LIABILITY83

CLAIMS AND RELIEF REQUESTED BY MICHAEL JAMES87

XVIII.MICHAEL JAMES’ DAMAGES CLAIMS87

XIX.RESPONDENTS’ CLAIM THAT PANEL HAS FAILED TO DECIDE A CLAIM REGARDING “BIG BLUE.”90

XX.DISSOLUTION AND LIQUIDATION91

XXI.PARTIES’ CLAIMS REGARDING ATTORNEY’S FEES, COSTS AND EXPENSES, AND PUNITIVE

DAMAGES92

A.Attorney’s Fees, Costs and Expenses Under “Prevailing Party” Clause of Operating Agreement92

B.Indemnity by GNP Under the Operating Agreement92

C.The Panel’s Ruling93

D.Punitive Damages94

XXII.MISCELLANEOUS95

ii

INTRODUCTION

1.In their respective pleadings, the parties put forth a number of claims or counterclaims supported by different alleged facts. Claimants’ claims included counts for (1) fraud in the inducement and negligent misrepresentation, based primarily on the contention that but for misrepresentations by Dr. James of his financial condition and mining experience, Goldrich would have sought more financial security before entering in the joint venture; and (2) breach of contract, and of the express covenant of good faith and fair dealing, against NyacAU and James, based on various alleged breaches of the Operating Agreement. Claimants also sought to have the Joint Venture dissolved and requested certain orders for the Panel to make in connection with the dissolution and liquidation process.

2.Respondents, on their part, counterclaimed against Claimants, alleging as follows: (1) action for breaches of contract in various particulars; (2) breach of fiduciary duty by Goldrich; (3) fraud, negligent and innocent misrepresentations by Claimants, which allegedly induced Respondents to enter into the Operating Agreement, as well as the Term Sheet and Placer Mining Claims Lease (“Claims Lease”) which proceeded it; (4) breach of said agreements by Claimants, as well as breach of a mining contract with Black Rock Drilling regarding some hard rock drilling performed by Goldrich at the site; (5) breach of fiduciary duty by Goldrich as a joint venture partner of NyacAU under the Operating Agreement; (6) unjust enrichment, by virtue of “improvements” made by Respondents NyacAU and Dr. Michael James (“James”) to the mining claims, beyond those specified by the Operating Agreement; (7) Violation of the Alaska Fair Trade Practice Act by Goldrich and its Board of Directors, based upon allegations of deceptive acts and practices; and (8) alter ego against the Goldrich Board of Directors, alleging misuse by the Board of the Goldrich entity to commit the alleged misrepresentations and

1

breaches of contract alleged in the counterclaim. Respondents also requested dissolution and certain orders in connection therewith.

3.However, in their final statements of damages and orders submitted at the Panel’s request at the end of the evidentiary hearing, the parties provided lists which differed in some respects from the claims that appeared in their respective pleadings. For example, Respondent James abandoned claims against Goldrich related to amounts owed to Black Rock Drilling (68% owned by James) for rental of equipment used for hard rock drilling by Goldrich. Similarly, Claimants deleted in their damages list a request for any relief (other than a general prayer for punitive damages) based on fraud and/or negligent misrepresentation (Exhibits 426, 429). Accordingly, in analyzing the claims, the Panel has focused on the items of relief actually requested by the Parties as they relate to the claims/counterclaims, rather than the strict language of the claims/counterclaims themselves.

4.The arbitration hearing commenced on July 19, 2018. The parties were given a full opportunity to present all evidence in support of their respective claims, and in defense of claims pressed by opposing parties. On August 28, 2018, after all such evidence had been presented, the hearing was closed. During the hearing, the parties stated that they had agreed to dissolve their joint venture, and wanted the Panel to assume jurisdiction and oversight over the dissolution/liquidation process to its conclusion. The Panel agreed to this, since the dissolution/liquidation process is set forth in the Operating Agreement containing the arbitration clause under which this proceeding was initiated, and falls within the ambit of the clause.

5.At the close of the hearing, the Panel explained the post-hearing procedure that it intended to implement, as follows: (i) pursuant to the parties’ agreement, there would be no post-hearing briefing; (ii) the Panel would first issue an Interim Award, which would address all issues, including dissolution/liquidation issues to that point, and a decision on whether there was

2

a “prevailing party” in the arbitration, which is the precondition in the Operating Agreement to recovery of reasonable attorney’s fees, costs and expenses of the arbitration; (iii) if a “prevailing party” was determined, the parties would file submissions on the fees, costs, and expenses requested, and the Panel would decide the appropriate amounts to award without the need for a further hearing, unless the Panel believed one was necessary. The Panel’s decision in this regard would then be incorporated in a Final Award, which for reasons discussed herein has been done in the form of a Partial Final Award; and (iv) the Panel would then issue the Award—in this case a Partial Final Award--which would be immediately enforceable by the parties with regard to the issues covered, but would reserve issuance of a Final Award until completion of the dissolution/liquidation process and adjudication of any disputes arising in connection therewith.

6.With a few minor wrinkles, the above process has been followed. On May 25, 2019, the Panel issued an Interim Award, which requested input from the parties on a small number of discrete issues, all input to be supported by references to the arbitration record. The parties responded to these requests, but in doing so also submitted a substantial amount of evidence and arguments on issues that had not been requested by the Panel. Further, Respondents—unsolicited--added a Motion for Reconsideration of the Interim Award. The Panel has studied and, as appropriate, incorporated into this Partial Final Award information provided by the parties which responded to the Panel’s requests in the Interim Award. However, the Panel has also decided that consideration of unrequested evidence and arguments from the parties would also be appropriate (provided that both parties were afforded a fair opportunity to present their positions—which has occurred, thereby avoiding prejudice to any party), and that to do so would also obviate the convoluted process of sorting out and rejecting “unrequested” evidence and argument that bore some relation--however tenuous--to the information actually requested.

3

The Panel made its decision recognizing that most of the unrequested evidence from the parties could have been justifiably rejected on grounds that the evidentiary hearing had closed.

7.Respondents’ Motion for Reconsideration of the Interim Award has been made the subject of a separate ruling by the Panel which is incorporated into this Partial Final Award and reiterated in part herein with regard to certain issues. Other unsolicited evidence and arguments submitted by the parties have also been addressed in this Partial Final Award where the Panel believed it appropriate to do so. To the extent that any part of any post-hearing submissions by the parties are not specifically addressed in this Partial Final Award or the companion Revised Interim Award, the parties should assume--and the Panel confirms--that the Panel has analyzed such information on the merits and rejected it as irrelevant or immaterial to the issues.

CLAIMS AND REQUESTS FOR RELIEF BY THE CLAIMANTS

I.CLAIMANTS’ CLAIM FOR INTERIM DISTRIBUTIONS BASED ON THE ALLEGATION THAT ALL EQUIPMENT LEASES ARE CAPITAL RATHER THAN OPERATING LEASES

8.There is a sharp dispute between the parties as to whether Leases 1 through 7 are properly characterized as “capital” or “operating” leases. Claimants argue that all the Leases are capital leases, whereas Respondents contend they are “operating” leases. The parties do not dispute that this is a relevant issue which could impact the manner in which monies were handled under the Operating Agreement. Among other things, Claimants contend that if the Leases are capital leases, it would create a positive impact on Claimants’ right to interim distributions for 2016-17 under Article X of the Operating Agreement, which provides that only “Operating Expenses” for the year in question, along with payments due under LOC 2 and LOC 3, need be paid by GNP before the Members each receive a 10% distribution “in kind,” of the “remaining gold produced” for the year. (Section 10.1.2). This issue is addressed below.

4

A.Capital vs. Operating Leases

9.There were a total of seven equipment leases (“Leases 1-7”) entered into for the Little Squaw Mine operations. Each was a “form” lease, virtually identical in language to Lease 1, except for obvious differences in the equipment covered and the lease price. The parties to each lease were Bear Leasing (“Bear Leasing”) (a company owned and controlled by James) , as lessor, acting on behalf of NyacAU, and the joint venture, Goldrich NyacAU Placer, LLC (“GNP”) as lessee. James testified that the leases were run through Bear Leasing--a company owned and controlled by James--rather than negotiated directly with GNP by the owners of the equipment--because GNP had neither the credit, the finances, nor the operations history to qualify financially as a direct lessee. Bear Leasing, on the other hand, did have the qualifications to lease (or purchase) the equipment from the owners, and to obtain necessary financing in connection therewith. Accordingly, James caused Bear Leasing to procure the equipment for Leases 1-7, and to in turn lease the equipment to GNP.

10.Among other provisions, each Lease had a five year term from its inception, was cancellable at will (upon 30 days prior notice) and had a purchase option, triggered at the end of term, which allowed GNP to purchase the equipment, either at 10% of the cost of the equipment (which the parties had agreed up front would be the fair market value of the equipment at end of term) or a price agreed by the parties. The cost of the leased equipment, as well as the purchase option price, were stated in attachments to most of the Leases.

11.Section 2.28 of the Operating Agreement provides that “Operating Expenses” “shall not include capitalized equipment leases or purchases.” This question is of some importance, since the categorization of Leases 1 -7 as either “capital” or “operating” leases is relevant to (i) determining the parties’ rights to interim distributions under Article X of the Operating Agreement; and (ii) indirectly, in the circumstances, whether GNP should be deemed

5

to have exercised the purchase option in any of the Leases which have run their terms, and thereby become the beneficial owner of the leased equipment.

12.There was no parol evidence submitted by the parties of discussions at time of contracting of the intended meaning of the term “capital lease,” and the term is not defined in the Operating Agreement. With respect to the Leases themselves, Molly Attala testified that the parties intended the Leases to be operating, not capital leases, but since Ms. Attala had no role in the negotiation of the Leases, such testimony obviously was hearsay and of little relevance. However, Ms. Attala also acknowledged that in 2016, as CFO of NyacAU and GNP, she responded to Goldrich’s claim that the Leases were all capital leases by retroactively lowering the 15% interest rate on the Leases to 9.6% and setting the purchase option prices under the Leases at fair market value, in order to insure that the Leases would later be characterized as operating, not capital leases, which suggests that Ms. Attala recognized that the initial Leases had at least some features of a capital lease.

13.The primary--and only written evidence--on the operating vs. capital lease issue which the parties presented at the hearing were the extensive reports (including initial and rebuttal reports) and testimony from their respective experts--for the Claimants, Jeffrey Katz and Richard Daubenspeck, and for the Respondents, Scott Shaffer and Michael Tope. The Panel’s analysis of this evidence is set forth below.

1.The Minimum Lease Payment analyses for Leases 1 through 6.

14.The experts agreed that Leases 1, 3, 5 and 6 were capital leases. Both Dr. Katz and Mr. Shaffer pointed out that the issue was to be determined by the criteria under the Financial Accounting Standards Codification (“FASC”)), § 840-10-25-1. They each explained that if any one of the following criteria under this standard were met, the Lease in question should be regarded as a capital lease:

6

(i)Transfer of ownership. (The Lease transfers ownership of the property to the Lessee by the end of the Lease Term.)

(iii)Lease Term. (The Lease Term is equal to 75% or more the estimated economic life of the Lease property.) and

15.Both experts agreed that under subparagraph (iv), the Minimum Lease Payment criterion, Leases 1, 3, 5 and 6 were capital leases. In this regard, Mr. Shaffer made an initial comparison of the fair market value of the equipment under the Leases per Michael Tope’s (Respondents’ expert) report, with the present value of future Minimum Lease Payments using a 15% discount rate (Shaffer Report, paragraph 42).

16.Dr. Katz arrived performed a similar analysis in his report, using interest rates of both 10% and 15%, but also concluded that all Leases (adding Leases 2 and 4 to the group) met the Minimum Lease Payment criterion. In response, Mr. Shaffer pointed out that Mr. Katz’s analysis of the Minimum Lease Payment criterion regarding Leases 2 and 4 was incorrect, because it erroneously compared the present value of Minimum Lease Payments with the equipment cost at the inception of the Leases 2 and 4 instead of with the fair market value of the

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equipment under the Leases, and that if fair market value at inception had been used as the baseline (as calculated by Claimants’ expert Richard Daubenspeck) Leases 2 and 4 would not have met the Minimum Lease Payment criterion. (Shaffer Rebuttal Report, ¶¶ 30-31 and Tables 3 and 4.)

17.Mr. Shaffer also testified that the formula for determining present value based on Minimum Lease Payments (subparagraph (iv), above), is not necessarily a constant. FASC Section 840-10-35-4 provides that, if at any time, the provisions of the lease are amended in a manner that would result in a different classification of the lease under the above criteria, the Amendment shall be considered a “new agreement” and the capital lease criteria shall then be applied “for purposes of classifying the new lease.” Both experts acknowledged that there were amendments to some Leases that added equipment to the Lease; however, Mr. Shaffer explained that he did not have sufficient information to determine the impact of any amendment to the Leases on then capital v. operating lease question, beyond the obvious increase in fair market value of the new equipment added to the Leases by such amendments. Dr. Katz did not comment on the right to recalculate Minimum Lease Payments with a change in the lease, but did use adjusted fair market value figures to determine whether the Leases met the criterion of subparagraph (iv) of the FASC standard.

18.The Panel accepts Mr. Schaffer’s analysis in this regard. Contrary to Dr. Katz’s view in applying the Minimum Lease Payment criterion, the parties did not agree, at inception of the Leases, that the fair market value at the end of term would be the cost of the equipment; what they did agree was that the fair market value of each Lease upon expiration would be equal to 10% of the contract price. The only expert who performed a calculation of the fair market value of the Leases at inception was Claimants’ expert Mr. Daubenspeck, and Mr. Schaffer properly used Daubenspeck’s numbers in determining that Leases 2 and 4 did not meet the Minimum

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Lease Payment criterion. In his rebuttal report, Dr. Katz acknowledged that Mr. Schaffer’s analysis was correct, but claimed that Leases 2 and 4 were nonetheless capital leases because of the purchase option price of each Lease being a “bargain price.” (Katz Rebuttal Report, p. 4.)

2.The “bargain price” analysis for Leases 2, 4, and 7.

19.Dr. Katz also performed an analysis in which he concluded that all Leases qualified as capital leases under the “bargain purchase price criterion” of FASC § 840. By contrast, Mr. Shaffer stated that he did not have sufficient information to determine whether or not any Lease in fact did provide a bargain purchase price option to the Lessee at the end of term, since he did not have information on the transport costs of the equipment from Little Squaw to Fairbanks, which, he opined, would have to be added to the purchase option price. However, even making allowance for reasonable transport costs (along the winter trail), Dr. Katz’s analysis indicated that the purchase option prices for Leases 2 and 4, although not for Lease 7, were still “bargain prices.” The issue with this calculation, as explained below, is whether the parties’ agreement on the fair market value of these Leases at end of term effectively preempted Dr. Katz’s analysis.

20.Lease 2. In Lease 2, the parties agreed that at the end of term GNP could purchase the equipment for fair market value, which the parties set at 10% of the equipment cost of $900,000, unless the parties agreed on another option price. The parties did agree on an option price of $90,000, as shown by Exhibit A, which in fact equaled 10% of the equipment cost. By comparison, Claimants’ expert Mr. Daubenspeck estimated the end-of-term fair market value of Lease 2 at inception at $535,000. Mr. Tope estimated the fair market value of the equipment at end of term to be $1,120,000, but did not calculate fair market value at inception, as the accounting standard requires.

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21.Lease 4. Lease 4 also states that 10% of the equipment cost shall represent the fair market value of the Lease at the end of term, and be the purchase option price, unless the parties otherwise agreed. The cost of the equipment for Lease 4, as amended, totaled $1,274,219, 10% of which is $127,421. However, Exhibit A of Lease 2 stated that the purchase option price would be $477,430, which equaled 100% of the original equipment cost, and almost 30% of the amended equipment cost. By comparison, Mr. Daubenspeck estimated end-of-term fair market value at Lease inception to be $1,117,750. Mr. Tope, again, did not calculate end-of-term fair market value at inception, but estimated the fair market value at end of term of term to be $579,500, and, considering the equipment subsequently added to the lease under four (4) amendments, ultimately increased the number to $1,587,000

22.Lease 7. Dr. Katz also concluded that the purchase option price for Lease 7 was a “bargain price.” However, this conclusion was based on the unsupported assumptions that (i) the equipment cost reflected the fair market value of the equipment at end of term; and (ii) the purchase option price was 10% of the equipment cost. Lease 7 sets forth the costs of the equipment at $197,404.00, and states that GNP will have the option to purchase the equipment for “fair market value.” Exhibit A references a “Purchase Price at Conclusion of Term,” and states “See attached,” but the attachment does not mention the purchase price. No evidence was provided of whether the purchase option price was to be 10% of the equipment cost, what the fair market value of Lease 7 would be at the end of term, or whether the parties in fact agreed on a purchase option price. Thus, Lease 7 cannot be characterized as a capital lease under the “bargain price” criterion of the FASC standard.

3.The impact of the parties’ agreements on the capital v. operating lease analyses.

23.Except for Lease 7, each of the Leases contains the standard language that, at end of term, “Lessee will have the right to purchase the Equipment for fair market value”; and that

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“Lessor and Lessee hereby agree that the fair market value [of the Lease] shall be 10% of the amount Lessor paid for the item of Equipment at the time Lessor purchased Equipment, as established by receipts or other reasonable proof, unless a specific purchase price is agreed as demonstrated on the Exhibit A attached hereto.” As explained above, the parties did agree on a specific purchase option price for each of Leases 1-6. The agreement for Lease 2 was $90,000, which equaled the agreed fair market value of the Lease at end of term, given the $900,000 equipment cost. The agreement for Lease 4 was $477,300, 100% of the original equipment cost, over 30% of the amended cost of $1,274,214, and three times the agreed end-of-term fair market value of $127, 431.

24.If the parties’ agreement in this regard were to be honored, it is obvious that the purchase option prices of Leases 2 and 4 were not close to being “bargain prices” under the FASC standard--rather, they in fact represented the fair market value of the Leases at that time. The Panel has no insight into why the parties chose to lock in an end-of-term fair market value of the Leases at 10% of cost, but the language is clear that they did so as a result of their negotiations, and the Panel is legally obligated, under Alaska law, to give each provision of the Leases its intended meaning. Accordingly, the Panel holds that Leases 2 and 4 did not meet any of the FASC standard criteria for capital leases, and are properly characterized as operating leases.

25.The same is true for Lease 7. There was no evidence presented that Lease 7 met any of the FASC standard criteria for a capital lease, and, as stated above, the Panel does not accept the assumptions of Dr. Katz that were necessary for him to reach the opposite conclusion.

4.Impact of the “cancellation at will” provisions

26.Molly Attala testified that she and the Respondents believed the Leases were Operating Leases because each of them contained a provision allowing the Lease to be cancelled

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at will, subject to a few conditions not here relevant; she also testified that the cancellation provisions were placed into the Leases intentionally by Respondents to ensure that the Leases were operating rather than capital leases.

27.However, both parties’ experts acknowledged that the four criteria for defining a lease as a capital lease do not include a right of cancellation. Additionally, Dr. Katz explained that although FASC § 840 does recognize generally that cancellable leases are operating leases, the lease would be deemed to be non-cancellable if the cancellation clause would cause the lessee to incur a penalty in such amount that continuation of the lease to end of term would appear, at inception, to be reasonably assured. A penalty under ASC § 840 is broadly defined as “any requirement that is imposed or can be imposed on the Lessee by the Lease Agreement or by factors outside the Lease Agreement” which would cause the lessee to incur unreasonable economic or related burdens.

28.Shaffer, in his report, also pointed out that cancellability is not a controlling factor in determining whether a lease is a capital or operating lease. Specifically, he confirmed that out of the four criteria set forth in ACS 840, only one must be satisfied in order for the Lease to be deemed a Capital Lease; and, as set for the above, these factors do not include cancellability. Mr. Schaffer also did not challenge Dr. Katz’s analysis that a lease will not be deemed cancellable at will, despite a provision to that effect, where exercise of the clause seems very unlikely at the lease’s inception.

29.In the Panel’s view, the evidence set forth below shows that, at the inception dates of all Leases except Lease 7, it was unlikely that the Lessee would exercise the cancellation clause.

1.Leases Numbers 1-4

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30.Leases 1-4 contain virtually identical terms. Each Lease has a 5-year term from inception (the inception dates of Leases 1-4 were: Lease 1 – August 1, 2012; Lease 2 – January 1 2013; Lease 3 – March 1, 2013; and Lease 4 – January 1, 2014). All these Leases contain identical clauses allowing cancellation at will by the Lessees on thirty (30) days prior notice. At the inception of Lease 1, NyacAU estimated that it would take at least 4.67 years after mining operations commenced to achieve commercial production. This estimate had not changed on the inception dates of either of Leases 2 and 3, since actual mining operations did not commence until after those dates. The evidence was also clear that under the US Army Corp of Engineers’ (“USACOE”) directive, even though GNP was issued a general permit covering ten acres in August 2012, NyacAU could not begin mining operations at the desired level until it had been issued an individual permit, which did not occur until August 2013.

31.As of January 1, 2014, the Lease 4 inception date, it was the middle of the winter season, when no mining could occur. During a brief period in 2013, after receiving its individual permit, NyacAU had conducted limited mining operations using “Big Blue,” a wash plant which had been supplied by Goldrich in connection with the deal. However, NyacAU quickly discovered that Big Blue would have to be replaced by a new and larger wash plant in order to resolve problems with Big Blue’s screen and also the inability of its “grizzly” to handle large boulders during the washing process. Big Blue also had a limited capacity for processing “pay zone” material, which obviously reduced gold production.

32.The evidence established that NyacAU addressed these problems by deciding to design and build a new wash plant, which could process a much higher amount of pay zone material than Big Blue (500-600 yards of pay zone per hour, which ultimately was accomplished). By January 1, 2015, NyacAU was in the process of completing the wash plant, to the extent its financial resources would permit. Thus, mining production of the type

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contemplated to reach the “Minimum Production Requirement” under the Operating Agreement had not yet commenced; and NyacAU’s estimate of 4.67 years to meet this milestone had still not started to run.

33.Given these factors, there was only a remote chance, as of the latest inception date--January 1, 2014--for any of Leases 1-4 to be cancelled before their ends of term. This effectively made cancellability a non-factor in determining whether these Leases were capital leases.

2.Lease Numbers 5-6

34.Leases 5-6 also contained essentially identical five (5) year terms, and cancellation clauses which allowed the Lessee to cancel the Leases at will with 30 days written notice. Lease 5 was executed on March 1, 2015; Lease 6 on August 15, 2015. During part of this period, NyacAU was in the process of completing the new wash plant and working out initial problems that arose with production runs. Full-scale Mining operations using the new wash plant did not commence until the middle of 2015. Thus, at this time, NyacAU’s estimate of 4.67 years to reach the Minimum Production Requirement had not changed and NyacAU was still anticipating that problems with the wash plant would be resolved and the plant would be able to process the necessary 500-600 yards of pay zone material per hour for the indefinite future. As such, the likelihood of GNP, the lessee, deciding on an early cancellation of Leases 5 and 6 as of their respective inception dates was still marginal, thereby effectively eliminating cancellability as a factor in determining whether these Leases were capital leases.

3.Lease Number 7

35.The cancellability of Lease 7 was not analyzed by either Mr. Shaffer or Dr. Katz. Lease 7 was executed by the parties on May 1, 2017. As with the other Leases, it had a 5-year term and a clause allowing GNP to cancel at will with 30 days advance notice. At this time, the

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wash plant was up and running, which enabled GNP to turn a profit in 2016 and 2017, but the evidence showed that NyacAU nonetheless had doubts about the ability of NyacAU to achieve the Minimum Production Requirement required by the Operating Agreement. Thus, the evidence presented was insufficient to determine whether the cancellability of the Lease was a factor for determining if Lease 7 was a capital lease.

4.Other factors relevant to cancellability of the Leases

36.The evidence also revealed other factors indicating the unlikelihood of cancellation at the inception dates of Leases 1-6, including the following, some of which were noted by Dr. Katz in his report: (i) it is improbable that Dr. James, acting through NyacAU on behalf of the Lessee, GNP, would cancel a Lease with his own company, Bear Leasing, thereby depriving Bear Leasing the full economic advantage of lease payments to the end of term; (ii) cancellation could give rise to costs of either storing the equipment or having it removed from the site and sold or leased to another party, the cost of which would be significant; (iii) GNP would have to replace the equipment with new equipment leased from Bear or another vendor, which would be likely to incur additional costs; and (iv) assuming the equipment was integral to mining operations, its replacement could potentially cause significant down time.

B.Impact of Retroactive Lowering of the Lease Interest Rates and Reformulating the Purchase Option Prices

37.The evidence also showed that, in 2016, the interest rates on Leases 1, 2 and 3 were lowered by NyacAU from 15% to 9.6%, both retroactively and going forward. Also, Leases 4, 5 and 6 were amended by eliminating the 10% purchase option and requiring exercise of the purchase option at the fair market value of the Lease at end of term. As Ms. Attala explained in her testimony, the purpose of these Amendments, which she orchestrated, was to respond to Goldrich’s stated position that all the Leases were capital leases, by creating Amendments which, in her view, ensured that the Leases indisputably could be characterized as

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operating leases. As a result of the amendments to Leases 1-3, Ms. Attala credited $1.5 million in excess interest payments by GNP (the overall difference between 15% and 9.6% interest charges) against LOC 1. Mr. Schara, testified that Goldrich never agreed to these amendments, or to the $1.5 million credit, and considered them invalid.

38.It was not disputed that Leases 1-6 were subject to § 4.3 and § 2.2 of the Operating Agreement, which provided that any transaction between GNP and the Manager (NyacAU) or an “Affiliate” of the Manager was subject to prior written approval by Goldrich. The Lessor under each of the Leases was Bear Leasing, a company owned by Michael James (who, of course, also owns NyacAU). Section 4.3 further provides that such transactions, in any event “shall not be void or voidable so long as the terms are reasonable and comparable to an arms-length transaction between unrelated persons.” In this case, it is quite clear to the Panel that the amendments promulgated by Ms. Attala were intended to benefit NyacAU and Bear Leasing in at least two ways: (i) insuring that all Lease payments could be characterized as Operating Expenses, thereby minimizing the opportunity of Goldrich to obtain interim distributions in accordance with § 10 of the Operating Agreement, since, as Operating Expenses, Lease payments for any year would have to be deducted before the parties could obtain any interim distributions for that year; and (ii) changing the purchase option formula to payment of the entire amount of fair market value at end of term, which virtually insured that GNP would not have the financial wherewithal to exercise the purchase option on any Lease, thereby allowing NyacAU (through Bear Leasing) to renew the Leases for another term, possibly extending up to the end of mine life (estimated at between 11 and 13 years in the Martin Report). It might well be argued that Ms. Attala’s amendments brought the Leases closer to the standard of “reasonable. . . arms-length transactions,” and provided GNP with a $1.5 million benefit at the same time. However, in the Panel’s view this is overcome by Ms. Attala’s attempts to

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sufficiently raise the purchase option prices originally agreed to in the Leases, so as to effectively deprive GNP of its ability to exercise its purchase option rights under Section 6.4 of the Operating Agreement. (Section 6.4 requires that any lease generated by NyacAU include a purchase option). Thus, in the Panel’s view, it was reasonable for Goldrich to withhold its approval from these unilaterally implemented amendments, and for that reason they are deemed invalid.

39.Finally, it deserves notation that the reference to capital leases in the Operating Agreement is somewhat cryptic: “Operating Expenses shall not include capitalized equipment leases or purchases.” “[C]apitalized equipment leases or purchases” is not a defined term under the Operating Agreement, and the parties presented no meaningful parol evidence as to the precise meaning of the term which they mutually intended at the time of contracting. The Operating Agreement also requires, in Section 15.8, a unanimous vote of the Members to amend the Agreement. Thus, the parties could easily have clarified the definition of a “capitalized equipment lease or purchase” to avoid the uncertainty that led to the issue of how Leases 1-6 should be characterized, but did not do so.

C.Impact of Characterization of Leases on Claimants’ Right to Interim Distributions

40.The parties’ experts were at odds as to whether, assuming the Leases were all capital leases, payments thereunder should have been recorded as “Operating Expenses” or as a debt liability on GNP’s books of account, along with a calculation of the yearly depreciation. Mr. Shaffer argued that, even if all the Leases were capital leases, the costs of the Lease, which Shaffer defines as including interest payments and amortization, should nonetheless be considered “Operating Expenses.” His stated rationale was that the payments under the Leases consist of and are identical to sum total of interest payments and amortization of the assets over

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the Lease terms. By contrast, Dr. Katz concluded that both lease payments and amortization should have been reflected as an expense on GNP’s income statements (Joint Exhibit 13, p. 27).

41.If Mr. Schaffer’s view were to be accepted, however, the exclusion of capital leases as “Operating Expenses” under Section 2.28 would have virtually no meaning. All payments made by GNP under any capital lease--i.e., Leases 1-6 would be treated as Operating Expenses, simply because those payments would equal the sum total of interest and amortization of assets at the end of the day. Fundamental rules of contract construction require the Panel to give meaning to every clause in a contract, and the clear meaning of the last sentence of Section 2.28 is that, for whatever reason, the parties agreed that the term “capitalized equipment leases,” which implicitly and necessarily includes the costs of such leases (including amortization and interest expenses) would not be treated as “Operating Expenses.” Legally, this interpretation must prevail over any contrary interpretation based on expert analysis, however erudite.

42.The analysis performed by Dr. Katz, not challenged by Mr. Shaffer or any other witness, confirmed that GNP made profits in 2016 and 2017. Article X of the Operating Agreement becomes relevant in such circumstances. Under Article 10.1, GNP is obligated to distribute revenue (in cash or as gold) generated from production by (i) under Section 10.1.1, first paying all Operating Expenses and liabilities incurred under LOC 1 by GNP for the particular calendar year; (ii) under Section 10.1.2, distributing in kind 20% of the remaining revenue to NyacAU and Goldrich to be shared equally; and (iii) deducting any liability of Goldrich under LOC 2 or LOC 3 from its 10% share before a distribution is made (Article 10 also provides for subsequent distributions after this occurs, but those provisions are not relevant for the 2016-17 time period).

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43.Profits in 2016 and 2017 resulted in interim distributions to the parties, equivalent to $67,580 for 2016 and $228,910 for 2017. NyacAU apparently received its distribution in cash or gold; but the payments due Goldrich for 2016 and 2017 were first used to pay off a substantial portion of a $250,000 obligation owing under LOC 3, resulting in Goldrich obtaining no distribution in 2016 and a reduced distribution in 2017. In both years, the annual costs of the Leases were deducted, as Operating Expenses, prior to the distributions, on the assumption that the Leases were all operating, as opposed to capital, leases.

44.However, the characterization of any leases as capital leases as Leases 1, 3, 5, and 6 requires a recalculation of 2016 and 2017 interim distributions. The costs of these Leases, including lease payments, amortization and interest payments, must be deducted from operating expenses for these years under Section 10.1.1 before calculating interim distributions under 10.1.2. Dr. Katz performed this calculations in his initial report (Katz Report, pp. 25-26). Mr. Schaffer performed similar calculations--which verified those of Dr. Katz--but as stated above improperly deducted amortization and interest expenses from the calculation (Schaffer Report, pp. 15-18). With interest and amortization properly included in the calculation, Goldrich is entitled to an additional $214,797 in distributions for 2016 and an additional $198,644 for 2017, for a total of $413,442. In like manner, NyacAU is entitled to an additional $413,442 in distributions for these years. Costs of Leases 1, 3, 5, and 6, including amortization and interest expenses, shall be eliminated from the Operating Expenses calculation for those years, and recorded as liabilities on GNP’s books.

45.Section 10.4 provides that notwithstanding any other section of Article 10, “distributions in liquidation of the [GNP] shall be made to each Member in the manner as set forth in Article 14” (which sets out the dissolution/liquidation process). However, it is the Panel’s view that Section 10.4 would apply only where a party had given notice of dissolution of

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GNP under one or more of the factors set forth in Article 14, or the parties had otherwise agreed to dissolution. No evidence was submitted showing that any party demanded, or that the parties agreed to dissolution before 2018, which makes Article 10.4 irrelevant to interim distributions before that.

46.It is critical to note that the above ruling does not give either party a windfall. GNP’s liability to NyacAU, through Bear Leasing, for the costs of Leases 1,3,5 and 6, shall be recorded as a liability of GNP to NyacAU (as a creditor) through Bear Leasing on GNP’s books, and must be fully repaid in the liquidation process before any final distributions are made.

II.CLAIMANTS’ CLAIM REGARDING OWNERSHIP BY GNP OF LEASED EQUIPMENT AND LEASE OVERPAYMENTS TO BEAR LEASING

47.Leases 1-7 between Bear Leasing and GNP all provided purchase options to GNP (the Lessee) at the end of the Lease terms, as follows:

1.Lease 1 (June 1, 2012 – June 1, 2017) purchase option was for 10% of cost of equipment, agreed to be $155,844 (cost of equipment $1,558,444).

2.Lease 2 (January 1, 2013 – January 1, 2018) purchase option was for 10% of cost of equipment, agreed to be $90,000 (cost of the equipment--$900,000).

3.Lease 3 (March 1, 2013 – March 1, 2018) purchase option was for 10% of cost of equipment, agreed to be $277,384 (cost of the equipment--$2,773,384)

4.Lease 4 (January 1, 2014 – January 1, 2019) purchase option was stated to be for 10% of cost of equipment ($1,274,437), unless parties otherwise agreed. Purchase option price was set at $447,437. Neither number accounted for additional equipment added to the Lease through four later amendments, which, in the view of Respondents’ expert Michael Tope, raised the estimated fair market value at termination to $1,587,000. (Shaffer Report, ¶¶ 30-31, Attachment C)). However, as discussed in Section I.A., infra, the parties are bound by their

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agreement that the “fair market value” of the Lease 4 at termination was to be 10% of the equipment cost;

5.Lease 5 (March 1, 2015 – March 1, 2020) purchase option was for 10% of equipment costs ($690,098), unless parties otherwise agreed. Purchase option price set forth the in the Lease was $172,456, which exceeded 10% of the cost of the equipment. Neither number accounted for cost or value of additional equipment added to Lease by later amendments, but no calculation was made of the impact of these amendments on the purchase option price,

48.On October 20, 2017, GNP sent written notice to Goldrich terminating Leases 4-7 under identically worded sections of the Leases that allowed GNP to terminate for convenience upon thirty (30) days prior written notice. None of the Leases had run their full term at the time of termination, but the leased equipment was still in use at the site, so GNP (through NyacAU) was offered a rental agreement (“Rental Agreement”) for the equipment from the termination date until October 31, 2018, which was still earlier than any original termination dates under Leases 4-7. Under the Rental Agreement, a monthly rental rate was set that covered the combined amount of monthly rentals under Leases 4-7, but eliminated the purchase option.

49.On March 23, 2018, GNP (through NyacAU) provided notice that the Leases 1-3, by their terms, had expired and informed Claimants that the equipment under those Leases would

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now be covered by a new agreement, titled “Amended Rental Agreement and Extension of Option to Purchase.” (“Amended Rental Agreements.”) The Amended Rental Agreements provided for continued rental of the equipment covered by Leases 1-3 for periods which all ended on September 30, 2018, at which time GNP would have an option to purchase the equipment for specified prices roughly equal to those set forth in the Leases.

50.Claimants objected to and refused to approve either the Rental Agreements or the Amended Rental Agreements, but continued to fully accept the continued use of the equipment covered by them in mining operations.

A.Impact of GNP’S Continued Rental Payments for Equipment After Cancellation /Termination of the Leases on Exercise of the Purchase Options

51.Under Section 6.4 of the Operating Agreement, NyacAU as Manager was given the right to “lease, with option to purchase, to [GNP] such personal property and equipment as may be reasonably necessary or desirable for efficient operation at the Claims.” Thus, it was clearly contemplated that any lease executed by NyacAU was required to include an option to purchase. Leases 1-7 met this requirement--all contained purchase options, although the price of the purchase option under Lease 7 appears to have been left blank. However, none of the purchase options were ever exercised by GNP, nor did GNP exercise the purchase options in the Amended Rental Agreements. The Rental Agreements which replaced Leases 4-7 did not contain a purchase option, which was contrary to Section 6.4, but this breach proved to be immaterial, since none of these Leases ran their full term, and GNP was in the process of dissolution when the Rental Agreements expired.

52.Nonetheless, the question remains, raised by Claimants, of whether rental payments made by GNP after the Leases had expired or were terminated should have been applied to the purchase options instead of continued rental, so as to make GNP the beneficial owner of the equipment under the Leases.

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1.Analysis of Lease Payments after end of term

53.The Amended Rental Agreements for Leases 1-3 were all entered into in the period from June 1, 2017 to January, 2018. The evidence was undisputed that both parties knew at this time that the Minimum Production Requirement, as laid out in Article 7.3 of the Operating Agreement, would almost certainly not be achieved by the end of 2018.

54.Article XIV of the Operating Agreement provided that the Company “shall be dissolved upon the happening of any of the following events,” which include “if the Company has not met the Minimum Production requirement by the end of 2017 [extended to 2018], unless the Members agree not to dissolve in writing” (which the Members did not do) (Operating Agreement, Art. XIV.1.5). Therefore, the parties knew at the time the Rental and Amended Rental Agreements were executed that the Company would in all likelihood have to be dissolved, which explains why the terms of the Agreements all expired at the end of the 2018 mining season.

55.Leases 1-3. Dr. Katz, in his analysis, concluded that if GNP were required to continue to pay rent under Leases 1-3 after the Leases expired--and assuming that the further rental payments were sufficient to cover the purchase option prices for the Leases--the rental payments should have been applied to exercise the purchase option on behalf of GNP, thereby giving GNP beneficial ownership of the equipment covered by the particular Lease, and relieving it of further lease/rental obligations. As set for the in more detail below, the Panel’s view is that Dr. Katz’s analysis applies as to Lease 1, but not as to Leases 2 and 3.

56.Leases 1-3 contained identical provisions which stated that, although “Lessee will have the option to purchase the Equipment for Fair Market Value” at the end of the Lease terms, the parties expressly agree that “Fair Market Value shall be ten percent (10%) of the amount Lessor paid for the Equipment at the time Lessor purchased such Equipment, … unless a specific

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purchase price is agreed as demonstrated on Exhibit A attached hereto.” (Leases 1-3, paras. 4). As stated above, the parties in fact did agree on a specific purchase option price for each such Lease: (1) $155,844 purchase option price for Lease 1; (2) $89,000 purchase option price for Lease 2; and (3) $277,384 purchase option price for Lease 3.^² However, the rental costs charged to GNP under the Amended Rental Agreements for Leases 2 and 3--even assuming they were paid--did not come close to covering the purchase option prices. The Amended Rental Agreement for Lease 2 had a term from January to December 2018, and required a one-time rental payment of $14,400, far short of the purchase option price of $89,000. Similarly, the Amended Rental Agreement for Lease 3 had a term running from January to December 2018, and required a one-time payment of $44,381.50--again, far short of the purchase option price in Lease 3 of $277,384.

57.However, situation was different as to Lease 1. The Amended Rental Agreement for Lease 1 had a term that ran from June 1, 2017 (the expiration date of Lease 1) to December 1, 2017, with a one year renewal right to December 2018. Rent was to be paid in two equal installments--$24,935 for 2017 and the same amount for 2018, for a total rental payment of $49,870. It would appear from these numbers that post-term rental payments for Lease 1 equipment also fell short of the agreed purchase option exercise price. However, the evidence showed that GNP in fact made post-term cash rental payments under Lease 1 of $24,935 per month, from June 1, 2017 to December 1, 2017 (7 payments), for a total payment of $146,705. Between March 19 and April 5, 2018, NyacAU then unilaterally modified GNP’s records to

^² With minimal changes, these purchase option prices were carried forward into the Amended Rental Agreements for Leases 1-3: (1) the Amended Rental Agreement for Lease 1 had a purchase option price of $155,844; (2) the Amended Rental Agreement for Lease 2 had a purchase option price of $90,000; and (3) the Amended Rental Agreement for Lease 3 had a purchase option price of $277,309. The purchase options under the Amended Rental Agreements for Leases 1-3 all matured at the end of term in December 2018.

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eliminate these cash payments, and reduced LOC 1 by $146,705. The Amended Rental Agreement was executed on March 27, 2018, retroactive to June 1, 2017.

58.In the Panel’s view, the post-term cash rental payments made by GNP as to Lease 1 cannot be disregarded in the purchase option exercise analysis; and NyacAU’s unilateral alteration of the accounting for such payments after the fact, for whatever reason, does not change this. To those cash payments should be added the $24,935 charged for rental of Lease 1 equipment for 2018, which produces a total of $171, 640 in post-term rental payments/charges for Lease 1 equipment. This exceeds the purchase option price under Lease 1 ($155,814) by $15,826. Accordingly, GNP shall be deemed the beneficial owner of the Lease 1 equipment, and such equipment shall be a GNP asset in the context of the ongoing liquidation under Article XIV. As Manager, NyacAU shall use such assets, as necessary, to pay down GNP’s debts and liabilities, including without limitation LOC 1 and LOC 3. NyacAU’s 2018 reduction of LOC 1 by $146,705 shall be reversed, and the $15,826 overage, provided that it was not part of a charge that increased LOC 1 (which would be the case if the 2018 rental for Lease 1 equipment were paid by GNP in cash) , shall decrease LOC 1 by that amount.

59.With respect to Leases 2 and 3, the foregoing analysis raises the further issue of whether Respondents had an obligation under the Operating Agreement to contribute funds to GNP that would make up the difference between the rental charges under the Amended Rental Agreements and the purchase option prices under the related Lease or the Amended Rental Agreement itself. No expert witness addressed this situation; in like manner, the Interim Award addresses only the situation in which post-term rental payments are sufficient to cover the purchase option price. Nor does the Operating Agreement directly answer the question, other than to impose upon NyacAU a general fiduciary duty to GNP while acting in its capacity as Manager of the joint venture.

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60.The Panel’s view is that NyacAU had no fiduciary or contract obligation to make up the differential between post lease rental payments made by GNP under the Amended Rental Agreements and the purchase option prices for Leases 2 and 3. The Operating Agreement, in Article VI, required NyacAU to provide funding only “for the benefit of the company to pay operating expenses sufficient to fulfill the Minimum Investment Requirements and bring the placer gold at the Claims into ‘Commercial Production.’” Logically, this would not include funding that would give GNP the wherewithal to exercise the purchase option price if it otherwise lacked the assets to do so, especially where--as with Leases 2 and 3--post lease rental payments would not reach the option price by the time GNP was dissolved. Moreover, although Art. 2.28 of the Operating Agreement defines “Operating Expenses” broadly to include “all costs associated in extracting the gold from the Claims…,” and provides a long but not exclusive list of expenses that would qualify as Operating Expenses, one cannot conclude that funding the balance of the purchase option price for Leases 2 and 3 beyond the amounts paid under the Amended Rental Agreements would be a cost “associated with extracting the gold from the Claims…” when, as the parties knew in 2017, GNP would be dissolved at the end of the 2018 mining season.

61.Lease 4. Lease 4 expired by its terms on January 1, 2019, triggering a purchase option price of $447,000 as set forth in the Lease. (This amount does not appear to take into account additional equipment which was added to the Lease subsequently, and which, in the view of Respondents’ expert Michael Tope, raised the estimated fair market value of the lease at termination to $1,587,000; but as stated above, these facts are irrelevant to the current analysis). Under the Rental Agreements, GNP paid the Lease rate for the equipment through 2017 and, as a result of a one-year renewal of the Agreement, to the expiration date of 2018, which was still prior to the date on which the purchase option price could have been exercised by GNP under

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Lease 4. Thus, GNP paid no amount to rent the equipment under Lease 4 after the expiration date that could have been applied to allow exercise of the purchase option price.

62.Lease 5. Lease 5 was executed on March 1, 2015, with a 5-year period running to April 1, 2020. The Lease contained a specific agreement of an option payment of $172,456, which under the parties’ agreement exceeded the set fair market value at end of term of 10% of the equipment cost. Since the Lease term has not yet run its course, no evidence could have been presented of lease payments made by GNP in excess of the option price after the end of term.

63.Lease 6. Lease 6 was executed on August 15, 2015, with an expiration date of August 20, 2015. The Lease contained a specific agreement of a purchase option price $2,665,571, which in fact equaled the cost of the equipment and was thus far in excess of the fair market value agreed by the parties at end of term (again, 10% of equipment costs). As with Lease 5, since the Lease term has not yet run its course, no evidence could have been presented of lease payments made by GNP in excess of the purchase option price at the end of the Lease term.

64.Lease 7. Lease 7 was executed on May 1, 2017, with a termination date of May 1, 2022. The Lease contained a purchase option allowing GNP to purchase the equipment at fair market value. The Lease also referenced a specific option price set forth on the attachment, but the attachment submitted at the arbitration as an exhibit contains no specific number. Since Lease 7 did not run its full term, GNP obviously made no lease payments after end of term that could have been applied to the purchase option price.

2. Claimants’ calculations of Lease overpayments

65.Claimants’ calculations of the allegedly excess amounts charged to GNP under Leases 1, 2 and 3, began with a calculation of the total lease obligation for each of those Leases based upon a 15% interest rate. The resulting numbers are as follows:

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(i)Lease 1 - $2,224,517;

(ii)Lease 2 - $1,284,656; and

(iii)Lease 3 - $3,959,374.

66.Claimants then calculated the lease charges for equipment made to GNP through March 31, 2018, which (even though this is the termination date of Lease 3, the latest termination date of Leases 1-3), resulted in lower total lease payments across the board:

(i)Lease 1 - $1,997,959;

(ii)Lease 2 - $1,151,522; and

(iii)Lease 3 - $3,548,599.

67.Claimants then added back in the retroactive adjustments made under the Interim Award, charging 15% interest to GNP across the board for all three Leases. This resulted in the original Lease obligations calculated by Claimants:

(i)Lease 1 – adjustment of $226,558, resulting in total lease charges to GNP for the equipment of $2,224,517;

(ii)Lease 2 – adjustment of $133,134 resulting in total lease charges to GNP for the equipment of $1,284,656; and

(iii)Lease 3 – adjustment of $410,775 resulting in total lease charges to GNP for the equipment of $3,959,374.

68.Claimants have also calculated the amounts which they say must be paid by GNP to own equipment under Lease 4. As with the other Leases, Claimants begin their analysis of Lease 4 by calculating GNP’s total original Lease obligations at a 15% interest rate in the amount of $1,818,815. This amount is then adjusted by the retroactive application of the 15% interest amount to all payments under Lease 4, resulting in an additional amount of $304,404 for a total of $2,123,219

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69.Claimants then add up the Purchase Option prices of Leases 1, 2, 3 and 4 to show that the total amount due from GNP to own the equipment is $650,650 (Lease 1- 155,844; Lease 2 - $90,000; Lease 3 - $277,384); Lease 4 - $127,422).

70.The above numbers are not seriously contested by Respondents. However, after computing this number, Claimants then go in a different direction to determine the allegedly excess amounts charged to GNP under each of the four Leases. They do so by taking the Fair Market Value of the equipment, as calculated by Michael Tope (Ex 22), and subtracting from that number the amount due to exercise the Purchase Option under each Lease. The resulting numbers are as follows:

(i)Lease 1 – Fair Market Value calculated by Michael Tope of $775,200, minus Purchase Option price of $155,844, equals a $619,357 alleged windfall to NyacAU by not exercising the Purchase Option;

(ii)Lease 2 – Fair Market Value calculated by Michael Tope of $775,000 for equipment, minus $90,000 for exercise of Purchase Option, equals $635,000 alleged windfall to NyacAU for not exercising the Purchase Option;

(iii)Lease 3 – Fair Market Value calculated by Michael Tope regarding equipment of $1,340,100, minus $277,384 for exercise of Purchase Option, equals a $1,063,716 alleged windfall to NyacAU by not exercising the Purchase Option; and

(iv)Lease 4 – Fair Market Value of equipment calculated by Michael Tope of $1,000,018, minus $127,422 to exercise Purchase Option, equals alleged windfall of $890,578 to NyacAU by not exercising the Purchase Option.

71.According to Claimants, the total windfall to NyacAU is $3,211,650. The Claimants then argue that the total Purchase Option price of $650,650 should be subtracted from this amount and applied to increase LOC 1 in that amount, which results in GNP having

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ownership of the equipment under Leases 1-4 and a damages claim against NyacAU for $2,561,000 in overcharges to GNP under Leases 1-4. Claimants do not explain how these damages should be handled under the dissolution process but Art. XIV of the Operating Agreement would require any such damages, if they were allowed, to reduce LOC 1 in that amount.

72.The problem with Claimants’ calculations is their disregard of the facts that GNP’s payment obligations under the Leases were fully negotiated by the parties, and the payment amounts--including principal and interest--expressly approved by Claimants for Leases 1-3, and implicitly approved by Claimants for Leases 4-7 by their acceptance of the benefits of those Leases. Claimants cannot now be allowed to revisit those terms and argue that the Leases have provided an unenforceable windfall to Respondents’ which must be reimbursed.

73.Finally, it deserve mention that since the unambiguous language of the purchase options in each of Leases 1-4 set the fair market value of the equipment at end of term at 10% of the equipment cost, comparisons of Michael Tope’s calculations of fair market values of the equipment at the end of the Leases to the purchase option prices are irrelevant to determining any overcharges to GNP.

B.Interest Charges on Leases 1-7

74.Claimants have also claimed that the 15% rate on Leases 1-3 was exorbitant, thus creating another argument that Bear Leasing was overpaid. However, the 15% rate on Leases 1-3 was approved in writing by Goldrich, without objection. Leases 4-7 carried on the 15% interest rate, and although Goldrich did not approve those leases, no evidence was presented showing that the 15% rate had suddenly become unreasonable. More objectively, the 15% rate compares favorably with other interest rates charged to NyacAU for project loans, including: (i) 15% interest rate on the GVC loan procured by NyacAU, with Goldrich’s help, to fund

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mining operations; (ii) 7.75% interest rate on the Alaska Growth Fund loan, based on a 30% down payment and personal guarantees by Dr. and Mrs. James (no down payment and no guarantees were made in connection with the Leases); (iii) 12% interest rate on an AEG loan procured by NyacAU (also with a 30% down payment and personal guarantees by Dr. and Mrs. James); and (iv) 10% interest rates on promissory notes for $250,000 executed by Bear Leasing to purchase the camp equipment from Global Services. Ms. Attala testified that rates on the Alaska Growth Fund and GVC loans would have been much higher, if those loans had been extended at all, without a substantial down payment and/or personal guarantees from the Jameses. Accordingly, the Panel holds that the 15% interest rate on the Leases was reasonable, and did not result in any overpayments to Bear Leasing.

C.Lease Charges for Arctic Camp Purchased from Global Services

75.In December 2014, Bear Leasing purchased the Arctic Camp--leased and used at Little Squaw from Global Services during 2014--for $250,000, by the execution of a promissory note to Global Services in that amount, at 10% interest, plus a balloon payment that had to be made within a year. Bear paid a total of $18,666 in interest on the promissory note, but did not have the ability to make the balloon payment when it fell due. However, Bear was able to sell the promissory note to the Koke family, at an interest rate of 14%, which caused Bear to incur an additional $35,000 in interest charges. Thus, the total purchase price for the Arctic Camp was $303,699. (The Koke transaction was memorialized by a document entitled “Allonge,” which linked the $35,000 interest payment to the promissory note. Although the Allonge was not made an exhibit to the arbitration, Claimants accepted its inclusion in calculating the total purchase price for the Arctic Camp. (Claimants’ Amendment to Claimants’ Reply to Respondents’ Response to Panel’s Interim Award Regarding Amount of Lease Charges for Arctic Camp).

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76.The evidence further demonstrated that from 2015-2017, GNP paid $263,305 for use of the Arctic Camp and was charged $577,927.52 in additional lease payments by Bear. Section 6.4 of the Operating Agreement requires leases from the members and their affiliates to be at fair market value, based on depreciated book value. However, Molly Attala acknowledged in her testimony that lease rates charged by Bear to GNP for the Arctic Camp exceeded the Camp’s depreciated book value, which appears clear by comparing the purchase price to total lease charges through 2017. Because the amount of lease payments GNP made to Bear exceeded the dollar amount paid to purchase the Arctic Camp from Global Services, GNP shall be deemed the beneficial owner of the Camp in connection with the dissolution/liquidation process. Further, LOC 1 shall be reduced by $531,164, which represents the lease payments GNP was charged beyond the purchase price for the Arctic Camp.

III.CLAIMANTS’ CLAIM REGARDING TREATMENT OF LOANS AND INTEREST ON LOANS FOR THE PROJECT

A.Loans

77.During the course of the project, it was necessary for NyacAU to acquire various loans in order for it to perform mining operations at Little Squaw, including the funding of LOC 1 as required under Section 6.1 of the Operating Agreement. Ultimately, NyacAU obtained loans from (i) Alaska Growth Capital (issued in three installments); (ii) GVC Capital; (iii) Edward and Deborah Koke; (iv) AEG; and (v) two loans from Global Services (to finance purchase of the camp by Bear Leasing). Of course, interest in differing amounts was charged and paid by NyacAU on each of these loans.

78.The evidence showed that proceeds from the GVC Capital loan ($5.25 million) were used by NyacAU to fund LOC 1 (Shaffer Rebuttal Report, p. 9 (GVC loan increased GNP liabilities booked in 2015 under LOC 1 from $14.8 million to $19.2 million)). The Alaska Growth Fund loan proceeds were used by NyacAU to fund LOC 1 sometime after it was issued.

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The evidence was not clear as to whether loans from Global Services, AEG or the Kokes were used to fund LOC 1 or simply booked as direct liabilities of GNP to the various lenders on GNP’s accounting records, but as set forth in more detail below, the Panel does not believe this to be significant as to how the loans should be dealt with under the Operating Agreement. The evidence indicated that NyacAU’s borrowing costs, including interest, closing costs and fees, were also treated and accounted for by NyacAU as sums advanced by NyacAU to GNP in funding LOC 1, or otherwise recorded as liabilities of GNP.

79.Claimants have argued that the principal amounts of any loans cannot be regarded as Operating Expenses under the Operating Agreement. However, this position disregards the clear terms of the Operating Agreement itself. Section 2.28 of the Agreement defines “Operating Expenses” as “all costs associated with extracting the gold from the Claims…,” including but not limited to an enumerated list of items which does not specifically refer to loans from third parties. In the Panel’s view, this broad definition of Operating Expenses included loans obtained by NyacAU from third parties which were necessary to fund mining operations. NyacAU had the unequivocal obligation to fund the mining operating, regardless of whether the loans were booked through LOC 1. This interpretation finds further support in Section 10.1.1 of the Agreement, which defines Operating Expenses that must be deducted before any annual distribution is paid to the Members. Section 10.1.1 provides that before distributions are paid, “the Company [GNP] will first pay all Operating Expenses as defined in Section 2.28 for Placer Mining operations at the Claims, within the current mining year,” and then goes on to provide separately for payment of LOC 1 obligations for the year.

80.The evidence was unchallenged that the loans taken out by NyacAU were necessary to fund mining operations, and that all such funds were in fact used to do so. Dr. James and Mr. Trowbridge each testified that NyacAU’s initial plan, discussed with

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Goldrich, was to invest $4.8 million in the Project, and if necessary take out a loan for an additional $1.9 million. Additional costs were to be paid from mining operations beginning in 2012, which were assumed to produce at least 1500 ounces per year--roughly the same amount that Goldrich had extracted from its 2010 mining operations at the site. However, this plan was subsequently derailed by Goldrich’s failure to perform required reclamation for its 2009-2010 mining activities, which led to Goldrich being cited for violations of reclamation regulations by the USACOE and to orders that delayed NyacAU’s right to obtain mining permits until reclamation was completed. Goldrich contracted with NyacAU to do the great bulk of its reclamation work, which was completed by August 2012. NyacAU was issued a general permit at that time, but it was too late in the 2012 season to commence any mining. Also, as a result of the violations found by USACOE, findings were issued which precluded NyacAU from performing any mining operations until it secured an individual permit, which because of new regulations requiring cultural and wetlands analyses of the site, did not occur until August 2013. NyacAU was able to perform minimal mining operations using the Big Blue wash plant (which proved to be inadequate) before the end of the 2013 mining season, but essentially two years of mining operations had been lost. Nonetheless, NyacAU was incurring significant costs during this period, for equipment, infrastructure work, and unreimbursed reclamation work performed for Goldrich.

81.The inevitable result of these developments was that NyacAU simply ran out of money, and had no choice but to seek funding from third parties. Goldrich realized and accepted this, as demonstrated by the fact that it helped NyacAU secure its first loan--$5.25 million--from GVC.

82.The evidence also was undisputed that all loan amounts were used to fund mining operations at Little Squaw, and that such funds were reasonable and necessary for this purpose.

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As Manager of GNP, NyacAU had “full and complete authority and power to take any and all actions reasonable and appropriate to manage and control the business, affairs, and properties of [GNP] and do any and all acts necessary and incident thereto.” Goldrich never raised an objection that obtaining loans for mining operations was outside of NyacAU’s power, or a breach of its contract obligations--to the contrary, Goldrich accepted all benefits of the use of such funds on behalf of GNP for mining operations.

83.It would be inappropriate to narrow the broad definition of Operating Expenses expressly set forth in the Operating Agreement as excluding such loans under the above circumstances. To do so would create an obvious windfall for GNP as well as Goldrich, since NyacAU would then be responsible for repaying the loans (and honoring the personal guarantees of the James’ that were a basis for them being extended) without any hope of reimbursement from GNP or any other source. The broad definition of Operating Expenses, plus the parties’ mutual acknowledgment that loans were necessary to keep the project afloat, clearly contemplate that NyacAU would not be exposed to such a dire consequence. Accordingly, the Panel holds that principal amounts of all loans taken out by NyacAU for mining operations are fully reimbursable by GNP as Operating Expenses, either under LOC 1 or otherwise.

B.Interest and Fees on Loans

84.Claimants have likewise asserted that any borrowing costs, including interest, closing costs and fees incurred by NyacAU on loans, cannot fairly be considered as Operating Expenses under the Operating Agreement. However, as with principal amounts of the loans taken out by Respondents, the interest and fees on those loans also fit rationally within the broad definition of “Operating Expenses.” Certainly the parties knew that NyacAU and/or Dr. James would incur fees and interest charges on loans taken out for the benefit of the Project, and no evidence was presented suggesting that NyacAU was not entitled to reimbursement of these

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amounts. To hold otherwise would require the Panel to find that NyacAU, having been forced by Goldrich’s violations into the position of obtaining unanticipated loans to continue mining operations, nonetheless agreed to contribute interest and fees on loans as additional capital contributions to the GNP, or simply “gift” such amounts to GNP for no explained reason. Yet to interpret interest and fees as additional capital contributions by NyacAU would run afoul of Section 3.3 of the Operating Agreement, which states that “[n]o Member shall be required to contribute any additional Capital to the Company.” Thus, Claimants’ position is neither rational under the circumstances, nor consistent with the express provisions of the Operating Agreement.

85.This conclusion finds further support in Section 6.4 of the Operating Agreement, which gives NyacAU, as Manager of GNP, as well as Goldrich, the right to “lease, with option to purchase, to [GNP] such personal property and equipment as may be reasonably necessary or desirable for efficient operations at the Claims.” Consistent with this provision, NyacAU, through Bear Leasing, entered into the Leases discussed above to provide equipment and related property to GNP. NyacAU’s right to lease can be reasonably foreseen to have encompassed situations in which equipment would first have to be purchased (which it was through Bear Leasing) through financing arrangements, with the interest and fee charges being passed onto GNP as the lessee. Goldrich knew that NyacAU needed to purchase such equipment for Leases 1-7, approved Leases 1-3, had full knowledge of Leases 4-7, and fully accepted the benefits of GNP’s use of all leased equipment for mining operations. There was no evidence presented that, during this period, Goldrich ever complained about interest and fee charges from the equipment purchases--or for that matter the principal amounts of loans--being passed onto GNP as Operating Expenses.

86.Claimants’ expert, Dr. Katz, argued that Section 6.1.2 of the Operating Agreement provided a “cap” on the amount of interest that could be charged to GNP based on

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funds advanced by NyacAU through LOC 1. However, in a majority of the Panel’s view, this is a misreading of the provision. Section 6.1.2 provided that the “LOC 1 shall earn interest at the AFR (short term) as of the date of the Term Sheet” (Emphasis added), and that Goldrich would be entitled to receive 50% of the interest earned. As such, the provision has no relevance to the interest and fees charged to GNP from loans secured on the project’s behalf.

87.Accordingly, all interest and fees charged on loans obtained by NyacAU for mining operations are chargeable to GNP as Operating Expenses under the Operating Agreement.

IV.CLAIMANTS’ CLAIM REGARDING FEES AND EXPENSES OF MOLLY ATTALA

88.Claimants have requested reimbursement of fees and expenses paid to Molly Attala, the CFO of GNP, in the amount of $541,000. Respondents claim that Ms. Attala’s fees and expenses were reasonable and authorized under the Operating Agreement.

89.It is a majority of the Panel’s view that the fees and expenses paid to Ms. Attala were appropriate. Section 7.5 of the Operating Agreement provides that GNP “shall pay reasonable management salaries for the individuals managing the Company,” and that the initial management salary approved by the Members shall be $450,000 and shall automatically increase yearly in accordance with the Consumer Price Index. However, Section 2.28 of the Operating Agreement, defines “Operating Expenses” as including not only “management salaries,” but also expenses paid for “contract services” and “accounting expenses.” The evidence shows that Molly Attala was never a salaried employee of GNP, but rather an independent consultant, even when she occupied the position of CFO. Her contract, dated January 13, 2013, was between “Attala Consulting Services” and NyacAU, and provided that Ms. Attala was to serve as an “independent consultant,” and would not be a salaried employee. She was to be paid a set fee for her services, identified as a retainer of $11,083 per month (Ms. Attala testified that she was

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actually paid $11,600 per month.) True to her consulting contract, Ms. Attala never received a payroll paycheck or any of the fringe benefits given to GNP employees. As such, Ms. Attala’s contract to consult for NyacAU was clearly for “contract services,” a term which is not defined in the Operating Agreement but can fairly be read as any services performed as a third-party independent contractor. Moreover, a significant amount of Ms. Attala’s services were “accounting services,” which also is expressly designated as an Operations Expense under Section 2.28.

90.As she testified, Ms. Attala’s duties included cash management, fundraising, forecasting, maintaining permanent documentation, transforming the GNP paperwork system into an electronic system, preparing monthly and annual reports, budget forecasts (which were required under the Operating Agreement), and serving as CFO for GNP. This work fits easily within the broad definition of Operating Expenses as including “all costs associated with extracting the gold from the Claims,” including but not limited to the specifically mentioned expenses listed under Section 2.28.

91.Although Claimants asserted that Ms. Attala’s contract was never approved by Goldrich, since Ms. Attala’s contract did not make her a salaried management employee, there was no requirement under the Operating Agreement for any such approval. Consistent with this, Ms. Attala’s consulting contract had no space for written approval by Goldrich. In any event, Ms. Attala testified that she sent her contract to Goldrich (Mr. Schara) shortly after it was signed, and he approved it orally or by email before Ms. Attala took over as CFO in 2014. On his part, Mr. Schara claimed that he approved reasonable accounting expenses to be paid to Ms. Attala, of between $20,000-40,000 (apparently annually), but felt $11,600 a month was too much. However, the March 28, 2014 minutes of the Goldrich Board of Directors meeting (which Ms. Attala attended as CFO) reflect that Mr. Schara was well aware Ms. Attala was a consultant,

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not an employee, and was performing some management tasks in that capacity. The minutes contain a proposal put forward by Goldrich to amend the Operating Agreement (not accepted by NyacAU), which, among other things, called for any managerial work performed by Ms. Attala to be a part of “management salaries” under the Operating Agreement--a clear recognition by Goldrich that Ms. Attala’s managerial work to that point was as an independent contractor, not subject to the overall $450,000 cap pertaining to Messrs. James and Trowbridge. The amendment was not accepted by NyacAU, and thereafter, Ms. Attala continued to send monthly invoices to Goldrich detailing work performed and hours spent, as Goldrich had requested, without receiving any objections from Goldrich as to the nature or extent of work performed, the amount of the invoice (always $11,600), or the quality of the work.^³

92.The evidence also showed that the consultant fees charged by Ms. Attala for her varied services as CFO of GNP were reasonable. It was undisputed that Ms. Attala charged a flat fee of $11,600 per month, plus expenses, and never received any bonuses or increases in pay, despite significant increases in annual hours worked for GNP. In 2013 and 2014, Ms. Attala split her time between GNP and other businesses (NyacAU and Bear Leasing), but devoted 100% of her time to GNP from 2015 onward. She testified that, beginning in 2015, she was working 10-12 hours per day and approximately 50 hours a week solely on GNP matters, and in 2015 alone devoted approximately 2500 hours to GNP work. But monthly invoices remained at $11,600. Mr. Shaffer, in his rebuttal expert report (page 11) did an analysis showing that Ms. Attala’s annual consulting fee was below the average salaries of CFOs of public and private companies, even more so because of the fact that she received no bonuses or employee fringe benefits.

^³ Ms. Attala’s resume shows that she had the experience and was fully qualified to perform the work required of a CFO.

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93.The above evidence shows that Ms. Attala’s “contract services” were fully authorized under the Operating Agreement, that she was qualified to perform and did perform a range of services of benefit to both GNP and Goldrich as a Member of GNP, that such services were more than reasonably priced, and that Goldrich fully accepted the benefits of Ms. Attala’s work. Accordingly, Claimants’ request for partial reimbursement of Ms. Attala’s fees is denied.

V.CLAIMANTS’ CLAIM REGARDING INTEREST PAYMENTS TO LACOMBE BOOKKEEPING

94.As mentioned above, “Operating Expenses,” as defined in Section 2.28, include, without limitation “accounting expenses,” which in turn include bookkeeping. The evidence was undisputed that Lacombe Bookkeeping performed bookkeeping services for GNP, and was entitled to the payment of fees and expenses for said services, which was done through LOC 1. In the beginning of November 2014, there were monies due Lacombe that were shown on GNP’s books as accounts payable. However, during that period, the payables were reclassified as two loans, evidenced by promissory notes payable by GNP, with interest at 12% per annum. The notes accumulated interest totaling $34,560 for the period from 2015 to 2017 (Katz expert report, page 30). The principal and interest on the loans have now been repaid.

95.Ms. Attala and Dr. James both testified that the reason for the reclassification of Lacombe’s fees to notes payable in 2014 was because of unanticipated financial demands of the project. As a result of permitting delays caused by Goldrich’s failure to timely reclamate the site of its 2009-10 mining operations, NyacAU having to reclamate the site on Goldrich’s behalf without getting paid for it, and the very limited mining operations NyacAU was allowed to conduct in 2012 and 2013, NyacAU had effectively run out of money, and was required to obtain loans in order to continue operations. It therefore was not unreasonable for NyacAU, as Manager, to make a deal with Lacombe Bookkeeping which allowed amounts due to be paid off as loans, with interest, when the mine was finally operational and making a profit. No evidence

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was presented that the 12% rate on the promissory note was unreasonable or that NyacAU obtained any benefits from the interest charged.

96.As explained in Section III, it is the Panel’s view that interest on loans obtained by NyacAU for the benefit of GNP is reimbursable as an Operating Expense under Section 2.28 of the Operating Agreement. Accordingly, Claimants’ request for reimbursement of interest charges paid to Lacombe Bookkeeping is denied.

VI.CLAIMANTS’ MISREPRESENTATION CLAIMS

97.In its initial pleading, Claimants included claims for fraud/deceit in the inducement and negligent misrepresentation, all based on alleged concealments of facts by Respondents that purportedly induced Claimants to enter into the Operating Agreement and proceed with the Little Squaw project. However, the damages and orders requested by Claimants in the action ultimately did not and do not include damages for fraud or negligent misrepresentation; therefore, the Panel concludes that these claims have been abandoned.⁴

98.In any event, it deserves mention that Claimants did introduce substantial evidence and argument at the hearing of alleged misrepresentations made by Dr. James that purportedly induced Goldrich to enter into the Joint Venture, to its damage. These included alleged misrepresentations of James’ financial condition, alleged concealment of James’ lack of mining experience, and lack of due diligence performed by NyacAU before entering into the deal. Almost no evidence was produced in support of the first misrepresentation claim, other than an unsubstantiated suggestion that the placer gold in safe deposit boxes which Dr. James showed to Mr. Schara and stated had value of over $7,000,000, may in fact not have been worth

^⁴ Claimants do maintain a request for punitive damages, but this is a general claim not accompanied by a request for compensatory damages for alleged misrepresentations, and the evidence was insufficient to meet the high standard of misconduct required for a punitive damages award.

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that much. With respect to the other misrepresentation claims, Claimants spent some time in arguing that James had concealed from Goldrich a lack of mining experience and also a lack of due diligence allegedly required of NyacAU, including, notably, the failure to inform Goldrich that a prefeasibility and feasibility report was needed for the project. Claimants also emphasized that it was inappropriate for James to simply rely on the Martin Report and the drill core information in it as the sum total of his “due diligence.”

99.However, these arguments disregarded the facts that (i) James had operated a substantial and profitable placer mine at Bethel for the past 15-20 years, which Goldrich in fact toured with James as part of its due diligence before entering into the contracts and (ii) Goldrich’s representations and warranties in the Term Sheet, which were expressly incorporated into the Operating Agreement (Section 4.8) included a representation in which Goldrich acknowledged “that NyacAU and the NyacAU Parties were relying on the information contained in the [2009 Martin Report], attached as Exhibit 10, as the basis to enter into this Term Sheet and form and invest in the LLC.” (Term Sheet, ¶ 31). Paragraph 31 goes on to state the following representation and warranty by Goldrich:

100.In the Panels’ view, paragraph 31 of the Term Sheet defines the parameters of any due diligence which Goldrich could reasonably have expected Dr. James to perform--i.e., review of and reliance on the 2009 Martin Report, and, as explained below, other accessible reports referenced in the Martin Report. Dr. James confirmed such reliance in his testimony. Additionally, the Martin Report itself states that it is not a prefeasibility or feasibility report, but merely a preliminary assessment, and neither the Term Sheet nor the Operating Agreement

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anywhere requires that such studies be performed by NyacAU either before or after execution of the Operating Agreement.

101.The evidence also was undisputed that Goldrich was extremely anxious for mining operations to take place in 2012.^⁵ But this would have been impossible had NyacAU been obligated to perform prefeasibility and feasibility studies, which Claimants themselves acknowledged would have taken approximately two years to complete.

102.Finally, during testimony on the “due diligence” fraud issue, the Panel raised a concern about not understanding the basis of Claimants’ claim that NyacAU had a legal duty to perform due diligence before signing the agreement and invited the Claimants to provide authority for the proposition. However, no such authority was received by the Panel.

103.Accordingly, it is the Panel’s view that the above facts were insufficient to establish actionable claims for fraudulent or negligent misrepresentations against Respondents, even if they had not been withdrawn.

VII.CLAIMANTS’ CLAIM OF OVERCHARGES FOR 2012 RECLAMATION

104.Claimants claim that Goldrich was overcharged by NyacAU/GNP for reclamation work performed by NyacAU, on Goldrich’s behalf in 2012, to cure the permitting violations issued by the USACOE based on Goldrich’s failure to reclamate the site after its 2009-2010 mining operations. The Parties agreed under the Operating Agreement that Goldrich would be solely responsible for such work. At Goldrich’s request and on its behalf, NyacAU performed all reclamation work, except for the removal of the tailings road to cure the wetlands violation (which it was agreed Goldrich would perform), and by August of 2012, reclamation was complete. Goldrich received its first invoice from NyacAU for the reclamation work in 2014.

⁵ Both Schara and James testified that Goldrich was very anxious to begin mining operations in 2012. .

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However, Mr. Schara, on behalf of Goldrich, took the position that Goldrich had been overcharged for the reclamation work, and refused to pay the reclamation invoice until the overcharges were deleted. (Schara, pp. 787, 795 and 800; Exhibit 360B). No reclamation charges had been paid at the time of the hearing, four years later.

105.Goldrich also claimed that it was owed rental payments for NyacAU’s use of Goldrich equipment during the 2012 reclamation process in the amounts of (i) $184,000 in equipment that Goldrich claimed was agreed to be leased to NyacAU, and (ii) $147,462 for other equipment that Goldrich contended was earmarked for use in the reclamation work. (Total $331,462)

106.The essential basis of Goldrich’s claim was that reclamation work had been performed by a single individual, Randy Cox, and that it was in any event impossible for more than one person or one piece of machinery to perform reclamation in the mine pit at one time. The evidence, however, compels a different result. Mr. Trowbridge explained that all employees who worked on reclamation filled out daily time-cards, where they listed number of hours worked and the type of work they had done. Reclamation workers were paid between $20-$30/an hour and $18 per hour (CT, p. 1305), and the average number of workers per day on remediation was about six (6) people, each working twelve (12) hours a day. (Trowbridge, p. 1307).

107.Ms. Attala was responsible for itemizing the cost of the reclamation effort and did so by reviewing the time cards with Mr. Trowbridge and recording hours spent on reclamation by various personnel. A list of hours spent and personnel involved is detailed in Exhibit AM (Trowbridge, p. 1216).

108.Randy Cox testified by deposition, and the parties agreed that his transcript could be admitted as evidence at the arbitration hearing. Mr. Cox testified that a large part of the

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remediation work was performed by him working alone. However, he also had a vague recollection of the names of three or four other people who performed reclamation work in 2012. Mr. Cox was a credible witness, but had to rely solely on his memory of events which had occurred almost six years before. Ms. Attala and Mr. Trowbridge, on the other hand, assembled their information on reclamation activity from daily time sheets which stated the hours worked on reclamation each day by all personnel at the site (including Mr. Cox). In the Panel’s view, the daily time records--which are obviously business records--provide more accurate evidence of hours spent on the 2012 reclamation activity than Mr. Cox’s recollection; moreover, Mr. Cox’s recollection of others who performed reclamation work in 2012 was somewhat consistent with Molly Attala’s testimony based on the time sheets. Accordingly, Goldrich is responsible to pay the full amount charged by NyacAU for 2012 reclamation work, based upon hours worked, with no reduction.

109.With respect to Goldrich’s claim of compensation for NyacAU’s use of equipment during the 2012 reclamation process, there was no dispute at the hearing that NyacAU in fact used some of Goldrich’s equipment. However, Goldrich’s obligation to reclamate the site naturally would have extended to the cost of equipment (which included primarily earth moving equipment). Had NyacAU not been allowed to use Goldrich’s equipment, it would either have had to rent such equipment from Goldrich or a third party and undoubtedly would have charged any rental payments back to Goldrich. NyacAU being able to use Goldrich’s equipment for reclamation without charge simply avoided these unnecessary transactions and expenses. Accordingly, Goldrich is not entitled to any recovery for NyacAU’s use of Goldrich equipment in 2012 to perform Goldrich’s reclamation work.

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110.Since the amount owed by Goldrich for NyacAU’s reclamation work in 2012 was certain, NyacAU is also entitled to 5% pre-judgement interest on the award from the date the first invoice for payment was sent to Goldrich.

VIII.CLAIMANTS’ CLAIM REGARDING RESPONDENTS’ REFUSAL TO LEASE EQUIPMENT TO GOLDRICH FOR 2015 RECLAMATION OF WETLANDS

111.The agreement made by the Parties in 2012 concerning the permitting violations cited to Goldrich by the USACOE provided that Goldrich would have full responsibility for the reclamation of the wetlands violation, which required removal of the tailings road which Goldrich had installed on the side of a hill adjacent to the mine site. Goldrich undertook this work in 2015, ultimately using services and equipment from Paul Manuel, a third party contractor.

112.In March of 2015, Mr. Schara emailed Dr. James, stating that Goldrich was going to have to expend $500,000 to rent equipment from a third-party for the reclamation effort, but that NyacAU could rent all of the equipment that was currently onsite to Goldrich for around $125,000. Mr. Schara proposed a lease of the equipment from NyacAU for that price. (Schara, p. 1403, Exhibit 362). Exhibit 362 showed that the amount of savings which could have been achieved if Schara’s proposal had been accepted by NyacAU was in the range of $335,000.

113.In response to Mr. Schara’s email, Ms. Attala wrote to Dr. James in 2015, explaining that none of the equipment requested by Goldrich for wetlands reclamation could be leased by NyacAU, because NyacAU was in the middle of the 2015 mining season and all of its equipment was needed for ongoing mining operations. (The wash plant was up and running at this time). Ms. Attala also pointed out in an earlier email to Ted Sharp, the CFO of Goldrich, that Ms. Attala had estimated the cost of the wetlands reclamation to be $770,000, in a joint board meeting with Goldrich and NyacAU representatives. This was comparable to

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Mr. Manual’s estimate (which included the cost of equipment rental), yet none of Goldrich’s directors at the meeting raised a question about Ms. Attala’s estimate.

114.The Operating Agreement provides that from time to time Goldrich will make available to GNP, for rental or lease, selected personal property and equipment (Operating Agreement, 5.5). However, the Operating Agreement contains no provision which obligates NyacAU to lease any equipment to Goldrich for any purpose. Thus, NyacAU had no legal obligation to respond to Mr. Schara’s proposal; nor did NyacAU have a general fiduciary obligation to do so, particularly since the evidence showed that the mining equipment of interest to Goldrich was already being used in ongoing mining operations in 2015.

115.Accordingly, neither NyacAU nor GNP shall be charged for payment of any of the amounts expended by Goldrich in performing the wetlands reclamation work.

IX.CLAIMANTS’ CLAIM RE REPAYMENT OF LEGAL FEES TO GNP

116.Claimants have also asserted that a payment of $103,000 to GNP’s lawyers, Bankston Gronning O’Hara, was improperly charged to and paid by GNP and should now be repaid to or credited to GNP by reducing LOC 1 in this amount.

117.However, in the Panel’s view, this request runs contrary to the Operating Agreement. In Section 2.28, the Operating Agreement describes “Operating Expenses” as broadly including “all costs associated with extracting the gold from the Claims, including but not limited to … legal fees …” The evidence showed that these legal charges to GNP were, as Section 2.28 requires, “associated with extracting the gold from the Claims,” Recoverable fees would not include fees incurred in connection with the arbitration dispute between the parties, but the evidence presented showed that these fees were not for such legal work. Accordingly, Claimants’ request is denied.

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X.CLAIMANTS’ CLAIM FOR PAYMENT OF INTEREST EARNED BY LOC 1

118.Claimants have requested an award of $58,000 based upon their right to a 50% share of interest income earned by the amounts in LOC 1. The claim has been made under Section 6.1.2, which provides that LOC 1 “shall earn interest at the AFR (short term) as of the date of the Term Sheet” and further provides that NyacAU shall pay Goldrich 50% of any such interest.

119.There was very little evidence introduced on this issue at the hearing. As a result, in the Interim Award the Panel requested the parties to make submissions supporting the amount of interest earned by LOC I which the parties would share. Respondents subsequently made a submission which showed that, as of the submission date, LOC 1 had earned interest totaling $253,332, 50% of which equals $126,666. This calculation was not contested by Claimants.

120.Section 6.1.2 makes clear that it is an obligation of NyacAU, not GNP, to pay to Goldrich 50% of any interest earned on LOC 1 actually received by NyacAU. Thus, any such amounts are not assets of GNP or subject to the GNP liquidation process. Accordingly, NyacAU shall pay to Goldrich the amount necessary to ensure that Goldrich has received 50% of all interest earned on LOC 1 which NyacAU has actually received, plus, if applicable, pre-award interest at the rate of 5% from the date(s) that NyacAU received the earned interest.

XI.CLAIMANTS’ CLAIMS REGARDING ALLOCATION OF TAX LOSSES

121.Section 9.1 of the Operating Agreement provides that “[i]ncome from a gain, loss, deduction, and any other tax item of [GNP’s] activities shall be allocated to the Members in proportion to their respective Ownership Interest at the end of each fiscal year of [GNP] except as otherwise required by applicable provisions of tax law.” “Income” from a tax “loss” or “deduction” can rationally be interpreted as requiring the Members to share all tax losses 50/50, in accordance with their respective interests in GNP, unless the tax law requires otherwise.

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122.At the hearing, Respondents took the position that NyacAU was entitled to take virtually all of the tax losses incurred for the Little Squaw Mining operation, since Goldrich was not at any economic risk in connection with the operations. Goldrich countered with a legal opinion letter from the firm of Dorsey & Whitney, which in essence stated that Goldrich was at economic risk in the sense that 50% of the gold located within the parameters of NyacAU’s individual permit belonged to Goldrich, whether or not it had been produced. The evidence presented and arguments made to refute the Dorsey & Whitney letter were not convincing to the Panel. Accordingly, in connection with the dissolution process, the Parties will take steps to ensure tax losses have been shared equally, as the Operating Agreement requires, but only during the periods where actual mining operations were being performed, since those rationally are the only periods in which both parties bore a material economic risk, in terms of the impact of mining operations on processed and unprocessed gold. Based on the evidence, mining operations were performed in August-September 2013, and 2015-2018.

CLAIMS AND RELIEF REQUESTED BY RESPONDENTS

XII.RESPONDENTS’ MISREPRESENTATION CLAIMS AGAINST GOLDRICH

123.Respondents have made claims for fraud, as well as “negligent or innocent misrepresentation,” for which they seek both compensatory and punitive damages. Such claims include the following: (1) that Claimants intentionally or negligently concealed that the deposit at Little Squaw mine was in the nature of an “aggregational” or “aggredational” deposit (both terms were used, apparently as synonyms, in the testimony and exhibits submitted), as opposed to a more typical “alluvial” deposit; (2) that Claimants intentionally or negligently concealed an updated draft report prepared by Paul Martin in 2010, which showed a dilution of the estimated pay grade of material at Line 11 of the mine of 16.91%, and a reduction in grade quality from 87% to 84%; and (3) that Respondents intentionally or negligently concealed the fact that there

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were pending permit violations by Goldrich concerning the site which would have to be dealt with before Claimants could proceed with their mining operations. Each of these claims is discussed in more detail below.

A.Legal Standard for Proving Fraudulent or Negligent Misrepresentations

124.The elements of a misrepresentation claim are well established across U.S. jurisdictions, and the parties’ briefing did not suggest that the Alaska standard is any different. A party asserting such claims must show that (1) the representation or concealment was intentional or negligent; (2) the misrepresentation or concealment was material; (3) the party who is the target of the misrepresentation or concealment reasonably relied on it to that party’s detriment; and (4) damages were incurred as a proximate result of the misrepresentations. Any such damages cannot be speculative, but must be proven to a reasonable standard of certainty. In the Interim Award, the Panel held that the standard of proof for misrepresentation claims was “clear and convincing evidence,” based on a dialogue between counsel during the hearing. However, a submission made by Respondents after the Interim Award verified that, under Alaska law, the correct standard of proof is a “preponderance of the evidence,” which applies to civil actions generally. Accordingly, the Panel has applied this standard in rendering its Final Award on Respondents’ misrepresentation claims, but has also determined that application of a “preponderance of the evidence” standard does not change its decision as stated in the Interim Award.

B.Analysis of Respondents’ Misrepresentation Claims

1. Alleged fraudulent nondisclosure of “aggredational” nature of deposit.

125.Respondents presented evidence at the hearing that on May 5, 2008, well prior to the close of the transaction in 2012, James Barker, an engineer, provided a report to Claimants entitled “Evaluation of the Chandalar, Alaska Mining Property” (Joint Exhibit 1), which,

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according to Respondents, identified the gold deposit at Little Squaw as an “aggredational” deposit--i.e., essentially an uneven pattern of gold deposits in soil, caused by a combination of glacial deposits, soil erosion and varying geological patterns. Dr. James and Mr. Trowbridge testified that going into the deal, they had assumed that the placer gold deposits at Little Squaw were typical alluvial deposits, i.e., a roughly even pattern of gold bearing soil deposits--based on Martin’s 2009 Preliminary Assessment (“Martin Report”). James and Trowbridge added that they had not learned the deposit was “aggredational” until approximately 2016, when NyacAU was engaged in mining operations in the southern end of the mine site (Line 1.2). Dr. James also testified that, had he known that the true nature of the deposit was aggredational rather than alluvial in nature before entering into the deal with Goldrich, he probably would not have done so.

126.However, a review of the detailed findings of Mr. Barker in his Report, as well as the Martin Report, place this claim in a somewhat different light. First, in addressing the type of placer deposits located at Little Squaw (Barker Report, p. 23), the 2008 Barker Report stated that the deposits consisted of “pre-glacial deposits” from erosion of the highlands, along with “glaciation” deposits (i.e., deposits caused by glacial movement), but that the glacial deposits were not of sufficient severity to destroy the pre-glacial deposits. The Report also stated that a common pattern of pre-glacier alluvial deposits was an “alluvial fan,” which spread the deposit out in a fan-like manner from a particular source. Such deposits, the Report concluded, although not caused by glacial movement, nonetheless can consist of thick, truncated deposits at various locations within the “fan.”

127.The Barker Report then proceeded to describe the placer mineralization of Little Squaw Creek in more detail (Barker Report, p. 38). It once again stated that the placer deposits consisted of pre-glacial fluvial, interglacial-glacial fluvial, and post-glacial fluvial deposits, but

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then explained that an alluvial fan of fluvial (pre-glacial) gravel extended downstream from the canyon at Little Squaw about 2,000 feet, with pay gravel ranging from 15-137 feet thick at a width of 1,262 feet. This “alluvial fan” was pictured in Table 15 of the Barker Report. Table 15 indicated that the bulk of the deposit at Little Squaw was in fact a pre-glacial fluvial deposit, which--importantly--appeared to extend to the area (Line 1.2) where Respondents established their permanent mining operations.

128.The section of the Report entitled “Placer Drilling Program” (page 50) pointed out that the drill holes and cores taken (approximately 101 cores drilled and 78 taken) focused in the northernmost and southernmost sections of the anticipated mining footprint, with a significant number of cores taken from within the area of the alluvial fan, and close to Line 1.2. The results showed pay gravel thickness ranging from 15-125 feet in the area, with an average pay grade of between 0.128 and 0.424 in the area encompassing the main areas later mined by Respondents (Barker Report, pp. 53-56). From this drilling information, the Barker Report concluded that approximately 173,006 total ounces of fine gold could be recovered from the area of the alluvial fan and another 70,614 ounces from the canyon area of the mining footprint; thus, the that the bulk of the recoverable gold at Little Squaw was to be found in the pre-glacial fluvial deposits.

129.Reference to “aggredational” deposits did not find its way into the 2008 Barker Report until the very end, where Mr. Barker set forth his recommendations. In a section entitled “Placer Deposit Models” Mr. Barker summarized the pattern of deposits at Little Squaw, consistent with Table 15, and then referenced a proposal made by a geologist named Yuri Goldfarb, who suggested a reclassification of placer deposits in northern latitudes based on a number of factors, proposing that such deposits be referred to as “aggredational.” However, the Barker Report does not state whether Mr. Barker adopted this suggestion, and no comparison was made in the Report as to whether the deposit at Little Squaw contained all the factors which

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Mr. Goldfarb believed would be present with an “aggredational deposit.” In any event, the Barker Report makes quite clear that a substantial portion of the deposit at Little Squaw, including the deposit in the area mined by Respondents, consisted of pre-glacial fluvial deposits, which, standing alone, did not appear to contain all the characteristics identified by Mr. Goldfarb for an “aggredational” deposit. Thus, in the Panel’s view, a genuine question of fact exists as to whether the Little Squaw deposit, particularly the area of the deposit mined by Respondents in 2015 and thereafter, can be classified as “aggredational,” as defined by Mr. Goldfarb.

130.It is also significant that Mr. Barker’s past reports were expressly referenced in the Martin Report. Both the Term Sheet and the Operating Agreement (which formed the Joint Venture) made specific reference only to the Martin Report (Operating Agreement, § 2.31; Term Sheet ¶ 31) However, past reports by Mr. Barker are specifically referenced in the Martin Report as being available on Goldrich’s website: “Mr. Barker, along with others, authored an original technical report on Little Squaw in 2004, and since then has prepared annual reports that are available on Goldrich’s web site, www.GoldrichMining.com.” The Martin Report also made clear that it relied on the same cores that were taken by and relied upon in the Barker Report, and also referenced the location of alluvial deposits consistent with the “alluvial fan” in Table 15 of the Barker Report, as well as the locations of all drill cores at the mine site. Consistent with this, the Martin Report stated that Mr. Barker was a contributing author to the Report.

131.In sum, the Martin Report not only put Respondents on notice of and gave them ready access to Mr. Barker’s prior reports, but relied on the same drilling information on which Mr. Barker made his characterization of the nature of the deposits at Little Squaw, including information showing the differences in the ranges of pay grade thickness and overburden thickness in the “alluvial fan,” and used a table from the Barker Report to show where different types of deposits were located. In the Panel’s view, these facts (i) were sufficient to put the

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Respondents on notice of the Barker Report (whether in 2008 draft form or the final version, issued in 2009 shortly after the Martin Report) before Respondents entered into the joint venture with Goldrich and (ii) showed that the bulk of the deposits at Little Squaw--i.e., those within the “alluvial fan” area—were indeed alluvial, as opposed to “aggredational” deposits.

132.In a Motion for Reconsideration filed after issuance of the Interim Award, Respondents argued that the Barker Report, in its final form, was not issued until a few months after the Martin Report. . But at the hearing, the Respondents’ focused on the 2008 draft version of the Barker Report to prove their case. This is the version on which the Panel has relied in making its decision, but it deserves mention that the final, 2009 Barker Report contained essentially the same information. Respondents also argued that the earlier Barker reports referenced in the Martin Report did not analyze the nature of the deposit, and that, in any event, Respondents had no obligation to investigate and/or rely on any report beyond the Martin Report in deciding whether to enter into the deal. However, as stated above, it is the Panel’s view that had the Barker Report been revealed, it would have been consistent with the Martin Report in describing the alluvial deposits at the site, and not have caused Dr. James sufficient concern to back out of the deal. The Panel also laid out its reasoning in this regard in an Order on the Motion for Reconsideration, which is incorporated by reference into this Partial Final Award.

133.Based on the above, Respondents have not proved their misrepresentation claim regarding the “aggredational” deposit issue by a preponderance of the evidence, and are not entitled to relief on that claim.

2.Alleged concealment of dilution of pay grade at Line 11.

132.In November of 2010, Mr. Martin prepared a draft update to his 2009 Report (“Updated Martin Report”), which incorporated the results of Goldrich’s 2009-2010 placer mining operations in the area of Line 11 of the mine site, located in the canyon area. Although

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Respondents later undertook placer mining for approximately 25 days (August 2013 until the season ended in September) at Line 5, also in or close to the canyon area, using the Big Blue wash plant, permanent mining operations were established by the Respondents at the opposite end of the site, in the area of Line 1.2.

133.Based on its incorporation of the Goldrich data, Mr. Martin made a material change to the initial Martin Report-- the pay grade at Line 11 was reduced from .0689 to .0572, a reduction of 16.87% (“Updated Martin Report, Goldrich 004208-004209), and the pay grade reduced from 87% to 84%. The Updated Martin Report emphasized the importance of this information by adding it to the list of “Concerns” from the Martin Report, as follows: “2009-2010 grade reconciliation to model predicts lower actual mining grade – possible dilution.”

134.Respondents contended that Claimants never provided them with the Updated Martin Report or the dilution information in it, and there was no convincing evidence which suggested otherwise. In fact, Claimants’ primary argument was that they had no duty to provide the Updated Martin Report, since it was a draft document, not officially signed or stamped by an engineer. However, although the Report clearly is a draft, no evidence was presented which suggested that the results of Goldrich’s placer mining operations set forth in the draft were incomplete or inaccurate. Thus, regardless of whether the Updated Martin Report was signed and stamped, the accuracy of the calculation of dilution at Line 11 was unchallenged.

135.Respondents also asserted that they had the right to rely entirely on the Martin Report as an inducement to form the joint venture (GNP). In this regard, the representations and warranties in the Term Sheet, which are incorporated by reference into the Operating Agreement (Operating Agreement, §§ 4.8, 2.33), include the following:

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Squaw Creek Alluvial Gold Deposit, Chandalar, Alaska, dated February 9, 2009 [Martin Report] attached as Exhibit 10 as the basis to enter into this Term Sheet and form and invest in the LLC [GNP]. Except for tax information and assumptions made in the [Martin Report], adjustments for gold mined in 2009 and 2010, normal cost increases since completion of the [Martin Report] and the average grade of gold being 84% instead of 87% as assumed in the [Martin Report], Goldrich and GMC represent to NyacAU and the NyacAU Parties that, to the best of either’s knowledge, the information contained in the [Martin Report] is accurate and complete as of the date of the execution of this Term Sheet, has not been amended and has been prepared in “compliance with [applicable regulations] except [that]no report was filed with a Canadian Authority. Since the date of the [Martin Report], February 9, 2009, neither Goldrich nor GMC has learned any information contrary to the information contained therein.”[Emphasis added

136.Based on this evidence, it was reasonable for Respondents to assume that no contrary information had been learned by the Claimants since the date of the Martin Report--certainly no information that was later identified as an express “concern” of Mr. Martin. It is true that the Term Sheet representation changed the 87% grade of gold in the Martin Report to 84% (the change of grade in the Updated Martin Report as a result of the dilution), and expressly excluded “adjustments for gold mined in 2009 and 2010” (which could be interpreted as a cryptic reference to the Updated Martin Report), but at the hearing Claimants did not contest that the Updated Report had never been provided to or explained to Respondents. Moreover, the above representation from the Term Sheet ends with an unconditional statement that since the Martin Report, neither Goldrich nor GMC had learned any information contrary to it. There was no reason for Claimants to withhold the Updated Martin Report from Respondents, and the unexplained references to information that was contained in the Updated Martin Report does not, in the Panel’s view, excuse them from doing so—disclosure of the Updated Martin Report certainly would have clarified the cryptic language of Paragraph 31 of the Term Sheet. Accordingly, the Panel holds that Claimants are liable for negligent concealment of the Updated Martin Report from Respondents.

137.Claimants’ expressed justification for not producing a “draft” report, coupled with the exclusion of “adjustments” for “gold mined” in 2009-010 in the Term Sheet representations

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and warranties cited above, raise an issue of whether the failure to produce the Updated Martin Report was an intentional or reckless act by the Claimants, as required to sustain a fraud claim, or a negligent act.. In the Panel’s view, the standard of a preponderance of the evidence has not been met regarding the fraud claim, but has been satisfied with respect to the negligent misrepresentation claim. The evidence also was sufficient to prove breach of contract by Goldrich with regard to Paragraph 31 of the Term Sheet, and, in turn, Section 4.8 of the Operating Agreement.

138.The analysis of whether damages were proximately caused by the facts alleged in these “dilution-based” claims presents more difficult issues. Respondents’ expert, Ronald Greisen, estimated damages at $1,596,000 for Line 11 dilution, and a much larger number--$4,817,280--based on an assumption of 16% dilution throughout the mine site. (Greisen Report, Exh. 27). However, Mr. Greisen’s opinions are based entirely upon calculations of the difference between the expenses incurred by Respondents in the mining operations which allegedly were of long term benefit to GNP and those which were not, adjusted to create damage numbers assuming 16.87% dilution at all Lines and only as to Line 11. However, these analyses do not adequately explain the causal link between his methodology and the Line 11 dilution. More specifically, the Greisen Report did not take into account the following factors:

(i)Respondents’ expert Randy Clarkson opined that there could have been as much as 14% dilution of the gold mined by Goldrich, as compared to the gold content predicted in the Martin Report, as a result of inefficiencies caused by Goldrich processing pay material through the small trommel--as opposed to a sluice system--in 2009-010. But Respondents never used, or intended to use the Goldrich trommel for their mining operations, but instead designed and constructed a wash plant to process the pay material. According to Clarkson, use of a wash plant (similar to a sluice system) at Line 11 would have resulted in higher gold production.

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Thus, Clarkson’s opinion has relevance in evaluating damages caused by Claimants’ negligent misrepresentation;

(ii)Mr. Greisen’s estimate does not appear to account for the fact that Respondents’ permanent mining operations were conducted at the opposite end of the site from Line 11, at: Line 1.2, the northernmost area of the mine site, using a custom-made wash plant that was of a much higher quality and much more efficient than Big Blue. Respondents’ plan was to mine the “alluvial fan” area (originally identified in the Barker Report, referenced in the Martin Report and even mentioned by Mr. Clarkson), gradually working their way through the alluvial fan to the canyon area where Line 11 is located. No evidence was presented as to how long it would take Respondents to reach Line 11 under its mine plan, in the context of the projected 13-year life-of-mine in the Martin Report. Thus, the Panel is unable to determine with reasonably certainty when, if ever, NyacAU intended to mine in the area of Line 11;

(v)Table 15 of the Barker Report indicated that the deposits at Line 11 might be a combination of pre-glacial fluvial, glacial, and post/glacial soils, and thus closer to “aggredational” deposit as defined by Mr. Goldfarb. The uneven nature of these deposits could conceivably have been a contributing cause of the dilution at Line 11; and

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(vi)Respondents produced no evidence of dilution at or around the area they were mining (Line 1.2), although many of the drill cores referenced in the Martin Report, and examined and relied on by James in entering into the joint venture, were taken from that general area.

139.Given these factors, and without impacting its holding that Goldrich is liable for negligent concealment of the dilution reported in the Updated Martin Report, it is the Panel’s view that damages, if any, proximately caused or reasonably foreseeable due to such concealment are too speculative to compute. The evidence presented did not provide a clear answer to the cause of dilution at Line 11; nor did it show that Line 11 dilution could be assumed to reflect dilution throughout the mine site. Accordingly, the Panel has no choice but to deny Respondents’ request for damages on these grounds, except with respect to James’ request for reimbursement of the $350,000 he paid to acquire Goldrich’s stock, as explained more fully in Section XVIII 1.

3.Alleged concealment of permitting violations.

140.Respondents’ final misrepresentation claim is that Claimants concealed from them permitting violations concerning Goldrich’s 2009 and 2010 mining operations that were pending when the Joint Venture deal was made. The evidence was disputed as to when Respondents were informed of such violations, and whether information given at various points in time was at least sufficient to put the Respondents on notice that violations had occurred. The relevant evidence, which was generated over time, is summarized in the following chronology:

(i)On February 24, 2010, Goldrich submitted to the United States Army Corps of Engineers (“USACOE”) an application for a General Permit, which was approved, and allowed Goldrich to conduct mining operations on a defined 10-acre parcel at Little Squaw.

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(ii)In February of 2011, Mr. Schara received an email from Ms. McAlee of the USACOE, discussing the permitting requirements and providing information on how to obtain an individual permit (Exhibit 171).

(iii)In June 2011, ADMA--a governmental agency involved with the permitting process--issued a report indicating that reclamation of the Goldrich site would be performed in 2011. Goldrich acknowledged that no reclamation had been done at the time the report was issued but proposed to perform remediation later in 2011, and also stated that the mine was on “reclamation on a maintenance basis” (Exhibit 171).

(iv)In July 2011, Charles Trowbridge visited the site and noted unstable conditions in the mining pit that Goldrich had dug, and sloughing of water from the pit walls into a pond on the pit floor. Mr. Trowbridge recalled telling Dick Walters, whom it appeared was representing Goldrich during the site visit, that Goldrich needed “get a hold on water,” apparently referencing the water seepage from the pit walls and the pond on the pit floor (CT, pp. 962-66).

(v)Trowbridge also asked Mr. Walters directly if Goldrich had any agency problems. Walters responded that the only agency problem Goldrich had was that its mining operations had exceeded the 10-acre footprint (CT, p. 1229)^⁶ Mr. James gave similar testimony with respect to the July 11 site visit. Like Mr. Trowbridge, James recalled Walters saying that Goldrich had no agency issues. In addition, he recalled Walters telling him that Goldrich had approvals from the State of Alaska and therefore didn’t care about USACOE permitting. (WJ, p. 2622). But Mr. Trowbridge did testify that, during the visit, he saw all the problems that

^⁶ Although the evidence was somewhat unclear on this point, in July 2011 Mr. Walters may no longer have been an officer or director of Goldrich. Nonetheless, the evidence showed that he was at least the apparent agent of Goldrich in connection with his dealings with Mr. Trowbridge. Thus, Walters’ statements during the site visit may be attributed to Goldrich.

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USACOE later identified as permitting violations. James also testified that the conditions which he observed in the 2011 site visit still existed in 2012 and were the basis for the violations issued by USACOE at that time (WJ, pp. 2663-63).

(vi)In July 2011, and as a result of the site visit, Mr. Trowbridge formed the conclusion that the problems he had observed would have to be corrected, but testified that he thought Goldrich would do this work (CT, p. 966) and that he did not think these problems or Goldrich’s approach to solving them would interfere with an IP being issued to NyacAU or GNP (CT, p. 1077).

(vii)On April 3, 2012, the parties entered into a written Term Sheet regarding the joint venture. The Term Sheet had several provisions relevant to the permitting process. Claimants represented and warranted, in Paragraph 32(e), that they “had disclosed prior to the execution of this Term Sheet all information that either has knowledge of or with the exercise of reasonable diligence would know with respect to any legal disputes, environmental disputes, environmental hazards, material violation(s) and of any local, state or federal laws or regulations, including notices from any source or any violation or alleged violation related to or arising out of use or activities on or near the claims.” Paragraph 23, entitled “Placer Permitting,” made the Joint Venture responsible for obtaining and maintaining all necessary permits for exploration development and mining of the claims, “including without limitation resolution of matters with USACOE related to prior violation(s) of authorization to operate under General Permit 2006-1944 (the Goldrich General Permit).” Paragraph 23 also gave NyacAU the right, if these permitting issues were not resolved in 2012, to either dissolve the joint venture or elect to extend by one year the Minimum Production Requirement. This indicated that the parties had already discussed the USACOE’s recognition of Goldrich’s violations before the Term Sheet was signed.

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(viii)On April 30, 2012, Charles Trowbridge attended a meeting with the USACOE. At the meeting, Mr. Trowbridge informed USACOE that there was an unstable condition in the mine pit at Little Squaw and that dirty water from mining operations was breaching a bypass ditch and running directly into Little Squaw Creek. The reaction of Leslie Tose, who represented USACOE at the meeting, was a confirmation that these conditions violated permitting regulations and would have to be resolved. She then suggested that a cease-and-desist order might be necessary to get Goldrich’s attention regarding the need to correct the violations. Ms. Tose added that, in the interim, NyacAU would not be able to obtain an individual permit in 2012 and, up to the point that it did receive an individual permit, would be restricted to mine operations on only a 10-acre parcel under a General Permit that would be granted by USACOE to NyacAU after reclamation work under the Goldrich permit was completed. Mr. Trowbridge testified that the April 30^th meeting was the first time he had learned that the problems he had observed at the mining site previously were considered by USACOE to be violations of permitting regulations. (CT, p. 1072).

(ix)On April 30, 2012, Ms. Tose sent a letter to Goldrich (to Mr. Schara attention), setting forth the violations Goldrich had committed at the site and making clear that the violations would have to be corrected promptly (Exhibit 165).

(x)On May 3, 2012, Mr. Walters was told by Ms. Tose of a “wetlands” violation in the area of the tailings road of the Little Squaw Mine. Walters responded by saying that he did not believe there was a wetlands violation (Walters, p. 323), and sent Goldrich’s entire permitting file regarding Little Squaw to Tose (Walters, p. 169) for examination. Tose explained that she was unable to open the file. Walters also testified that he told Schara about his position on the wetlands violation and emphasized that Goldrich did not need any further permitting from USACOE.

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(xi)On May 22, 2012, Mr. Schara responded to USACOE’s 2012 letter by promising to resolve the violations and requesting that USACOE hold off on issuing a cease-and-desist order (Exhibit 171; Schara,. p. 717).

(xii)On May 25, 2012, a meeting was held at USACOE offices with Leslie Tose, Charles Trowbridge and Michael James (representing NyacAU), and Bill Schara (representing Goldrich). At the meeting, Mr. Trowbridge proposed having Goldrich put in a lined ditch to replace the bypass that Goldrich had installed and avoid polluted water draining directly into Little Squaw Creek, to reactivate settlement ponds to get mud out of the water, and to stabilize the side slopes of the mine pit. Schara stated that he had not previously been aware that these and other matters observed by Mr. Trowbridge during his 2011 visit were violations of permitting regulations, but reiterated that Goldrich was willing to correct them.

(xiii)Following the May 25, 2012 meeting, USACOE and Ms. Tose wrote a formal letter to Goldrich laying out the permitting violations and stating corrective measures to be taken. The stated violations included:

(1)material, especially sidewalls in the mining pit, were in an unstable condition;

(2)dirty water from mining operations was draining into Little Squaw Creek;

(3)there had been an improper reclamation effort by Goldrich (in 2011) regarding stream diversion;

(4)there was a wetlands violation in the area of the tailings road; and

(5)Goldrich had abandoned the site without reclamation. (Exhibit E8).

The letter also informed Goldrich that its violations could all have been avoided with proper planning. (Exhibit H).

The corrective measures required by the USACOE included:

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(1)close down the 2600 feet bypass previously constructed by Goldrich and construct a new spillway to channel water from mine operations;

(2)repair “seeper” on the eastern pit wall and install rip-wrap on the apron and culvert;

(3)reshape walls to a stable condition and seed with native grass mixture; and

(4)present a time table for removing the tailings road and putting material back into the mine pit.

(xiv)Following the May 25, 2012 meeting, Ms. Tose explained to NyacAU that individual permitting requirements had recently changed, in that an applicant was now required to obtain “a cultural and anthropology rating” and a determination of whether wetlands existed at the site, before an individual permit would be issued.

(xv)On June 29, 2012, Ms. Tose wrote a letter which again described the citation issued to Goldrich by USACOE, and explained that NyacAU would be confined to operations within a 10-acre parcel in 2012 (through a general permit to be granted to NyacAU), and would not obtain an individual permit in 2012.

(xvi)On August 12, 2012, after NyacAU had completed its reclamation work, a General Permit was issued to NyacAU for a 10-acre parcel which overlapped substantially with Goldrich’s 10-acre General Permit.

(xvii)NyacAU/GNP applied for an individual permit in the latter part of 2012, which included the newly required “cultural and anthropology” report and wetlands analysis, but, because of the length of time necessary to obtain approvals of such reports, was not issued until August 2013.

141.From the above chronology, it is clear that both Goldrich and NyacAU knew about the problems at the site which ultimately became the basis of violations cited by USACOE

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before the Term Sheet was signed, in early April of 2012. Paragraph 32 of the Term Sheet, which sets forth the representation and warranties of Goldrich [and its affiliate corporation GMC], contains the following representation and warranty on “Disclosures”:

142.Read in isolation, Paragraph 32(e) could be interpreted as charging Goldrich with the knowledge that the conditions which existed in 2011 at the site were in fact violations of permitting regulations, even though no formal finding of violations had yet been made by USACOE; and Goldrich’s failure to impart such knowledge to NyacAU arguably would have been a misrepresentation or breach of warranty under this provision. This in fact was the primary argument pressed by Respondents as a basis for their misrepresentation claims. However, as stated above, the Term Sheet also contains a paragraph on “Placer Permitting,” which makes the Joint Venture (GNP) responsible for obtaining and maintaining all necessary permits for mining operations at Little Squaw, including, without limitation: “resolution of matters with the Army Corp of Engineers related to prior violation(s) of authorization to operate under [Goldrich’s General Permit]. . ..” The paragraph goes on to provide that if these prior violations are not resolved by 2012, “then NyacAU may dissolve [GNP] as provided in Section 3(c), or elect to extend by one (1) year all Minimum Production Requirements.”

143.These provisions of the Term Sheet are consistent with a discussion, testified to by Mr. Schara, between Schara and Dr. James before the Term Sheet was signed, about how the permitting violations issue could be resolved. Mr. Schara stated that he offered, and James agreed, that NyacAU would reclamate all conditions on which the violations were based, except for the wetlands violation in the area of the tailings road, which would be Goldrich’s

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responsibility. It was also agreed that Goldrich would bear full financial responsibility for NyacAU’s reclamation work. Finally, according to Mr. Schara, the parties agreed to allow NyacAU to extend by one year (to 2018) all Minimum Production Requirements to compensate for the time it would take NyacAU to perform the reclamation work.

144.The permitting issue was effectively put to rest by the later executed Operating Agreement. The Operating Agreement first incorporated all of Goldrich’s representations and warranties under the Term Sheet. (Section 4.8). It also carried forward the Parties’ agreement in the Term Sheet regarding the time period for achieving the Minimum Production Requirement, stating, in paragraph 7.3.8, that “if GNP is unable to obtain an individual permit from the USACOE for placer mining by July 1, 2012,” then NyacAU, as Manager, “may elect to extend by one (1) year all Minimum Production Requirements.” The Operating Agreement also contained a new section which clearly reflected a further agreement by the parties regarding the impact of Goldrich’s prior permitting violations on the Joint Venture’s operations: Article XIV of the Operating Agreement, which dealt with dissolution and termination of the Joint Venture. Within that Article, Section 14.1.7 provided that the Joint Venture could be dissolved at NyacAU’s sole discretion, if “[GNP] cannot resolve matters with the US Army Corps of Engineers in 2012 related to prior violations of authorizations to operate under [Goldrich’s General Permit]; or related permits with respect to placer mining on the claims.” The Section went on to provide that if NyacAU chose to dissolve GNP on these grounds, it shall: “(1) be authorized under Alaska Law to take certain actions in the course of winding up [GNP]; (2) have priority for payment of all lines of credit and loans to GNP prior to distribution of the assets in the course of winding up; (3) Goldrich shall continue to be solely responsible for repaying LOC 2 and LOC 3 to NyacAU; and (4) Sections 4.6 and 4.7 shall otherwise govern the dissolution.”

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145.Of the two options regarding Goldrich’s permitting violations given to NyacAU under the Operating Agreement, the evidence is clear that NyacAU chose the latter--it moved forward with reclamation of the USACOE violations issued in 2012 (with the understanding that Goldrich would fully bear the expense of such work), applied for and obtained an Individual Permit in August of 2013, and extended the Minimum Production Requirement by a year when it learned from USACOE that it would not be issued an individual permit in 2012.

146.There were also points in time, well prior to the execution of the Term Sheet, where NyacAU easily could have backed out of the deal--for example, following the July 2011 site visit, after observing conditions at the site and realizing that reclamation work would have to be done at least with regard to the water issues. Dr. James did testify that he had invested nearly $2 million in the project up to the time the Term Sheet was negotiated and signed, to purchase equipment, build a winter road and transport equipment along the winter road to the mining site, and for that reason was very reluctant to lose that investment by rejecting the deal based on permitting violations. But all of this was done with full knowledge of the problematic conditions (except, arguably, for the wetlands issue), which James admittedly knew would have to be reclamated in any event, and which, as he and Trowbridge had predicted in 2011, later became the basis of the citations and reclamation requirements issued by USACOE. Even after those citations had been issued, and knowing that an individual permit would not be issued to NyacAU in 2012, Dr. James could have opted to make Goldrich do all the reclamation work, reassessed the situation at the end of the 2012 season, dissolved the Joint Venture under the Operating Agreement, and initiated a proceeding against Goldrich to try and recover his investment. Goldrich’s permitting violations also gave James leverage that might have allowed him to hold out for even a better deal, perhaps guaranteeing repayment of his $2 million investment to that date. But at the end of the day, James decided to move ahead, satisfied that the concessions in

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the Operating Agreement relating to permitting violations were sufficient to deal with the permitting issue.

147.Accordingly, Respondents’ claim that it was defrauded by Goldrich intentionally, recklessly or negligently concealing what it should have known to be outstanding permitting violations has not been proven by a preponderance of the evidence. Nor by virtue of the above-cited contractual provisions, has it been shown that Goldrich breached a contractual obligation in this regard.

4.Misrepresentation damages sought by Respondents

148.Respondents’ damages expert, Ronald Greisen, articulated in his expert report several categories of damages sought by Respondents based on their misrepresentation claims: (i) monies allegedly expended by NyacAU in the years 2012-2014 which did not benefit GNP ($2,094,294 in 2012, $5,656,597 in 2013, and $2,034,304 in 2014), plus prejudgment interest thereon, (ii) lost profits at Little Squaw mine from 2012-2014 ($2,281,500), plus prejudgment interest thereon; and (iii) lost profits from the Bethel mining operation for 2014-17 ($5,609,960), plus pre-award interest thereon (Greisen Reports, Joint Exhibit 27).

149.Based on the above analyses, these damage requests are denied, except with respect to Dr. James’ claim for reimbursement of his $350,000 stock purchase (See Section XVIII 1.).

XIII.RESPONDENTS’ CLAIM FOR BREACH OF PLACER MINING CLAIMS LEASE REGARDING USE OF INFRASTRUCTURE (CAMP)

150.Respondents claim that Claimants breached the Placer Mining Claims Lease (“Claims Lease”), which was entered into effective April 2, 2012, very close to the same date that the parties signed the Term Sheet (Joint Exhibit 2.5). The claim is based on Sections 7(b) and 12 of the Claims Lease. Section 7(b) provided that GNP could use the facilities free of

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charge for any mining season when they were not being used by Goldrich for other mining purposes:

“Mining Rights. The Mining Rights Leased exclusively to GNP expressly include, without limitation, the following: … (b) unrestricted, non-exclusive use of all existing road, airstrips or airports, landing strips, other transportation facilities, water, water rights, water crossings, stockpiles, buildings, structures, dumps, ditches, wells, drains, improvements, and other man-made infrastructure at the Claims (collectively, “Infrastructure”) …”

Section 12 stated, in part, that “GNP and its employees, contractors, visitors, invitees, agents and representatives (collectively “GNP Parties”) will have unrestricted, nonexclusive use of all Infrastructure existing at the claims as of the effective date of the lease.” Section 12 went on to provide that GNP and the “GMC Parties” (which includes Goldrich) will meet yearly, no later than March 15, to discuss the use of existing Infrastructure for the upcoming mining season and “will use their best efforts to amicably resolve any conflicts in use, with the GMC parties having priority to use existing Infrastructure if there is a dispute.” Under Section 12(d), the GMC parties were responsible for maintaining, repairing or replacing any Infrastructure which existed as of the effective date of the Claims Lease unless otherwise agreed by the parties; but this responsibility was to be allocated between GNP and GMC to the extent that GNP used any of the existing Infrastructure.

151.Respondents claimed that Goldrich had breached the above provision by failing to allow use of the Goldrich camp facilities in 2012, allegedly causing Respondents to have to acquire substitute camp facilities (known as the “Arctic Camp”) from a third party. Respondents’ damages expert Ronald Greisen calculated the damages from this breach as consisting essentially of the cost to GNP of acquiring the Arctic Camp

152.As stated in the Interim Award, the Panel found that Greisen’s damages analysis did not clearly address whether any expenses were incurred by Respondents beyond those arising from the lease and installation of the Arctic camp. Accordingly, the Panel invited the parties to

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make submissions on this issue, which was done. Following the hearing, both sides presented evidentiary submissions regarding whether or to what extent GNP had suffered damages by Goldrich’s allegedly improper refusal to allow GNP (and NyacAU, on GNP’s behalf) to use the camp infrastructure previously existing at the site, apart from the cost of purchasing the Arctic Camp. Respondents submitted the following additional costs: (i) costs of purchasing, transporting and installing (including materials costs) a 52 man tent in the total amount of $235,056, allegedly because of the refusal of Goldrich to allow use of the camp in 2013; and (ii) costs of purchasing, transporting, and installing (including materials costs) a mechanical shop, allegedly because of Goldrich’s storage of a truck in its mechanical shop and refusal to remove the truck so that NyacAU could use the shop for the 2016 mining season.

153.Overall, damages sought by Respondents for Claimants’ alleged breach of Section 7(b) of the Claims Lease totaled $622, 687.

154.At the end of the day, the parties ended up making a number of submissions on this issue (analyzed in more detail below), including a motion by Respondents to strike evidence presented by Claimants to refute the damages claim that were not part of the hearing record (even though such documents were or should have been exchanged during discovery). Claimants justified their submission of these new documents on grounds that Respondents had not made a claim for damages based on the refusal to allow its camp infrastructure to be used, either in its original counterclaim or in a list of damages which Respondents filed on August 20, 2018, in response to the Panel’s request for the parties to update their respective claims. (See Exhibit ZQ)

155.However, it was not uncommon during the hearing for both sides to provide written evidence which had not previously been marked as exhibit(s), but had been exchanged in discovery. With respect to this evidence, the Panel opted to set up procedures as necessary to

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allow the evidence in, but in circumstances where the other party would first be given a fair opportunity to review and comment on the evidence, so as to alleviate any potential prejudice. The Panel has elected to take a similar approach with respect to the parties’ submissions on GNP’s alleged inability to use Goldrich’s camp infrastructure, i.e., the parties have been given full opportunity to present and respond to evidence presented on the merits, and all such evidence has been carefully considered by the Panel. Thus, there is no need to strike any evidence submitted on this issue, and Respondents’ motion in that regard is denied.^⁷

156.As stated, when the Claims Lease was signed in April 2012, Goldrich already had in place a camp infrastructure which it had used for mining operations in 2009 and 2010. The history of the parties’ dialogue concerning use of these camp facilities from that point, and the Panel’s analysis of such evidence, is sufficiently intricate to merit a brief chronology, which follows.

A.2012

157.The evidence was undisputed that in early 2012 (probably sometime in March), William Schara, on behalf of Goldrich, told Dr. James that Goldrich was contemplating using the camp facilities for 2012 to do some “load” mining of gold at the site. This statement was backed up by the March 29, 2012 minutes of Goldrich’s Board of Directors, which authorized Goldrich to enter into a drilling contract for such purposes (separate from a placer mining Joint Venture Agreement with NyacAU, which also was authorized at the meeting). Goldrich also entered into a drilling contract on or about this date with Blackrock Drilling, which was to supply the equipment for the drilling operation (the evidence showed that Blackrock Drilling was 68% owned by Dr. James, but the date of his acquisition of that interest was not clear).

⁷ As the Panel has previously explained, there is no jurisdictional impediment to the Panel’s considering such evidence at this point, since prior to this Partial Final Award the Panel had only issued an Interim Award on the claims in the arbitration.

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158.The evidence likewise is undisputed when Dr. James was advised of Goldrich’s intentions, he proceeded to negotiate a deal for the lease of an “Arctic Camp” from Global Services, anticipating at the time that NyacAU would be able to conduct placer mining operations in 2012. Dr. James made the deal for the Arctic Camp before any of the contract documents, including the Claims Lease, were signed so as to enable the camp be delivered along the winter Trail before it closed in mid-April, 2012. In their papers, Respondents made an offer of proof to submit an affidavit from the head of Global Services confirming that Global had another customer for the Arctic Camp and therefore would have been willing to cancel the lease if the Arctic Camp could be put back on the trail and delivered to Cold Foot before April 15, 2012. However, even assuming this to be so, there was no evidence presented in the arbitration either that (1) Goldrich changed its mind about possible 2012 mining operations between April 2 and April 15, or (2) Dr. James made further inquiry as to whether conditions had changed during that period so as to make the lease and delivery of the Arctic Camp unnecessary. Accordingly, GNP has not established that it is entitled to any relief based on an improper refusal by Goldrich to make its camp facilities available in 2012.

B.2013

159.There appears to be no dispute that in 2013 the parties had an understanding that Goldrich would be using its camp infrastructure (which would have left the Arctic Camp available to GNP for work at the site as necessary). The arrangement discussed was that Goldrich would conduct load drilling at the site, which would be financed by (1) NyacAU’s purchase of certain equipment owned by Goldrich on the site in the amount of $900,000; and (2) the raising of $4,000,000 of additional investment to be repaid through gold production.

160.Ultimately, Goldrich was not able to obtain financing for its anticipated 2013 drilling operation, and no evidence was produced as to whether the parties ever consummated the

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$900,000 purchase of Goldrich equipment. In any event, the only written evidence of a request by GNP in 2013 to use the Goldrich camp came from Charles Trowbridge, who asked Goldrich to allow GNP to use some tents, the shed, and the Goldrich machine shop in 2013. In an email response to the request on April 18, 2013, Mr. Schara stated: “1. Sleeping Tents and wannigans - We will have investors up this year. I would like the wannigans (the orange one and the large green one) to be cleaned out and ready for use with no one staying in them this summer. We also need at least two of the tents. I would like the two tents on the south end of the main pad to be kept open (these are the ones closest to the silver airstream). If we need more space, I will call you and we can figure it out. I can stay in the office building on a cot if it comes to that.” No evidence was presented that Mr. Trowbridge objected to this offer, or that Goldrich later withdrew it in 2013. Further, the Arctic Camp presumably was up and running by this time, and available for use by GNP employees, which should have diminished its need to use the Goldrich camp.

161.Respondents have argued that Goldrich’s alleged delay in giving permission to GNP to use the Goldrich camp in 2013 required NyacAU, on behalf of GNP, to invest in a 52-man ATCO camp for the site; and the records in fact show that the 52-man camp was in fact acquired in 2013 and listed as equipment under Lease 3. However, the evidence indicated that the purpose of this acquisition was not to deal with a current need, but to facilitate construction of expanded camp facilities by 2016, which in fact is when the 52-man camp was finally set up at the site.

162.Respondents also appear to claim that, as a result of refusal or at least continuing delay by Goldrich to allow GNP to use the Goldrich machine shop, GNP was forced in 2013 to purchase an ATCO frame and a number of “conexes” to expand the shop. Respondents further explained that this purchase had been made in 2013 because of an opportunity to acquire it at

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less than Fair Market Value, even though GNP/NyacAU admittedly did not intend to build the expanded machine shop until 2016 (after the wash plant was up and running). Respondents argued that as such, purchase of the ATCO frame and conexes was actually an attempt to mitigate later losses that would be caused from lack of access to Goldrich’s machine shop, by avoiding the alternative of laying a new concrete foundation for an expanded shop. However, the Panel can find no rational basis to allow GNP to recover damages for purchasing the ATCO frame and conexes in 2013, since the obvious purpose of the purchases was to build an expanded machine shop, not to deal directly with any lack of access in 2013 to Goldrich’s machine shop.^⁸

C.2014

163.GNP has made no claim for damages due to lack of access to the Goldrich camp in 2014. This presumably was due to the fact that GNP constructed the wash plant in 2014 and carried on no mining operations at the site.

D.2015

164.GNP does not appear to be claiming any damage for lack of access to the Goldrich camp in 2015. Respondents submitted evidence that Charles Trowbridge had made an oral request to use the Goldrich camp for a number of weeks, but suggested that Goldrich had improperly delayed responding to Mr. Trowbridge. GNP offered no calculations of damages which may have resulted from this alleged lack of access.

165.On the other hand, the evidence was undisputed that in 2015 Goldrich was required to hire Paul Manuel, a consultant, and a small team of people to perform reclamation work of a wetlands portion of the mining site, which consisted of the removal of a side hill access road running through the wetlands. Also, Bear Leasing purchased the Arctic Camp from

⁸ Claimants also argued that the Goldrich machine shop was never of an adequate size for GNP to use in its mining operations, pointing out, as an example that the Dior bulldozer could not fit into the front door of the Goldrich shop.

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Global Services in December 2014, thus assuring that the Arctic Camp would continue to be available at the site for the 2015 season and beyond. . Further, GNP had been in possession of the 52-man ATCO camp, along with the actual frame and conexes, since 2013, and presumably could have readily put those facilities to use in 2015 had the need arisen. Finally, the need for camp facilities was likely reduced by the fact that the 2015 mining season was shortened by technical difficulties with the wash plant, which had to be addressed and resolved before the wash plant could be fully operational. In combination, these facts show that GNP had no real need to use Goldrich’s camp facilities in 2015 and was not damaged by any lack of access thereto.

E.2016

166.In November 2015, at a meeting of the Joint Venture, Ms. Attala announced that NyacAU (i.e., GNP) intended to use Goldrich’s camp facilities in 2016.

167.The only documents submitted by the parties which followed up on this statement were emails of June 17 from Molly Attala to Williams Schara and Mr. Schara’s response on June 21, 2016. On June 17, 2016, Ms. Attala gave notice that NyacAU needed to use the machine shop for welding during the 2016 season. Schara responded that although Goldrich had stored a truck in the machine shop, it would be removed so that the welders could use the shop. (Claimants’ response, Schedules 2 and 3). Since this exchange took place relatively close to the beginning of the 2016 mining season (around the end of May, 2016), it does not reflect evidence of any prejudicial delay or other improper conduct by Goldrich in failing to make the shop available to GNP. And even though Respondents contend in their submissions that many of the conversations which took place regarding access to the Goldrich camp were oral rather than written, it is noteworthy that there is no further written follow up to the above email exchange between the parties, thus suggesting that access was granted as requested.

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168.The evidence also showed that the ATCO frame and conexes were used in 2016 to construct an expanded machine shop, which suggests that Goldrich’s existing shop may not at that point have been adequate for NyacAU’s expanded operations.^⁹

169.Finally, as explained earlier, GNP’s purchase of the 52-man ATCO camp in 2013, though possibly prudent for camp expansion purposes, did not form a legitimate platform for the award of damages for lack of access to Goldrich’s camp (presumably based on the cost of the ATCO camp) in 2016.

F.2017

170.At a meeting of the Joint Venture in 2017, a discussion was held regarding “Facilities Utilization,” in which access to Goldrich’s camp facilities, including the machine shop, were discussed. Goldrich claimed that it needed the geology tent to analyze new drill samples and it also needed to use the machine shop when the weather conditions were too poor to allow work to be done outside. However, Claimants also submitted an email in which Mr. Schara confirmed that GNP could use the machine shop when Goldrich was not there (Respondents claim that this email was just another example of Goldrich’s unjustified delays in granting access since it was not given until the 2017 mining season was nearly over).

171.Beyond this, there is no evidence demonstrating lack of access or any damages incurred by GNP as a result in 2017. Moreover, since the machine shop was expanded considerably by construction of the ATCO frame and conexes in 2016, it is, at best, speculative whether GNP incurred damages from a lack of access to the Goldrich shop in 2017. The more likely conclusion, in the Panel’s view, is that the Goldrich shop was simply inadequate for GNP/NyacAU’s greatly expanded mining operations.

⁹ To deal with the three year delay between 2013 and 2016 in putting the ATCO frame and conexes to use, $25,576 in lease payments under Lease 3 were properly credited to GNP, and LOC 1 reduced by that amount.

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G.2018

172.GNP has made no claim for damages for lack of access in 2018. In 2018, the parties were embroiled in the arbitration proceeding which culminated in a hearing in the latter part of that year. Prior to the hearing, various requests were made through counsel for access to the Goldrich machine shop and for access to some of the Goldrich facilities. All such requests were denied. Indeed, Goldrich went so far as to threaten criminal trespass actions against GNP/NyacAU if there was any unilateral attempt to use the Goldrich facilities.

173.Claimants’ response to this position was that it had been necessitated by alleged damage done by NyacAU/GNP employees to four Goldrich tents, but no further evidence was presented as to the nature or amounts of the alleged damage.

174.Accordingly, GNP is not entitled to relief for lack of access to Goldrich facilities in 2018.

XIV.RESPONDENTS’ CLAIMS BASED ON GOLDRICH’S BREACH OF THE OPERATING AGREEMENT BY ALLOWING THE CLAIMS TO LAPSE

175.Respondents’ Claims. Respondents claim that Goldrich breached the Operating Agreement by failing to make the filings and pay the amounts necessary to maintain the claims (as well as the assignment thereof to GNP under the Claims Lease) in good standing. In this regard, Section 5.2 of the Operating Agreement states that “Goldrich or its designee shall file with the State of Alaska Affidavits of Annual Labor and pay the annual rate for the Claims.” It also obligates Goldrich to provide GNP copies of said Affidavits and proof of rental payments within at least thirty (30) days prior to the filing deadlines. In this case, Goldrich admittedly missed the filing deadline, and gave no advance notice to GNP that it might not complete the necessary paperwork in time to meet the deadline. (William Schara pages 1355-1356). In fact, Schara learned of Goldrich’s missing the filing date from Goldrich’s own claims service advisor (Id.). The parties conceded that under relevant Alaska mining regulations, the failure to timely

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file affidavits and make rental payments necessary to keep the claims in force automatically triggered an “open claims” period, during which any third-party could come onto the property and stake its own claim.

176.In the Interim Award, the Panel mistakenly listed the required filing date as December 9, 2013. However, in their Motion for Reconsideration, Respondents pointed out, correctly, that the actual filing deadline was November 13, 2013; December 9 was the date on which the necessary papers to keep the Claims alive were finally filed, which ended the “open claims” period, but started the running of a 45 day “open claims” to complete administrative paper work. Fortunately for the Parties, no third-party stakeholder appeared during these “open claims” periods.

177.At this same time, Dr. James and the project needed financing, and James was courting a potential investor (Clark Gillam) to provide a $5.7 million loan with an accelerated payback and a 10% minority equity interest in NyacAU’s 50% interest in GNP. Dr. James claimed that the “open claims” problem caused Gillam to back out of the deal. However, the Panel rejected this reasoning in the Interim Award, in part because of Mr. Gillam’s email of December 2, 2013--obviously prior to December 9--in which Gillam stated that he had no interest the arrangement NyacAU was proposing. The corrected dates show that the missed filing date actually occurred some days earlier than Mr. Gillam’s email, which Respondents’ contend effectively disposes of the argument that Gillam’s decision was not caused by the late filing and ensuing “open claims” period.

178.However, the corrected dates do not change the analysis set forth in the Interim Award. Respondents contend that the corrected dates show that Gillam’s change of heart in his December 2 email was in fact a reaction to the late filing. However, this reads too much into the email. In it, Gillam referred to a conversation he had had “last Sunday” with James, detailing the

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terms of an offer to Gillam of “a 20% equity stake for 11.4 million plus an interest-free $5-6 million 2014 capital loan, with priority claim on first cash flow.” Gillam goes on to state that this is “too full a valuation for a minority, non-controlling investment”; and concludes that “because of such, we will have to pass.” There is no reference in the December 2 email to a concern about late filing of claims documents or the “open claims” period which ensued as a result. Subsequent emails from Gillam during this period likewise contain no reference to these subjects. For example, on December 28, 2013 Gillam (aka BCR Investments) wrote an email to Ms. Attala, stating that he would furnish immediately a short term note (presumably referring to the $500,000 loan made in December 2013 to the project), “with the intention of rolling it into the larger $5,000,000 facility.” At this point, the 45 day “open claims” period had not yet expired, yet Gillam still expressed a willingness to proceed (Exhibit 71). On January 3, 2014, Gillam met with Respondents to see a PowerPoint presentation regarding Gillam’s proposed investment. No evidence was presented that the open claims issue was discussed in this meeting. A subsequent meeting was held on January 16, 2014, to discuss Respondents’ business model in connection with Gillam’s proposed investment. (Exhibit 81) On January 24, 2014, a call was held with Respondents and their counsel to finalize the deal, again with no reference to the open claims period--which by this time had expired without incident. On October 11, 2014, long after the open claims period had closed, Gillam wrote an email stating that NyacAU’s apparent offer to allow Gillam to buy into the project as a “minority, non-controlling shareholder” for “$7 million cash is just too much money relative to receiving a 20% stake in the Joint Venture,” which hearkened back to Gillam’s December 2, 2013 email. Finally, on December 27, 2014, Molly Attala forwarded another email string from Gillam, containing a counter offer of $4.6 million for 20% of Bear Leasing, which NyacAU rejected. At that point, Ms. Attala stated her exasperation over trying to make a deal with Gillam: “I don’t think this is a partnership that will

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ever materialize, they are always looking for a ‘deal’ and will push us down to take advantage of our situation.” It is quite clear from these emails that the problem with Respondents securing a $5,000,000 loan or investment from Gillam was that he was continually demanding better terms for participating in the project than NyacAU was willing to give, not because he was concerned about the late claims renewal filing, or the “open claims” and 45 day periods which ensued.

179.Additionally, Respondents claim that that they incurred damages from Claimants allowing the claims to lapse by purchasing six A-40 haul trucks intended for 2014 mining operations which--because of the “open claims” and subsequent 45 day period--could not be shipped to the mine site on the winter trail in 2014. Instead, the trucks had to be stored in Fairbanks for the year. Respondents assert that the damages they incurred as a result included (i) $158,544, attributable to an inability to lease the six purchased trucks to GNP for contemplated 2014 mining operations, less amounts Bear was able to earn by renting four of the six trucks, resulting in a net damages figures of $107,900; and (ii) $3,000 in costs for storing the trucks in Fairbanks in 2014. (Greisen Report, page 6, Bear Leasing Schedule 1.0). However, as explained above, the evidence showed that NyacAU in fact had no use for these trucks at the site in 2014, since NyacAU-- for reasons unrelated to the lapsing of the claims--was unable to obtain financing to perform any mining operations until after the 2014 season had ended. Therefore, NyacAU had no grounds to charge GNP rent for the use of the trucks, or for storage costs for 2014 (although, if the trucks were eventually used for mining operations, amounts expended to procure them should be added to LOC 1).

180.Respondents also claim that they are entitled to recovery of legal fees and costs of $14,930, plus pre-judgment interest at 5%. These charges appear to have been for the filing of a lien to protect GNP from damages caused by the “open claims” and 45 day period problem. However, paragraph 15 of the Claims Lease provides that “GNP and GMC shall keep the Claims

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free and clear from all liens or encumbrances for labor, materials, or other indebtedness of any kind,” and further states that any Party who fails to do so will have to bear the costs incurred by the other Party in expunging the lien. Thus, the lien generated by the legal services in issue is invalid (and should be expunged by Respondents if that has not already incurred), and Respondents are not entitled to recover attorneys’ fees concerning the lien as damages for Claimants’ breach of the Operating Agreement.

181.Dr. James’ individual claim. Dr. James claims that he is entitled to $10,416, plus pre-judgment interest thereon at 5%, for payment of interest on a short term $500,000 bridge loan from Gillam to mitigate the impact of Gillam backing out of the contemplated investment of $5,700,000. However, as set forth above, the evidence showed that Mr. Gillam’s choice to back out of the deal was unrelated to lapse of the claims, and no evidence was presented that the $500,000 bridge loan itself bore any relation to the claims lapsing. To the extent that the bridge loan was used to purchase equipment or for other project purposes, both the principal and interest on the loan can be added to LOC 1. But this gives NyacAU the right to recover interest (and principal) paid on the loan--not Dr. James individually.

XV.RESPONDENTS’ CLAIM FOR RECOVERY OF BOOK ENTRY OF INTEREST UNDER LEASE FOR WASH PLANT

182.Respondents have also presented, through their expert Mr. Greisen, a claim by NyacAU, (through Bear Leasing) for an entry on GNP’s books of an unpaid and unbilled interest expense of $66,180 under the appropriate Lease, incurred during the period of construction of the wash plant. This request shall be granted, by adding as damages to Respondents the amount of $66,180 as unpaid interest under the appropriate Lease for the wash plant, which shall be booked as a debt liability on GNP’s books, consistent with the Panel’s decision that Leases 2 and 4 are Operating Leases and Leases 1, 3, 5, and 6 are capital leases, and also added to LOC 1. In the

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dissolution process, NyacAU (through Bear Leasing) shall be treated as a third party creditor with respect to the recovery of this amount from GNP.

XVI.RESPONDENTS’ CLAIM FOR VIOLATION OF ALASKA UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION ACT

183.Respondents have counterclaimed that Goldrich, as well as a number of its officers and Directors individually, should be held liable under the Alaska Unfair Trade Practices Act (the “Act”). Section 45.50.471 of the Act expressly prohibits a wide array of specifically defined acts, focused primarily on certain types of fraud, misrepresentations, and concealments in the business arena.

184.However, none of the specified acts under the Act appear to fit Respondents’ claims, and Respondents do not directly contest this. Rather, as explained in their arbitration brief, Respondents rely on Section 45.50.545 of the Act, which states that “[i]n interpreting AS 45.50.471, due consideration and great weight should be given the interpretations of 1 U.S.C. 45(a)(1) (§ 5(a)(1) of the Federal Trade Commission Act” (“Federal Act”). Respondents then cite a case decided under the Federal Act, State v. O’Neill Investment, Inc. 609 P.2d 520, 535 (Ala. 1980) for the proposition that any “unfair or deceptive practices” are within the Federal Trade Commission’s enforcement powers, and, by virtue of Section 45.50.471, within the purview of the Act as well. Respondents also claim that the individual officers and directors can be held liable for “unfair and deceptive practices” under the case of Federal Trade Commission v. Publishing Clearing House, Inc., 104 F. 3d 1168, 1170 (9^th Cir. 1996), which held that the president of a telemarketing company she had founded had engaged in unfair and deceptive practices.

185.Setting aside the question of whether the broad standard of “unfair and deceptive practices” is intended to be read into the Act, but assuming for the moment that it is, both of the above cases cited for this position involved fairly extreme examples of unfair and deceptive

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practices. In State v. O’Neill, the Attorney General brought an action against a debt collection agency, alleging a litany of egregious actions by debt collectors who worked for the company, including coercion, threats and intentional misrepresentations to debtors to induce them to pay outstanding balances on their debts. In FTC v. Publisher’s Clearinghouse, the court found that the company president had full knowledge of and participated in a “solicitation script” used for potential customers that contained a number of material misrepresentations designed to obtain customer sign-ups, sometimes accompanied by payments of money.

186.By contrast, in this case the Panel has found Goldrich liable for only one act of negligent misrepresentation--concealment of dilution information in the Updated Martin Report, and has denied most of the damages claims asserted based on that misrepresentation. All other liability found and damages awarded against Claimants constituted, at most, contract violations, and based on the Panel’s reading of the Operating Agreement and related evidence. Additionally, no evidence was produced that individual officers and directors of Goldrich had knowledge or intentionally or recklessly engaged in, a pattern of unfair and deceptive practices with regard to Respondents.

187.In sum, neither the words of the Act, the Federal Act, nor the case authorities cited by Respondents suggest that the wrongdoing by Goldrich or its officers and directors rose to the level of “unfair and deceptive practices” arguably envisioned by the Act. Accordingly, Respondents’ claims for violations of the Act are denied.

XVII.RESPONDENTS’ CLAIM FOR IMPOSITION OF ALTER EGO LIABILITY

188.Respondents have also claimed that the corporate entity--Goldrich Placer LLC--should be disregarded for purposes of liability and damages, and that the officers and directors named in the counterclaim should be held individually responsible for damages imposed against Goldrich. Respondents rely solely on the case of L.D.G. v. Brown, 211

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P.3d 1110 (Ala. 2009) to set the legal standard for their claim. L.D.G. was a dram shop case brought by the representative of the estate of a woman who had been shot and killed by an intoxicated man, against a bar (a corporation) and the bar’s sole shareholder, individually. The allegation was that the bar had served the man drinks while they knew he was intoxicated, which caused him to commit the crime. The individual shareholder of the company that owned the bar was dismissed from the case on a directed verdict at trial, and the representative appealed. The appellate court, while recognizing that alter ego liability was a remedy to be used only in “exceptional circumstances,” held that the facts were sufficient to raise a jury question as to alter ego liability, and remanded the case to the trial court on that basis. The court articulated two standards for imposing alter ego liability: the “mere instrument” test, consisting of six factors to show that the corporate entity was used as an instrument of a shareholder, and a more general standard that a party cannot hide behind the corporate form to avoid liability when to do so would “defeat public convenience, justify wrong, commit fraud, or defend crime.” The court then held that that the following evidence concerning the individual shareholder was sufficient to raise a jury question re alter ego liability under the latter standard: (i) failure to honor corporate formalities; (ii) payment of employees’ salaries out of shareholder’s own pocket, and sometimes under the table; (iii) commingling of corporate and personal funds, and personal use of corporate funds; (iv) manipulating the business in and out of the corporate form to avoid taxes; and (v) undercapitalizing the company.

189.Respondents’ alter ego claim against individual officers and directors of Goldrich falls short of this standard. Goldrich is a public company which, during all relevant periods, maintained a board of directors and officers, made required public filings, and, albeit imperfectly, held annual board of directors and shareholders meetings where minutes were taken and later circulated. Further, with respect to the joint venture, it cannot be said that Goldrich was

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undercapitalized. The Operating Agreement provided, in Section 3.3, that “[n]o Member shall be required to contribute any additional capital to the Company” beyond amounts initially contributed, and that “[n]o member shall have any personal liability for any obligation of the Company.” Further, Respondents’ alter ego claim is based primarily on claims of misrepresentation by Goldrich, but the Panel has found that no misrepresentations were proven other than negligent misrepresentation in connection with Line 11 dilution, as to which damages were speculative; other findings of liability against Goldrich were based on failures to comply with the Operating Agreement. Further, other than William Schara and arguably Dick Walters (a former Board Member), no members of Goldrich’s Board of Directors named in Respondents’ Counterclaim were deposed or called to testify, and no evidence was offered as to any of them which suggested that they had used, or had the power to use, Goldrich to accomplish the unsavory objectives necessary to impose alter ego liability. Liability of Goldrich’s individual directors under an alter ego theory cannot lie in such circumstances.

190.In their Motion for Reconsideration of the Interim Award, Respondents make an additional argument that the members of Goldrich’s Board of Directors, or at least Directors William Schara and Dick Walters, should be held personally liable for damages caused by Claimants’ concealment of the dilution at Line 11, since they were responsible for putting the warranty regarding the 2009 Preliminary Assessment in the Term Sheet, with full knowledge of the 2010 Update. More specifically, Respondents point out that Schara and Walters had full knowledge that (1) the 84% gold deposit measurement, which was set forth in the Term Sheet in place of the 87% number calculated in the Martin Report, came from the non-disclosed Martin Update; and (2) that NyacAU, under the Terms Sheet and the Operating Agreement, had a right to rely “solely” on the Martin Report. Respondents claim that this is clear proof Schara and Walters knowingly concealed the 2010 Update and the dilution of Line 11 from Respondents

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and, on that basis, should be held individually liable for the concealment. However, a company obviously can act only through its directors, officers, agents and other representatives, and the evidence at the hearing showed that Schara’s and Walter’s actions with respect to the Martin Report, the 2010 Update, and the negotiation of the Term Sheet were performed on behalf of Goldrich. No evidence was presented that Schara or Walters committed acts or omissions in these areas which had not been authorized by Goldrich, even though they may have been negligent in carrying out their duties. Thus, the Panel sees no reason to extend Goldrich’s liability for negligent misrepresentation to Schara and Walters individually.

191.As to the other individual directors of Goldrich, Respondents also argue in their Motion for Reconsideration that they too should be held individually liable for Goldrich’s concealment of the dilution at Line 11. Respondents attempt to support this argument by referring to meeting minutes of the Board of Directors dated November 12, 2010 (Exhibit BO) and March 26, 2012 (Exhibit DG). However, the November 12, 2010 minutes simply refer to an updated preliminary assessment being prepared by Paul Martin--presumably referring to the Updated Martin Report--that would be reviewed with “members of management,” which likely referred to Mr. Schara and his management team (who were unnamed) for the Joint Venture, not necessarily the entire Board. There is no record as to what directors other than Mr. Schara participated in this review or were provided with a copy of the Updated Martin Report. The March 26, 2012 minutes refer to providing a draft of the Term Sheet (containing changes made by both Dr. James and Mr. Schara) to the Board of Directors; again, however, there is no evidence of which, if any of the Board members reviewed the draft, or of any discussion with the Board of any provision of the draft, including particularly ¶ 31, with reference to the dilution at Line 11 or the reduction in the grade of the pay material from 87% to 84%.

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192.Accordingly, Respondents are not entitled to relief against the individual directors on the alternative theories raised in the Motion for Reconsideration.

CLAIMS AND RELIEF REQUESTED BY MICHAEL JAMES

XVIII.MICHAEL JAMES’ DAMAGES CLAIMS

193.Dr. James, individually, has made three claims against Goldrich: (i) for reimbursement of $350,000 paid by James to purchase Goldrich’s stock; (ii) for reimbursement of an expense which James incurred personally in connection with the reclamation work by NyacAU of Goldrich’s permitting violations in 2012; and (iii) for recovery of interest on a $500,000 bridge loan obtained from the Gillam, which has been dealt with in Section XIV, above.

1.Claim for Repayment of $350,000 Stock Purchase.

194.Article 14 of the Term Sheet provided that, upon execution of the Claims Lease and the Operating Agreement, James “agreed to purchase Three Hundred Fifty Thousand Dollars ($350,000 US) of publicly traded common stock of GMC.” This obligation is incorporated into the Operating Agreement under Section 4.8, and was fully complied with by Dr. James when the Operating Agreement was signed.

195.In the Interim Award, the Panel awarded Dr. James a 17% return on his stock purchase price, on the basis that it was not clear under the evidence that Dr. James would have refused to purchase Goldrich stock and/or consummate the deal if he had known about the dilution at Line 11. A more likely scenario in the Panel’s view, was that Dr. James, at most, would have negotiated a lower purchase price for the stock. The following evidence supports this: (i) Although Dr. James initially rejected Mr. Schara’s offer of 50/50 joint venture arrangement, he testified that he very soon thereafter (in the plane flight home from Little Squaw with Schara) agreed to the 50/50 arrangement, apparently with little haggling; (ii) Dr. James was

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so enthusiastic about going forward with the project that he spent well over $1 million on work related to the mining operation before even seeing the Term Sheet or the Operating Agreement; and (iii) Dr. James acknowledged that when he did see the Term Sheet, Preliminary Assessment and Operating Agreement, he made only a cursory review of them, since he was mainly interested in, and focused his attention on, studying the core samples on which the Preliminary Assessment was based. These facts all sustain the idea that Dr. James was enthusiastic about the deal, would not have been deterred from the project by the report of dilution at Line 11; and that his concern would more likely have expressed itself in negotiations on the amount he would be willing to pay for Goldrich stock.

196.Respondents nonetheless claimed, in their Motion for Reconsideration, that they were entitled to full rescission of Dr. James agreement to purchase $350,000 of Goldrich stock as a part of the joint venture deal, since rescission of a contract must be “complete” under Alaska law.

197.However, in the Panel’s view, Respondents’ references to evidence favoring a full rescission of Dr. James’ stock purchase do not lend sufficient support for such relief. First, a rescission of Dr. James purchase price is not in fact a full rescission; the stock purchase was only one part of the joint venture deal. Second, Respondents’ claim that Line 11 was going to be mined in 2018, based on hearing testimony from Molly Attala that NyacAU “would be” mining 800,000 BCR of pay material at Line 11 in 2018, is not material. Respondents presented no evidence of any actual mining which had taken place at Line 11 at the time of the arbitration hearing in August of 2018, and, given the parties’ stated agreement at the hearing that GNP would be dissolved, coupled with the close of the mining season in September, it is obvious that no mining at Line 11 occurred after the hearing ended.. Finally, Respondents’ apparent argument that Dr. James would have called off the deal because there was no explainable reason for a

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dilution at Line 11 is not supported by the evidence. Respondents argued that since Robert Clarkson’s testimony that 14% of the 16.91% dilution found at Line 11 could be explained by Goldrich’s use of a small trommel--as opposed to a “sluice” system--to mine Line 11 in 2009 and 2010, he was not opining about dilution at all, but rather about the impact of using different systems for placer mining at Little Squaw. However, the evidence was undisputed that NyacAU never intended to or did use the trommel chosen by Goldrich for the 2009-2010 mining at Line 11, but ultimately opted to construct and use a customized wash plant for all mining at the site; i.e., a type of “sluice plant,” as described by Mr. Clarkson. Thus, according to Mr. Clarkson, had the wash plant been used to mine Line 11--as Ms. Attala testified would occur in 2018--any dilution caused by the trommel used by Goldrich in 2009-2010 would in his view have been eliminated. Accordingly, Mr. Clarkson’s attribution of dilution at Line 11 to Goldrich’s use of a trommel continues to have relevance. More importantly, Respondents did not address other reasons in the Interim Award for granting Dr. James a 17% reduction in the stock purchase price. As the Interim Award stated, Line 11 is the only line at Little Squaw where, based on an analysis of the core sample taken, all gold deposits were “inferred”; at every other Line, analysis of the drill cores resulted in either “measured” or an “indicated” gold resources. Thus, a possible dilution at Line 11 could have been anticipated even without the 2010 Update. Also, Respondents produced no evidence of any actual or estimated dilution in any of the other lines at the site, including Line 1.2, which was the location of the majority of NyacAU’s mining efforts. This effectively precluded any rational assumption that the Line 11 dilution existed at other locations.

198.Although, in the Panel’s view, it has not been proven that information from the Updated Martin Report on the dilution at Line 11 would have prevented James from entering into the deal altogether, the uncertainty raised by the dilution on the quality of the deposit at the

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mine site likely caused James reasonable concern, as it did with Mr. Martin. It is reasonably foreseeable, in the Panel’s view, that this would have impacted how much James would have been willing to pay up front for the purchase of Goldrich stock. Regrettably, precise calculation of damages in this regard is difficult. However, the Panel believes it is reasonable to assume that, had James known the true facts about dilution at Line 11, and its potential indication of dilution in other areas of the site, he would have reduced the price paid for his purchase of Goldrich stock by at least 17%, the amount of dilution at Line 11 reported in the Updated Martin Report that James was never provided. Accordingly, the Panel reaffirms its Interim Award that James is entitled to reimbursement from Goldrich of 17% of his $350,000 stock investment, which equals $59,500, plus prejudgment interest thereon at 5% from the stock purchase date.

2.Personal Payments of Expense Related to 2012 Reclamation.

199.As explained previously, NyacAU bore the costs of the reclamation effort made in 2012 on Goldrich’s behalf, conditional on Goldrich reimbursing NyacAU for all those expenses. Goldrich did not deny this obligation, but claimed that GNP had overcharged Goldrich for the work. On July 20, 2012, as part of NyacAU’s reclamation work, Dr. James purchased “tundra fabric,” which was used for lining of the bypass and stabilization of the pit walls, and in doing so incurred personal expenses of $9,858. Mr. Greisen also determined the amount of pre-judgment interest on this amount at 5% through August 22, 2015 of $3,015. (Greisen Report, p. 8, Dr. James’s Schedule 1.2) Therefore, Dr. James is entitled to repayment by Goldrich of this expense, plus prejudgment interest thereon at 5%, as calculated by Greisen to August 2015, and thereafter to the date of this Partial Final Award.

XIX.RESPONDENTS’ CLAIM THAT PANEL HAS FAILED TO DECIDE A CLAIM REGARDING “BIG BLUE.”

200.In its Motion for Reconsideration, Respondents have stated that the Panel failed to include in the Interim Award a decision on Respondents’ claim that it was defrauded by

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Claimants with respect to the processing capabilities of “Big Blue,” equipment that was supplied by Claimants under the deal to process pay material. However, other than to state that is has been overlooked, Respondents offer no analysis of this claim.

201.The Panel is intent on deciding every claim presented to it by any of the parties, but has been unable to locate any evidence in the record of a claim having been made regarding “Big Blue,” or of evidence supporting the claim having been presented at the hearing. The record does reflect that Big Blue was part of the joint venture deal; that it was assembled by Respondents (Charlie Trowbridge) and made operational at the site; that Big Blue was used by NyacAU in the latter part of the mining season in 2013--after NyacAU had received its individual permit--to mine a limited amount of gold from the site, up to the end of the mining season in September 2013; and that Big Blue had operational problems by virtue of having the wrong “screen” for mining the pay material and a “grizzly” that could not adequately separate large rocks or boulders from the material. Both Dr. James and Mr. Trowbridge testified that they knew almost from the beginning, simply by examining Big Blue, that it would not be sufficient for their purposes, which is the reason the “wash plant” ultimately was designed and constructed by NyacAU for the Little Squaw mining operation. However, there was no evidence presented that Claimants had misrepresented Big Blue’s capabilities, that Respondents relied on any such misrepresentation to their damage, or that Big Blue’s lack of capability to process pay material adequately was somehow a breach of the contract documents.

202.Accordingly, the Panel denies any claim regarding Big Blue, assuming such a claim is now being made.

XX.DISSOLUTION AND LIQUIDATION

203.The Interim Award contains a Section on the dissolution and liquidation of GNP, which is not part of this Partial Final Award, but has been reissued, contemporaneously herewith,

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as a Revised Interim Award, with some additions based on post-hearing submissions from the parties. The reasons for this are that the parties have asked the Panel to retain jurisdiction and oversight over the dissolution/liquidation process to its completion, and that there is likely more information the parties will have to provide on certain issues--including, among others, changes in the balance of LOC 1 and the issue of transfer of the permit to Goldrich--before a Final Award on dissolution/liquidation can be made.

XXI.PARTIES’ CLAIMS REGARDING ATTORNEY’S FEES, COSTS AND EXPENSES, AND PUNITIVE DAMAGES

A.Attorney’s Fees, Costs and Expenses Under “Prevailing Party” Clause of Operating Agreement

204.Both parties have requested recovery of attorneys’ fees, costs and expenses pursuant to Section 15.9 of the Operating Agreement. That Section provides, in relevant part, that if any arbitration proceeding is commenced, “for the purpose of interpreting or enforcing any provision of this agreement, the prevailing Party in the proceeding will be entitled to recover a reasonable attorney’s fees in the proceeding or any appeal relating thereto to be set by the court or arbitrator without the necessity of hearing testimony or receiving evidence, in addition to the costs and disbursements allowed by law.”

B.Indemnity by GNP Under the Operating Agreement

205.In addition, Section 8.1 of the Operating Agreement provides that, with an exception not here relevant “[GNP] shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed claim or action by reason of the fact that such person is or was a Manager or a Member of [GNP], against expenses actually or reasonably incurred by such Manager or Member in connection with the defense or settlement of such claim or action, if such Manager or Member acted in good faith and in a manner such Manager or Member reasonably believed to be in, or not opposed to, the best

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interests of [GNP].” Section 8.1.2 provides that GNP will have no indemnity obligations for the conduct arising from the “gross negligence or willful misconduct” or “reckless disregard” of the Manager or Member in the performance of duties under the Operating Agreement.

206.It is conceivable that the Indemnity Clause could apply to some of the costs of defense incurred by either Party with respect to any claims that were successfully defended against the other. The impact would be that any such defense costs would become a liability of GNP, and therefore payable in the liquidation, before the payment of distributions, if any, to the Members. However, the Panel appreciates that this particular issue was not identified or argued by the Parties during the course of the arbitration

C.The Panel’s Ruling

207.In the Interim Award, the Panel invited the parties to make further submissions on the issues of (i) whether there was a prevailing party in the arbitration; and (ii) whether the GNP indemnity clause should be triggered with regard to any claim(s), including what the impact of activating the indemnity clause would be.

208.With respect to the indemnity clause (Section 8.1 of the Operating Agreement), the parties are in accord that the clause is inapplicable to this case, since it was intended to apply to actions brought by third parties against any “Member” of the joint venture. Although Section 8.1 does not expressly state this restriction, the Panel accepts the parties’ mutual interpretation of the indemnity clause.

209.With respect to Section 15.9 of the Operating Agreement, each party made a fairly substantial submission claiming that it was the prevailing party in the arbitration, and therefore entitled to recovery of attorneys’ fees, costs and expenses, as set forth in that Section. The case law cited by the parties contains different articulations of the standard for determining if a party has “prevailed” in a case, including that a party must (i) successfully prosecute or

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defend the claim, (ii) prevail in the suit as a whole; (iii) obtain substantial relief; (iv) prevail on the main issue in the action; and (v) obtain an affirmative recovery. The Alaska Supreme Court has also made clear that there should be no “counting” of claims on which each party was successful to determine the prevailing party. State Board of Corrections v. Anthoney, 229 P.3d 164, 168 (Ala. 2010).

210.All these articulations, in essence, support the concept that to prevail in a disputed matter, a party must have obtained the primary relief which it sought in the case, and successfully defended the claims against it. However, as is apparent from the content of this Partial Final Award, to this point in time each party has had substantial success on some of its claims as well as its defenses. It is difficult, if not impossible, to rationally parse out a “prevailing party” under these circumstances, and State Board of Corrections indicates that it would be inappropriate to undertake such a task. Thus, the Panel holds, based on a review of all the claims, defenses, and evidence presented on the claims and counterclaims to date, that there has been no prevailing party in the arbitration to this point, although it reserves judgment as to whether a prevailing party will emerge from the Final Award with regard to issues which are now part of the Revised Interim Award. Accordingly, as to all issues covered by this Partial Final Award, the parties shall bear their own costs, expenses, and attorneys’ fees.

D.Punitive Damages

211.Both parties have also requested an award of punitive damages. In addition, Respondents have requested an award of treble damages under the Alaska Unfair Trade Practices Act. It is the Panel’s view that no party’s acts or omissions in connection with this matter rise to the level required under Alaska law for a punitive damage award. Accordingly, the Panel denies all requests for punitive damages. Since Respondents have failed to state a cause of action under the Alaska Unfair Trade Practices Act, their request for treble damages under the Act is moot.

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XXII.MISCELLANEOUS

212.All other claims for relief not specifically addressed or reserved herein are denied, except for those related to the dissolution/liquidation of GNP, as further detailed in the Revised Interim Award.

IT IS SO ORDERED.

DATED: November __, 2019
	Jason Kettrick, Arbitrator (subject to his separate filing of a concurrence and dissent)

DATED: December 1, 2019
	Thomas J. Brewer, Arbitrator

DATED: November __, 2019
	Fred G. Bennett, Panel Chair

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ARBITRATION UNDER ALASKA ARBITRATION ACT

GOLDRICH PLACER, LLC, GOLDRICH MINING COMPANY, and GOLDRICH NYACAU PLACER, LLC,

Claimants,

vs.

NYACAU, LLC, DR. J. MICHAEL JAMES, and BEAR LEASING, LLC,

Respondents.

SECOND INTERIM AWARD RE DISSOLUTION/LIQUIDATION OF GNP AND RELATED ISSUES

GOLDRICH NYACAU PLACER, LLC, NYACAU, LLC, DR. J. MICHAEL JAMES, and BEAR LEASING, LLC,

Counterclaimants,

vs.

GOLDRICH PLACER, LLC, GOLDRICH MINING COMPANY, WILLIAM SCHARA, STEPHEN VINCENT, DAVID ATKINSON, CHARLES BIGELOW, KENNETH EICKERMAN, WILLIAM ORCHOW, MICHAEL RASMUSSEN, THEODORE SHARP, JAMES DUFF, and RICHARD WALTERS,

Counterclaim Respondents.

INTRODUCTION

1.As explained in the Partial Final Award, the Panel—pursuant to the parties’ express request at the arbitration hearing—has agreed to retain jurisdiction and oversight over the dissolution/liquidation of GNP, and issues associated therewith, until the liquidation process is completed. This is consistent with the broadly worded arbitration clause of the Operating Agreement (under which this arbitration was initiated), which requires that “any dispute arising from or related to this Operating Agreement, the Lease [referring to the Placer Mining Claims Lease, in which Goldrich assigned the Claims to GNP] or operations by Goldrich, NyacAU, or [GNP] shall be resolved” by arbitration under the Alaska Revised Arbitration Act. Article XIV of the Operating Agreement sets for the process to be followed for the dissolution/liquidation of GNP.

2.This Second Interim Award is necessitated by the facts that the dissolution/liquidation has not yet run its course; the parties have raised issues pertaining to dissolution/liquidation on which the Panel has ruled (as set forth herein), but which conceivably could be subject to change if new issues related to the rulings arise in the future; and more issues may arise between the parties as the dissolution/liquidation process continues.

3.Once the dissolution/liquidation of GNP has run its course, the Panel will incorporate this Second Interim Award, along with all other issues decided in connection with the dissolution/liquidation of GNP, into a second Partial Final Award. However, it is important to emphasize that this process is not intended in any way to impact the immediate enforceability of the previously issued Partial Final Award.

I.THE PARTIES’ REQUESTS FOR ORDERS REGARDING DISSOLUTION/ LIQUIDATION OF GNP

4.Both parties have requested various orders from the Panel which bear some relation to the dissolution/liquidation process to be carried out (under the Panel’s supervision as

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requested by the Parties). As set forth in more detail below, the Panel has issued rulings regarding some of these orders and deferred ruling on others which it believes are more appropriate for resolution at a future point in the GNP liquidation.

A.Orders Requested by Claimants

5.The orders requested by Claimants were initially set forth in Exhibit 426, and refined, as to damages sought, in Exhibit 429. Certain orders requested by Claimants, which do not directly relate to the dissolution/liquidation process, have been dealt with in the Partial Final Award. They include, using Exhibit 426 as a reference point: (i) Requested Order 1 (Section III of Partial Final Award); (ii) Requested Orders 2 and 3 (Section I of Partial Final Award); (iii) Requested Order 4 (actually two requested orders) (Section II of Partial Final Award); and (iv) Requested Order 5 (Section XI.3. of Partial Final Award). Claimants’ dissolution/liquidation requests which do relate to the dissolution/liquidation of GNP are addressed below, including a post-hearing request for the Panel to order transfer of GNP’s individual permit to Goldrich, which (as explained in the ruling on the request) relates to and impacts the liquidation process.

1.Request for an Order appointing Goldrich to replace NyacAU as the Manager of the dissolution/ liquidation process.

6.The dissolution/liquidation process for GNP is laid out clearly in Article XIV of the Operating Agreement. Article XIV provides that the “Manager”, NyacAU, is responsible to “effect the dissolution of [GNP]” by filing and publishing a proper notice as required by the Alaska Revised Limited Liability Company Act (Operating Agreement, §§ 14.2, 14.3 and 2.1), and thereafter to “act with due diligence as liquidator to wind up the Company within one (1) year or such longer period as may be agreed in writing by the Members”. If NyacAU fails to accomplish the liquidation of GNP within one year or any extension agreed by the parties, the “Member that is not the Manager,”--i.e., Goldrich--then has the right to complete the liquidation

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process, including, if not already done, establishment of reserves for “contingent or unseen liabilities,” followed by final distributions, if any, to the Members.

7.The Panel’s jurisdiction over the dissolution/liquidation process empowers it to replace NyacAU with Goldrich (or even a third party, if appropriate) should NyacAU fail to perform its duties. To date, however, NyacAU has complied with all processes put in place by the Panel for liquidation (primarily through sale of equipment to third parties and the initiation of a government-approved reclamation of the mining site), and there is no evidence indicating that NyacAU will not continue to perform as the Operating Agreement requires. Claimants also have argued that NyacAU should be replaced by Goldrich as Manager, based upon NyacAU’s alleged failure to perform its obligations under the Operating Agreement. However, on balance there was insufficient evidence presented at the hearing to support this contention.

2.Claimants’ Requested Order that all equipment be sold to Goldrich.

8.Requested Order 6 asks the Panel to order that all equipment leased or rented to or owned by GNP be sold at fair market value to Goldrich, with final payment for such equipment being made on August 31, 2019, and interest on the purchase paid at the same rate that is being charged by Alaska Growth Fund on its $4,000,000 loan to NyacAU to fund mining operations. However, Goldrich has no legal right, under the Operating Agreement, or the dissolution/liquidation process set forth therein, to require that sales of all equipment constituting GNP assets be made to it, as opposed to some other third party purchaser. Respondents have acknowledged that Goldrich may purchase any and all equipment which constitute GNP assets for cash at fair market value, in the amounts calculated by Michael Tope in his Expert Report. However, NyacAU’s obligations in connection with the liquidation of GNP are to ensure that it obtains the best prices possible for sales of such equipment, sufficient to pay off any encumbrances on the equipment and possibly provide GNP with some net recovery on the sales

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to satisfy other liabilities. Goldrich has no contractual right of first refusal with respect to any such sales, although it certainly can put in its cash bid for any piece of equipment when it is auctioned and hope it emerges as the highest bidder. NyacAU shall be obligated, throughout the liquidation process, to give Goldrich reasonable advance notice of any such auction, as more fully explained herein.

3.Claimants’ requested order for NyacAU to escrow interim distributions paid to NyacAU.

9.Requested Order No. 7 asks for an order requiring NyacAU to escrow all revenue it has been paid as an interim distribution under Section 10.1.2, and use it to pay off all encumbrances on leased or purchased equipment. However, Article 10 of the Operating Agreement does not impose any obligation on Members, including NyacAU, who are actually paid interim distributions under Section 10.1.2, to use those distributions in a certain way, whether to pay off encumbrances or reinvest them in the mining operation. Accordingly, the Panel denies this request.

4.Claimants’ requested order for GNP to retain $100,000 for liquidation costs and for Respondents to pay any and all liquidation costs in excess of this amount.

10.Requested Order No. 8 asks for the establishment of a $100,000 reserve for liquidation costs and an order requiring Respondents to pay any overage themselves. But this request finds no support in the Operating Agreement. The dissolution procedure in Article 14.3 is clear that during liquidation, the Manager is obligated to use GNP’s assets to first pay the debts and liabilities of GNP, including any amounts owed to the Members (but excluding Capital Accounts) and “the expenses of liquidation in the order of priority set forth herein.” During this process the Manager may also establish, at its discretion, any reserves deemed necessary for “contingent or unforeseen liabilities or obligations of [GNP]”, which conceivably could include an amount for liquidation expenses. But Article XIV does not provide for GNP to retain any

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amounts for liquidation expenses, does not place any limit on liquidation expenses that would be subject to reimbursement from a sale of GNP’s assets, and does not require the Manager to personally bear any such expenses. Accordingly, this request is denied.

5.Claimants’ requested order No. 9, for ownership of the wash plant to be transferred to GNP.

11.This requested order is addressed by the Panel’s order in Section I.A.2., supra. Also, it deserves mention that Goldrich has recently agreed that the wash plant may be disassembled by NyacAU and stored in Fairbanks, despite the fact that such action (at least according to Respondents’ expert Michael Tope), would significantly diminish the plant’s value on the market.

6.Claimants’ requested order preventing Respondents from removing small tools or items purchased by GNP for the project site.

12.The Panel has issued previous orders, all of which it now confirms, allowing transfer of equipment and other asset of GNP to Fairbanks for storage, in order to maximize their value on the market. Those rulings are hereby incorporated into this Revised Interim Award. The Panel hereby makes the same order as to any other items at the site, including pieces of equipment and tools owned by GNP, unless it can be shown that there is some economic advantage related to the liquidation to leaving these items on site (for example, if equipment/tools are needed on site for reclamation), and that they will not lose value if not moved to Fairbanks.

7.Claimants’ request for orders transferring mining permits and mining claims to Goldrich.

13.After the hearing, Claimants requested an order requiring GNP to transfer all mining permits and mining claims (as defined in the Placer Mining Claims Lease and Assignment “Claims Lease”) to Goldrich. Subsequently, the parties made additional submissions on this issue, all of which have been reviewed by the Panel.

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i.No provision of the Claims Lease or the Operating Agreement speaks directly to the rights or obligations of GNP to transfer its mining permit.

14.In their submissions, the parties have referenced various provisions of the Claims Lease and the Operating Agreement as controlling, or at least having relevance to, the transfer of a permit by GNP. The Panel has reviewed these provisions, but as explained below, finds nothing in them that expressly imposes any rights or obligations on the parties with respect to a transfer of the mining permit secured by NyacAU on behalf of GNP (“Mining Permit”).

15.Under the Claims Lease, GMC leased the Claims to Goldrich, which in turn assigned all of its rights, title and interest in the Claims to GNP (the assigned Claims are set forth in Exhibit 1 of the Claims Lease). The assignment was ratified by Section 1 of the Operating Agreement, which stated that the assignment included “without limitation, the right to use all associated water rights, mining Permits, Leases and licenses in existence as of April 2, 2012 as more fully set forth in the Lease” (emphasis added). However, this language makes clear that the assignment of the Claims included only mining permits which existed as of the assignment date, which then consisted only of Goldrich’s preexisting general permit for mining ten acres at Little Squaw. The Mining Permit was not issued until August 2013.

16.Section 7(a) of the Claims Lease articulates a slightly broader definition of “Mining Rights” which were assigned to GNP under the Lease as including “the exclusive right and license to … sell or otherwise dispose of … all Permits, Leases, licenses, rights-of-way, easements and servitudes in existence as of the date of this Lease or thereafter acquired as may be necessary, useful or convenient for [mining] purposes and the right of ingress and egress therefor…” (emphasis added). By its terms, this language gives GNP the right to sell or otherwise dispose of any permits, including the Mining Permit, acquired during, and either necessary, useful or convenient for mining “purposes.” However, it does not provide any

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specific procedures or proscriptions for a permit transfer, nor does it pertain to a period where all mining operations have ceased, the Claims assignment has been terminated and GNP has been dissolved and is in the process of liquidation.

17.Section 6(c) of the Claims Lease, also cited by the parties, does not specifically refer to the Mining Permit, but makes clear that even though the Claims Lease is terminated by the dissolution of GNP, GNP would continue to have the “obligation to reclamate the Claims until fully released by appropriate governmental authorities.” This provision implies that the Mining Permit would remain in force during this period, since reclamation of the site was a condition of issuance of the Permit to which NyacAU agreed, in its capacity as the representative acting for and on behalf of GNP. Section 14.6 of the Operating Agreement recognizes this exception in Section 6(c) of the Claims Lease in connection with the termination of the Lease upon dissolution: “Upon dissolution of [GNP] the [Claims Lease] shall terminate, and all its rights, title and interest in it shall revert to Goldrich or GNP, as applicable, and neither [GNP] nor NyacAU shall have any rights, title or interest in the Claim, subject to the rights and obligations set forth in the [Claims Lease] (emphasis added).

18.No other provision of the contract documents directly refers to the Mining Permit, or the transfer thereof to Goldrich or any third party.

ii.Dissolution/liquidation provisions of the Operating Agreement do have relevance to the transfer of the Mining Permit

19.Consistent with Paragraph 6(c) of the Claims Lease, NyacAU, as Manager of the dissolution/liquidation process, must “make provision” for reclamation of the site as well as the payment of liabilities by the sale of GNP’s assets. (Article 14.2). In this regard, the Mining Permit can be fairly characterized as a GNP asset, of course with the understanding that it carries with it the burden of reclamating the site when mining operations have been terminated. As such, it is incumbent on NyacAU, as Manager, to determine if, under these conditions, the

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Mining Permit has market value that potentially could be used to pay off GNP’s liabilities. No market value has been established for the Mining Permit, although NyacAU has to date fulfilled its responsibility to make provision for the reclamation required by the Permit by submitting and obtaining government approval for a reclamation plan and performing reclamation in accordance with it. .) As the owner of the Mining Permit, GNP has properly been charged for these reclamation costs and LOC 1 should be increased accordingly (Goldrich has challenged NyacAU’s reclamation work on grounds that the work has damaged future mining prospects by covering up exposed, unmined pay material, but no evidence supporting this allegation was presented, including any evidence that the government had modified or revoked its prior approval of NyacAU’s reclamation plan, or criticized the manner in which the plan had been implemented to date.).

20.Absent a transfer of the Permit, GNP (through NyacAU) of course would be obligated to complete reclamation, and obtain final approval from appropriate government authorities, as required by Section 6(c) of the Claims Lease—a process estimated to take several years. But Section 14.3 contemplates that liquidation will be completed within one year of dissolution—at the latest, by May 31, 2020 (a year from the filing of the formal Notice of Dissolution by NyacAU)--unless the parties agree to a longer period. However, in the Panel’s view, this conflict can be rectified by NyacAU, prior to May 2020 “mak[ing] provision” for the completion of reclamation as required by Article 14.2., even though reclamation might not be completed for several more years.

21.The dissolution/liquidation process in the Operating Agreement provides the proper guidance for doing so, by giving NyacAU the right to establish reserves for “unforeseen or contingent liabilities,” which fairly can be read to encompass reclamation costs. By establishing an adequate reserve for reclamation costs before May 2020, to the extent possible

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after payment of GNP’s debts and liabilities and liquidation expenses, NyacAU will have fully satisfied its obligation to “make provision” for reclamation under the Operating Agreement in connection with the dissolution/liquidation of GNP, even though reclamation activity might necessarily have to continue after that date.

22.In light of the above, the Panel orders as follows:

(i)By no later than January 15, 2020, NyacAU and Goldrich shall attempt to establish, by agreement, a market value for the GNP permit in connection with a transfer of the Permit to Goldrich or a third party, taking into consideration the obligation of GNP, or any transferee of the permit, to complete reclamation in accordance with NyacAU’s government-approved reclamation plan. If agreement cannot be reached, the parties will so notify the Panel promptly, and the issue will be resolved either by (1) the parties each submitting a market appraisal of the fair market value of the Mining Permit, and the Panel deciding fair market value based on such submissions, or (2) in any other reasonable manner agreed by the parties;

(ii)Reasonably prior to May 31, 2020, NyacAU shall perform its obligation to “make provision “ for reclamation by (1) adding all reclamation expenses actually incurred by NyacAU to LOC 1; (2) from GNP’s assets, to the extent possible after payment of GNP’s debts and liabilities and liquidation expenses under Article 14.3.1 of the Operating Agreement, establishing a reserve for estimated reclamation expenses necessary to complete reclamation in accord with the existing, government-approved reclamation plan, in accord with Section 14.3.2 of the Operating

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Agreement; and (iii) transferring its legal obligation to complete reclamation of the site to Goldrich or other third party only if reclamation liability is fully assumed by Goldrich or another third party as of the effective date of transfer of the permit, and Goldrich or any other third party has at that time provided sufficient financial security, in NyacAU’s reasonable view, to ensure that sufficient funding exists to complete reclamation in accordance with the existing reclamation plan and with approval by the appropriate governmental authorities. To the extent that reclamation liability is properly assumed by Goldrich or another third party, the funds in any reclamation reserve may be used for reclamation, provided they are not for some reason needed to pay off debts and liabilities of GNP or ongoing liquidation expenses accrued after the reserve was established.

23.Claimants’ request to transfer the Mining Permit attempted to impose various conditions on the transfer, including, for example, (i) delaying Goldrich’s assumption of reclamation liability to a later, unspecified date; (ii) “offsetting” Goldrich’s reclamation liability with damages to the site allegedly caused by NyacAU’s faulty reclamation work to date; and (iii) allowing Goldrich to complete reclamation according to its own plan, rather that the NyacAU reclamation plan approved by the government. Each of these conditions raises issues over which the Panel, in its view, has no jurisdiction. Transfer of a mining permit under Alaska law is heavily regulated, to the point of imposing severe penalties on any party who fails to comply--as the parties have shown by the numerous references to relevant laws and regulations contained in their submissions. It is for the proper government authority to determine if any of Goldrich’s requested conditions to transfer of the Mining Permit satisfy these regulations (and

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other laws pertaining to them), and the regulations do not, in the Panel’s view, cede jurisdiction to other bodies. Under such circumstances, the Panel, at most, could only determine only that, with regard to a transfer of the Mining Permit, adequate provision had been made for reclamation to be completed as required by governmental authorities, based on express confirmation by such authorities themselves.

24.Of course, the parties are not precluded from negotiating an alternative arrangement for the liquidation of GNP which addresses more directly the issue of permit transfer should they wish to do so; but at present the Panel is constrained in its ruling by the existing contractual provisions and jurisdictional issues discussed above.

B.Orders Requested By Respondents

25.The orders requested by Respondents in connection with dissolution/liquidation, and the Panel’s rulings in connection therewith, are set forth below.

1.Respondents’ requested order confirming dissolution.

26.Respondents have requested an order from the Panel confirming the dissolution of GNP under Article XIV. The Panel grants this request. The evidence is undisputed that NyacAU filed and published a formal Notice of Dissolution on May 30, 2019 (and other requisite documents before that date), which in accordance with Section 14.2 of the Operating Agreement, formally effected the dissolution of GNP—although the parties had agreed to dissolution and commenced the liquidation of GNP in 2018.

2.Respondents’ requested order denying GMC an automatic right to purchase equipment.

27.The extent of Goldrich Mining Company’s (“GMC”) rights to purchase equipment are identical to the rights of Goldrich to make such purchases, which is addressed in Section I.A.2., above. Accordingly, this request is granted.

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3.Respondents’ requested order concerning booking of Alaska Growth Fund claim.

28.As has been discussed, the Alaska Growth Fund made a significant loan to NyacAU to fund mining operations. At this time, there is apparently $2,000,000 outstanding on the loan, which of course will have to be addressed by NyacAU in accordance with the liquidation process (Article 14.3 of Operating Agreement). The loan may not be booked as a capital contribution (or in any other manner) on GNP’s books, since the evidence showed it to be a loan of funds for mining operations and therefore a liability of GNP, subject to repayment from GNP’s assets in the liquidation process (Section 14.3.1). On this condition, the request is granted.

4.Respondents’ requested order for Tobin Creek reserve.

29.Respondents have also requested an order requiring Goldrich to establish a $30,000 reserve for Tobin Creek. This apparently is the estimated amount it would take to remove mercury and otherwise clean up the Tobin Creek site so that a mining permit of some kind can be issued. However, the Operating Agreement does not impose upon any party obligations with regard to Tobin Creek, and it is undisputed that no mining operations took place there from 2012 to the present.

30. NyacAU also argued in the hearing that they should be entitled to $124,000 in lost profits regarding the mining of Tobin Creek, based upon an indication of interest received from a third party that it might wish to mine Tobin Creek in the future. However, this amount is not part of Respondents’ current damages claims and, in any event, would be too speculative for the Panel to award. For these reasons, Respondents’ request to establish a reserve for Tobin Creek is denied.

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5.Respondents’ requested order that any damages awarded to them can be an offset to distributions (or damages) due Goldrich.

31.This request is granted in favor of both sets of parties and shall be applied reciprocally.

6.Respondents’ requested order to determine balances of all lines of credit.

32.The Panel considers this request to be part of the liquidation process and subject to determination by the Manager (with Goldrich,, as a Member of GNP, having the right to provide input), as part of its duty to ensure that all debts and liabilities of GNP are paid on a priority basis, including amounts due NyacAU as a creditor under any letters of credit. To facilitate this process, and in response to a request made by the Panel in the Interim Award, both parties made submissions on the balances due for LOC 1, LOC 2 and LOC 3. The parties agree that LOC 2 has a zero balance.

33.LOC 1 balance. As reflected in Respondents’ submission on the balance of LOC 1, LOC 2 and LOC 3 as of March 31, 2019, and in GNP’s accounting records (“Respondents’ LOC 1 and LOC 3 submission”), the assets and liabilities of GNP with regard to LOC 1 included the following:

(i)GNP’s total liabilities, as of March 31, 2019, were $23,703,985 and the balance of LOC 1 was $14,657,041. The amount of GNP’s booked assets at the time was $599,818, which will be used by NyacAU, as Manager of the liquidation, to repay amounts owing under LOC 1 and/or, to the extent not so used, to satisfy other GNP liabilities.

(ii)However, LOC 1 must be recalculated in light of the Interim Award holdings (incorporated into the Partial Final Award) and other liabilities which have accrued since March 31, 2019. As shown by Respondents’ submission, these include the following:

i.	Additional liabilities:
	Reinstatement of 15% interest rate under Leases 1-6
	Leases 1-4	$1,119,498

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	Leases 5-6	$333,626
	Lease 7 and 2018 equipment rentals	$77,482


ii.	Credits:
	Credit to GNP regarding lease overcharges for Arctic Camp	$531,164

Taking these funds into account, the revised balance of LOC 1 as of March 31, 2019 was $15,656,483.

Respondents also listed in the category of “additional liabilities” $241,615 in interest payments from a number of loans, including: (1) a $2014 loan from the Koke’s in the principal amount of $500,000 (which the Panel assumes to be the $500,000 bridge loan ascribed by Respondents to Clark Gillam); (2) a 2014 loan from Kobuk Storage for $100,000; (3) a 2016 loan from the Kokes for $500,000; and (4) a 2018 loan from AK USA for $1,000,000. However, the Panel has been unable to locate references in the record to loans (2), (3) and (4). Accordingly, before adding any interest on these loans to GNP’s liabilities, and within twenty (20) days of the issuance of the Second Interim Award, Respondents shall submit evidence showing that such loans were used exclusively for mining operations, and that the loans were referenced in the arbitration or records reflecting the loans provided in discovery. Claimants shall have the right to respond to such submission within fifteen (15) days thereafter.

(iii)Respondents’ Submission also show additional liabilities incurred by GNP since March 31, 2019 up to the date of the Submission (June 21, 2019), which increased the LOC 1 balance, including:

Additional employee salaries, debt payments and insurance premiums

$256,661

ii.

Additional vendor payables

$328,512

These amounts, when added to the LOC 1 balance, increase LOC 1 as of June 2019 to $16,483,271.

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(iv)NyacAU, as Manager of the liquidation process, shall make any further adjustments to the LOC 1 that are necessitated by (1) additional liabilities incurred by GNP in connection with the reclamation of the site; (2) any other liabilities appropriately incurred by GNP; and (3) the Panel’s holdings in this Partial Final Award that (a) Leases 1, 3, 5, and 6 are Capital Leases and Leases 2, 4 and 7 are Operating Leases; and (b) that as a result of this characterization of the Leases, the parties are entitled to additional interim distributions for the years 2016-17 of $413,000 each, but with Goldrich’s additional share being reduced by $102,893 to pay off the balance owed on LOC 3 (see below).

(v)In their submission of July 30, 2019, Claimants asserted that the balance of LOC 1 as of March 31, 2019 was $17,343,648 (Claimants’ Summary of LOC 1 and LOC 3 Balances, Schedule 1). This indicates that there similarity in the parties’ respective calculations of the balance currently owing under LOC 1.

34.LOC 3 balance. GNP turned a profit in 2016 and 2017, which triggered interim distributions to the parties under Article X of the Operating Agreement. For 2016, Goldrich received a distribution of $67,580, which was used to reduce interest on loans in LOC 3 to $45,051, with $250,000 principal balance still remaining. In December 2017, Goldrich received a distribution of $245,323, which was applied to pay off accrued interest and pay down the principal amount of LOC 3 to $91,488. Interest continued to accrue on that amount, which resulted in LOC 3 having a principle balance of $91,489 and accrued interest of $11,405 as of March 31, 2019, for a total of $102,894 (Respondents’ LOC 1 and LOC 3 Submission, page 10).

35.Claimants have asserted that there was a zero balance owing in LOC 3 as of March 31, 2019. However, no analysis was presented to support this conclusion. Thus, the LOC 3 balance as of March 31, 2019 shall be $102, 893, along with any additional interest

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accrued under the LOC 3 loan to the date of issuance of a Second Partial Final Award, unless the parties agree to a different balance in the course of the liquidation.

C.Additional Orders Concerning the Dissolution/Liquidation Process

36.To help ensure that the dissolution and liquidation process is carried out fairly as to all parties, NyacAU, as Manager of the dissolution/liquidation process, shall do the following:

(i)NyacAU shall provide to the Panel and to Claimants an inventory of all equipment which has heretofore been transported from the site to Fairbanks, and, on a quarterly basis, shall provide supplemental inventories of additional equipment transported to Fairbanks (with the exception of equipment at the site needed for reclamation work).

(ii)For any equipment or other items that are remaining on site for reclamation, NyacAU shall ensure that such equipment is adequately protected from environmental conditions so as to be fully operational during the reclamation process;

(iii)NyacAU shall provide to the Panel and to Claimants a list of all debts and liabilities of GNP, including debts and liabilities owed to NyacAU or Claimants, identifying the particular creditors of GNP and the amounts due;

(iv)NyacAU shall provide to the Panel and to Claimants a list of liquidation expenses incurred to date, and all liquidation expenses incurred, on a quarterly basis, in the future;

(v)NyacAU shall provide to the Panel and to Claimants a list of all reclamation expenses incurred to date, and all such expenses incurred, on a quarterly basis, in the future;

(vi)For any sale of the equipment constituting GNP assets, NyacAU shall provide the Panel and to Claimants at least ten (10) days advance notice in writing of the proposed sale, and Goldrich shall be allowed to either meet the proposed price by the payment of

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a cashier’s check or wire transfer, or object to the proposed price if Goldrich has a reasonable grounds to believe that the proposed amount of the sale is less than fair market value and that a better price may be obtained, within the timetable for the proposed sale, from Goldrich or another third party. All such objections, if not resolved, shall be submitted to the Panel for resolution;

(vii)NyacAU shall keep a written record of the sales of equipment and other assets of GNP, which shall include identification of the buyer and the amount of the sale, the amount of any encumbrance on the items sold, proof that the encumbrance on the equipment has been removed or diminished by payment to the appropriate creditor from the sale proceeds, and use of net proceeds of the sales;

(viii)All amounts derived from the sales of equipment or other assets of GNP in the liquidation process shall be deposited into a separate trust account, from which outstanding debts and liabilities of GNP, and the expenses of liquidation and/or reclamation, shall be paid, in accordance with Article XIV. NyacAU shall provide to the Panel and to Claimants notice of any amounts remaining in the account after all such debts, liabilities and liquidation costs have been paid, and any such amounts shall remain in the account pending further order of the Panel;

ix.NyacAU shall provide notice to the Panel and to Claimants of any reserves, including reclamation reserves, which NyacAU intends to establish in accord with Section 14.3.2 of the Operating Agreement. Claimants shall have a right to object or comment on the proposed reserve(s) before they are implemented; and

x.NyacAU shall give notice to the Panel and to the Claimants of monies and properties, if any, to be distributed to the Members in accordance with Sections 14.3.3 and 14.3.4 of the Operating Agreement. The proposed amounts shall be distributed and the allocation thereof shall be approved by the Panel before they are made.

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37.The Panel may issue other orders in connection with the dissolution and liquidation process, as necessary, to resolve any dissolution/liquidation issues between the parties.

38.It is not intended that this Second Interim Award be regarded as final or subject to review, pursuant to either federal or state arbitration statutes or in any other judicial proceedings in connection therewith.

IT IS SO ORDERED.

DATED: December 1, 2019

Thomas J. Brewer, Arbitrator

DATED: November __, 2019
	Jason Kettrick, Arbitrator

DATED: November __, 2019
	Fred G. Bennett, Panel Chair

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Concurrently with the filing by Respondents of their motions to expand the period for NyacAU to manage the liquidation of GNP and for application of certain credits due GNP from third parties, the parties have filed various follow-on motions dealing with a variety of issues. The Panel’s orders on these motions, including Respondents’ motion for application of credits, are set forth below. As appropriate, these orders will be incorporated into the Final Award, to be issued at the conclusion of the liquidation of GNP.

1.Claimants’ motion to have reclamation reserve increased.

a. Parties’ briefing

Claimants have moved to compel an increase in what they contend was at one time a reclamation reserve for the Project, established by NyacAU. Claimants assert that in 2018 NYACAU entered $4,427,357 in accrued liability on GNPs books, which included;

(i)$2,078,091 for reclamation;

(ii)$951.937.00 for immobilization and construction of the winter trail;

(iii)$384,315.00 for equipment rental; and

(iv)$5,000 for utilities.

Claimants contend that these numbers were based on a one-page estimate of reclamation expenses prepared by NyacAU which was totally inadequate. On those grounds, Claimants argue that NyacAU’s estimate, which they claim was

booked as a reserve on GNP’s books, should be replaced by an $18.4 million dollar reclamation estimate prepared independently by Goldrich.

Respondents oppose the motion on the following grounds;

(i)The reclamation estimate was entered on GNP’s books in 2018, not as a reserve—because GNP was insolvent—but only as an estimate of reclamation costs;

(ii)NyacAU’s one-page estimate of reclamation costs is irrelevant because NyacAU has submitted and had approved by the USACOE a modified reclamation plan, as required by the mining permit;

(iii)At the arbitration hearing and in a string of documents, Goldrich consistently estimated reclamation costs in the range of $2 to $3 million dollars, which is consistent with NyacAU’s estimate in 2018; and

(iv)Goldrich’s $18.4 estimate was prepared 18 months after the arbitration hearing, is inflated, and contains numerous factual inaccuracies. It also does not take into account Goldrich’s stated intent to conduct future mining operations at the Project site, which Respondents claim would greatly reduce the cost of the current reclamation.

Claimants’ reply to NyacAU’s opposition argues that the $18.4 million dollar estimate was as low as possible, in order to not disincentivize potential investors in future mining operations at the site. Claimants also challenges NyacAU’s complaints regarding factual inaccuracies in the Goldrich estimate.

(v) Ruling

Claimants’ motion is denied.

As Claimants point out, in late 2018, NyacAU booked the following estimates in GNP’s books of account: (i) $2,078,091 for reclamation work; (ii) $951,931 for demobilization of the site; (iii) $384,382 for equipment rental; and

(iv) $5000 for utilities. However, Respondents make clear in their response to the motion that these amounts were not reserves, because GNP had no funds to establish any reserves related to reclamation at that time, in light of its liabilities to third party creditors. Thus, as a prefatory matter, Claimants’ motion is based on the incorrect premise that estimated reclamation costs were actually booked by NyacAU as a reserve.

Beyond this fact, Goldrich does not have the right to establish any reclamation reserve for the Project. Under the Operating Agreement, Goldrich’s rights regarding reclamation are limited, by Article 4.5, to either (i) requesting the Manager (NyacAU) to establish a reclamation reserve of up to $300,000; or (ii) if Goldrich wishes to request a reserve in excess of $300,000 to obtain NyacAU’s approval to hire an independent evaluator to prepare the estimate. Goldrich failed to follow Article 4.5 with regard to its current $18.4 reclamation estimate. The estimate was prepared unilaterally, without informing NyacAU of its preparation until the filing of the current motion. No approval was sought from NyacAU of an independent evaluator to perform a reclamation estimate for purposes of establishing a reclamation reserve. And, as stated, GNP does not have the funds to establish any reclamation reserve in any amount, let alone a reserve of such significant proportions. Goldrich’s $18.4 million estimate of is no relevance under these circumstances.

This conclusion is fortified by other provisions of the Operating Agreement. Under Article 7.1, NyacAU is vested with exclusive authority to manage GNP; there is no carve-out giving Goldrich the right to demand establishment of a reclamation reserve. Further, NyacAU’s obligations as Manager of GNP under Article 6 do not include any express obligation to establish a reclamation Reserve. This is consistent with the language of Article 4.5, that the establishment of any reclamation reserve is within NyacAU’s discretion as Manager, subject to its approval to allow the amount of any reserve to be determined by an “independent evaluator”. Under Article 14.2, the Manager of the liquidation of GNP (NyacAU) is solely responsible for making “provision for reclamation”; but Goldrich has no right to usurp this process with its own reclamation estimate, unless it were to be appointed as Manager of the liquidation, which is a request the Panel has denied in a prior Order.

The evidence is also clear that, with regard to the liquidation of GNP, NyacAU has made adequate “provision for reclamation”, as required by Article 14.2, by (i) preparing and obtaining approval of a reclamation plan from the USACOE; and (ii) advancing costs for reclamation in accordance with such plan. Thus, Goldrich cannot rationally contend that its estimate should be accepted because of a failure to NyacAU to perform its responsibilities in this regard. Article 14.3.2 also gives NyacAU complete discretion to establish any reserves

during the liquidation process for “any contingent or unforeseen liabilities or obligations of the Company”, which can fairly be interpreted as encompassing a reclamation reserve.

Finally, Goldrich cannot successfully argue that NyacAU is somehow required to accept the $18. 4 million reclamation estimate as part of its obligation to fund LOC 1under Article 6.1. Article 6.1 does not speak to the establishment of any reserves, and cannot rationally be interpreted as depriving NyacAU of its discretion regarding the setting of a reclamation reserve under Articles 4.5 and 14.3.2.

2.Claimants motion to impose an obligation on NyacAU to reclamate under the Operating Agreement.

a.Parties’ briefing

Claimants have moved for an order holding that NyacAU is obligated to reclamate the project site under the Operating Agreement. The basis of the motion is that reclamation expenses fall under the category of “Operating Expenses” as defined in Section 2.28, and that under Article 6.1, NyacAU has the obligation to fund all Operating Expenses through LOC 1. Claimants also point out that NyacAU has an express obligation to reclamate the site under the individual mining permit issued to NyacAU in August 2013. They further contend that even through NyacAU actually set up and booked a reserve for future reclamation and

demobilization costs in GNP’s accounts, NyacAU then misappropriated the reserve funds for themselves, apparently to pay down LOC 1.

Claimants also assert that NyacAU has failed to adequately reclamate the site either during or after mining operations. Finally, Claimants emphasize that under Article 3.3, Goldrich is not required to contribute any additional capital toward reclamation expenses.

Respondents contend that NyacAU’s funding obligation under LOC 1 is limited to the payment of Operating Expenses necessary to achieve “Commercial Production” levels of gold at the Project, and that when GNP’s mining operations were shut down, further funding under LOC 1 became irrelevant; therefore, reclamation expenses—which necessarily are not incurred until mining operations have ceased-- do not and cannot fall within the parameter of NyacAU’s LOC 1 funding obligation. NyacAU also points out that no provision of the Operating Agreement expressly requires any party to bear reclamation expenses, and that the only provision in the Agreement pertaining to reclamation is the obligation of NyacAU, as Manager of the GNP liquidation, to “make provision for reclamation”. Respondents contend that NyacAU has done this by obtaining an approved reclamation plan from USACOE and advancing all costs of reclamation to date as required by the approved plan. Respondents also confirm that the reclamation estimate of $2,810,000.00 was used to pay third party creditors, not pocketed by

Dr. James; further, that that Dr. James and Charles Trowbridge are still owed $1.8 million in unpaid management fees from GNP.

Respondent’s also reject Claimant’s unilaterally prepared reserve reclamation estimate of $18.4 million dollars, pointing out that Goldrich itself has represented for years, in writing, that the estimated cost of reclamation would be in the range of $3 million dollars; and that even these costs could be reduced greatly if Goldrich were to continue mining operations at the site, which Goldrich has intimated it intends to do. In sum, Respondents’ position is that it would be extremely prejudicial if the Panel imposed an obligation to reclamate on NyacAU, particularly any responsibility reclamate in accordance with Claimants’ $18.4 million dollar reclamation estimate.

b.Ruling

Claimants’ motion is denied.

The Operating Agreement imposes no express obligation on NyacAU to reclamate the Project site, other than to “make provision for reclamation” in connection with the liquidation of GNP—which NyacAU has done. NyacAU’s duties as Manager, set forth in Article 7, do not refer to reclamation. Moreover, Article 4.5 contemplates that the establishment of a reserve for reclamation is within the discretion of NyacAU. In like manner, Article 14.3.2 of the Operating Agreement gives NyacAU, as Manager of GNP’s liquidation, the discretion to

“establish any reserves that the liquidator deems necessary for any contingent or unforeseen liabilities or obligations of [GNP]”, which conceivably could include reclamation reserves. The only express obligation to reclamate lies with GNP under the Claims Lease, which imposes on GNP the obligation to “perform reclamation with respect to the placer operations on the Claims in conformance with the provisions of this Lease and all state and federal laws”. The individual mining permit, which NyacAU secured on behalf of GNP in August 2013, imposes an obligation on the permit holder to reclamate the site in accordance with governmental regulations, and subjects the permit holder to penalties for a failure to perform; however, a determination of the scope of NyacAU’s or GNP’s (or both) potential obligations to reclamate under the permit is beyond the jurisdiction of this Panel.

NyacAU’s obligation to fund an “Operating Line of Credit” (LOC 1) under the Operating Agreement is defined in Article 6.1 and other contract provisions encompassed within it. Article 6.1 limits NyacAU’s funding obligation to those expenses “sufficient to fulfill the Minimum Investment Requirement and bring the placer gold at the Claims into “Commercial Production”. Under Article 2.9, “Commercial Production” is deemed to have been achieved when gold – production is sufficient to meet the “Minimum Production Requirement”, which, in Article 7.3, is defined entirely in terms of quantities of gold production; no

mention is made of reclamation. As Claimants point out, the definition of “Operating Expenses”, under Article 2.28, necessary to achieve “Commercial Production” is very broad, but is itself limited to costs “associated with extracting gold from the Claims”; and the list of Operating Expenses which form part of the definition, while not all-inclusive, does not reference reclamation.

Well-established principles of contract construction require that the above provisions be read together, affording each provision its intended meaning. As such, NyacAU’s LOC 1 obligation must be limited to those expenses necessary to bring the placer gold into Commercial Production, as defined by the Agreement. In accord with the definition of “Operating Expenses”, virtually any expense necessary to achiever Commercial Production under LOC 1`would be appropriate, including expenses for reclamations activity during ongoing mining operations that might be required to keep the individual permit in force. However, the purpose of LOC 1 funding comes to an end where—as here--mining operations have ceased, GNP has been dissolved, and the liquidation process is underway.

This interpretation is also consistent with the provisions of the Operating Agreement pertaining to liquidation, which separate the obligation to “make provision for reclamation” from the repayment of LOC 1. Accordingly, NyacAU has no obligation to fund post-mining reclamation expenses under LOC 1

(Note: This deprives NyacAU of a security interest in 50% of future placer gold production at the site to repay reclamation expenses which it advances.)

3.Claimants’ motion to void transfer of GNP assets to Bear Leasing and cancel contract with Alaska Equipment Appraisers.

a.Parties’ briefing

Claimants have moved to void the transfer of certain GNP assets (equipment) to Bear Leasing and to cancel the contract made by NyacAU with Alaska Equipment Appraisers (“AEA”--owned by Michael Tope) for the sale of GNP equipment in connection with the ongoing liquidation.

With respect to the transfer of assets to Bear Leasing (which was valued at $565,000). Claimants argue that other costs should have been addressed before making the transfer, including the costs of remedial work on environmental problems caused by the spring run-off, third party payables, and reclamation expense. On these grounds, Claimants request that the transfer be voided, and the equipment returned to GNP.

With respect to the contract with AEA, Claimants argue that the contact should be cancelled for a number of reasons, including;

(i)Michael Tope, the principal of AEA, is biased against Goldrich, having testified as a “hostile” witness in the arbitration, and is a personal friend of Dr. James;

(ii)Mr. Tope is not competent to conduct the remaining sales of GNP equipment because, in 2019, he was only able to sell equipment originally valued at over $1 million for $190,000.

On these grounds Claimants contend that there is a danger of future sales being made to “shill” purchasers or to NyacAU itself at rates far below market

value. Claimants also contend that the schedule attached to the AEA contact, which shows a list of creditors to be paid with the proceeds of future sales, is not correct, but do not provide what they contend would be a correct listing.

In response to the motion to avoid the transfer of funds, Respondents argue that the $565.000 value placed on the equipment represented the fair market value of the equipment, in large part because Bear assumed the existing debt on the equipment owed by GNP to AEG, which financed the equipment purchases, and that none of the GNP equipment subject to the AEG encumbrance could have been sold to any third party without an assumption of such debt. The offsetting benefit to GNP was a reduction of the balance of LOC 1 by $565,000. Respondents also contend that the $565,000 payment was representative of the fair market value of the equipment at the time, pointing out the following:

(i)The equipment value depreciated at 1% per month (total 21%) from August 2018 to May 2020;

(ii) $365,500 of the equipment sold to Bear Leasing remains at the Project site. and no third party could reasonably be expected to purchase the equipment still at the site; and

(iii)Goldrich had the opportunity to purchase the equipment for cash at a higher price up to May 30, 2020 but made no offer to do so.

As to cancellation of the AEA contract, Respondents argue that Tope was not a hostile witness against Claimants, but an independent expert. They also claim that Dr. James had no relation with Tope prior to the arbitration and that

their current relationship is strictly professional. As to Mr. Tope’s competence, Respondents point out that he was recommended to them by AEG and other creditors of GNP.

a.Ruling

Claimants’ motion to void transfer of assets to Bear Leasing is denied.

Claimants have objected to the transfer and to its valuation at $565,000.

Respondents claim that the purchase price was close to fair market value for the equipment, which assumed 1% monthly depreciation in the original cost of the equipment from August of 2018 to May of 2020, and Claimants’ have provided no evidence to the contrary. No other party bid for the equipment, and as Respondents point out, it was unlikely that any third party would do so for equipment still located at the Project site. Moreover, under the Panel’s prior orders, Goldrich had the opportunity to purchase the equipment at fair market value, but elected not to do so. Thus, the sale to Bear Leasing cannot rationally be voided on grounds that the price was not at or near to the fair market value of the equipment.

Additionally, in connection with the transfer, Bear Leasing assuming GNP’s existing debt to the AEG Fund (which financed the purchase) for the equipment. Accordingly, the corresponding benefit to GNP was a reduction of LOC 1 by $565,000. Claimants assert that the benefit derived by GNP from the sale- should

not have been used to reduce LOC 1, but instead to pay off other costs, including the cost of remedial work necessitated by the spring runoff, third party payables, and reclamation expenses. However, this argument disregards the fact that AEG would not have released the equipment for sale unless provision was made for satisfying its secured loan. Thus, Bear Leasing had no choice but to assume the AEG debt as payment for the equipment, which caused an automatic reduction of LOC 1, since (under the Partial Final Award) all loans to GNP obtained by NyacAU were properly booked under LOC 1. Moreover, to the extent that the equipment valuation may have exceeded the price for removing the encumbrance on it (which was not addressed in the briefing), Article 14 of the Operating Agreement gives NyacAU, as Manager of the liquidation, the discretion to apply such excess to pay down LOC 1 or pay other creditor obligations.

Claimants’ motion to cancel GNP’s contract with Alaska Equipment Appraisers (AEA)—Michael Tope’s company—is also denied. In May 2020, NyacAU entered into a contract with AEA to sell the remainder of GNP equipment, except that needed for reclamation work. Because Michael Tope, presumably the owner of AEA and signatory to the contract, testified as an expert witness for Respondents at the arbitration hearing, and is allegedly a friend of Dr. James, Claimants assert there is a danger that Mr. Tope will make sales to “shill purchasers”, or to NyacAU itself, for far less than fair market value. Claimants also question Mr.

Tope’s competence, since he was able to sell only $190,000 of GNP equipment in 2019.

However, these claims are belied by undisputed facts. Mr. Tope testified as an independent valuation expert at the hearing, and was not hostile to Claimants’ positions; in fact, Claimants’ expert Jeffrey Katz relied on Tope’s valuation of the equipment under Leases 1-7 in forming his opinions on Claimants’ damages. Respondents assert that Dr. James’ relationship with Mr. Tope is entirely professional, and no evidence was presented by Claimants to dispute this.

Moreover, Claimants did not challenge any of the equipment sales orchestrated by Mr. Tope in 2019. Mr. Tope’s entire compensation under the May 2020 agreement is a one percent (1%) commission on all equipment sales, which quite obviously incentivizes him to make future equipment sales at the highest possible prices, not at cut rates designed to confer some benefit on NyacAU.

4. Claimants’ motion to compel transfer of mining claims

a. Parties’ briefing

Claimant have moved to compel NyacAU to transfer a mining claim contiguous to the Claims (as set forth in Exhibit 2 to the Claims Lease) to the Claims, which NyacAU staked—apparently in its own name--during mining operations. Claimants argue that under paragraph 3 of the Claims lease, any claim

contiguous to Claims must be transferred to GMC (the parent corporation of Goldrich) upon request.

Respondents acknowledge their obligation under Section 3 of the Claims Lease, but point out that is necessary for NyacAU to use the contiguous parcel in question to complete the liquidation process in an efficient and businesslike manner. Specifically, Respondents represent that the land is needed for parking equipment until it is transported over the winter trail, and to construct the winter trail itself. Respondents request that they be allowed to use the land to complete the liquidation of GNP, after which the contiguous claim will be transferred to GMC as required by the Claims Lease.

b.Ruling

Claimants’ motion is granted in part and denied in part.

Paragraph 3 of the Claims Lease provides that all claims contiguous with the Claims defined in Exhibit 1 to the Lease “shall be located in GMC’s name as the owner of the claims. . .”, and that [i]f such claims are not initially located in GMC’s name, then the owner shall hold the claims in constructive trust for GMC and shall transfer the claims to GMC upon written request of GMC and at no cost to GMC.” This language makes clear that GMC is the rightful owner of the contiguous claim staked by NyacAU.

However, the actual transfer of the claims to GMC must take into account the fact that, in connection with GNP’s liquidation, NyacAU, as Manager of the liquidation, has full power and authority to sell, assign, and encumber any or all of [GNP’s] assets and to wind up and liquidate the affairs of [GNP] in an orderly and businesslike manner. NyacAU has explained that it needs to use the land covered by the contiguous claim (which is adjacent to the runway at the Project site) to park equipment until it is shipped for resale, and to construct and use the winter trail for the transport of equipment.

The Panel finds NyacAU’s request to be reasonably necessary to complete the liquidation in an “orderly and businesslike manner”, while at the same time acknowledging GMC’s ownership of the contiguous claim under the Claims Lease.

Accordingly, NyacAU shall be allowed to use the land covered by the contiguous claim to complete the liquidation process, holding the claim in constructive trust for GMC, following which the contiguous claim shall promptly be transferred to GMC.

5.Claimants’ motion to compel repayment of misappropriation of funds

a.Parties’ briefing

Claimant have moved to compel NyacAU to pay out distributions as provided in Article 10 of the Operating Agreement, specifically Article 10.1.2. Claimants point out that GMP conducted mining operations in 2018, prior to the

dissolution, and made a profit on the gold produced in 2018. Claimants also contend that NyacAU created a reserve in the latter part of 2018 for reclamation expense in the amount of $2,810,000.00, but then used that money to pay down LOC 1. Claimants contend that this pay down was inappropriate and and that the full amount of the alleged reserve should be included in calculating the interim distributions payable to the parties for 2018.

Respondents oppose the motion on grounds that all issues relating to interim distributions due to Goldrich were completely resolved by the Partial Final Award and cannot be revisited. They also argue that the dissolution of GNP occurred when parties agreed to dissolve GNP at the arbitration hearing, which commenced on July of 2018. Respondents further point out that Article 10.4 provides that any distributions to the members during the process of liquidation must be handled in accordance with Article 14, which provides for member distributions to be paid only after payment of all debts and liabilities of GNP and payment of liquidation expenses.

Claimants reply that the arbitration did not deal with 2018 distribution to Members, and therefore does not preclude Claimants from raising the issue post hearing.

b.Ruling

The ruling on Claimants’ motion is deferred.

Claimants’ motion is based on the assertion that GNP made profits in 2018, before GNP was dissolved, which, after deduction of Operating Expenses for the year, should have been paid on equally to NyacAU and Goldrich, as an interim distribution under Article 10.1.2 of the Operating Agreement.

Claimants acknowledge in their reply papers that they did not make this claim in the arbitration. This is confirmed by the evidence which Claimants did present at the hearing on interim distributions, and by the language of the Partial Final Award. Claimants’ expert, Jeffry Katz, calculated that the amount of gold produced “exceeded Operating Expenses in 2016 and 2017 only”, and using that parameter calculated that Goldrich was entitled to interim distributions for 2016 in the amount of $214,797 and for 2017 in the amount of $198,644. Consistent with this evidence, in awarding Claimants interim distributions for 2016-17 (as calculated by Mr. Katz) the Partial Final Award stated: “No evidence was submitted showing that any party demanded, or that the parties agreed to dissolution before 2018, which makes Article 10.4 [pertaining to distributions during the dissolution/liquidation of GNP], irrelevant to interim distributions before that.”

However, at the arbitration hearing, the Panel recognized that since the hearing took place roughly in the middle of 2018, the results of 2018 mining operations, which were not then known nor presented as evidence at the hearing,

could be relevant to various, unspecified issues in the arbitration. Accordingly, the Panel reserved jurisdiction to review and, as appropriate, modify its findings based on the result of 2018 mining activities. Specifically, the Panel stated that following issuance of the Partial Final Award (emphasizing the word “partial”), the Panel would (i) order “the commencement of the dissolution process”, and (ii) reserve jurisdiction “to modify, if appropriate”, its findings “based on the results of 2018 mining activities, which may or may not have some impact. But we will look at that again because we don’t have all that information before us right now.” (Transcript, pp. 5953-54).

This carve out can fairly be interpreted to encompass Claimants’ claim for payment of interim distributions for 2018 under Article 10 of the Operating Agreement. Accordingly, within twenty (20) days of the date of this order, the parties shall present evidence and argument (disregarding any jurisdictional issue) as to (i) whether Claimants’ have a right to interim distributions for 2018, and (ii) the amount, if any, of distributions to be paid. Within ten (10) days thereafter, the parties shall file responses to the initial submissions. The submissions shall be limited to profits actually received by GNP in 2018, and shall not include estimates for reclamation or other future expenses of GNP.

6.Claimants’ motion for clarification from Panel and notice of possible misunderstanding of facts

a. Parties’ briefing

Claimants have moved for the Panel to clarify a portion of the Partial Final Award related to interim distributions. Their position is that paragraph 45 of the Award, which recognized the right of Goldrich to receive interim distributions for 2016-17, should be interpreted as authorizing Goldrich to recover interim distributions for 2018 for the period that mining was conducted, since GNP was not dissolved until a later date.

Claimants have also moved to correct what they term a “possible misunderstanding of facts” in the Partial Final Award. They suggest that the Panel may have misunderstood that (i) GNP made $263,582 in profits in 2018, even excluding NyacAU’s estimates for the cost of reclamation and demobilization; (ii) NyacAU wrongfully used these profits to pay down LOC 1; (iii) Article 10 of the Operating Agreement requires an interim distribution to be made for 2018 before NyacAU can make any further paydown of LOC 1; and (iv) if—as would be fair—NyacAU’s reclamation and demobilization (which are accrued, not actual expenses) are not included as 2018 Operating Expenses under Article 10,1,1, Goldrich is entitled to an interim distribution for 2018 of $2,685,234.

In response, Respondents argue that Claimants have no right to relitigate issues which were finally decided in the Partial Final Award, and interpret paragraph 45 of the Award as precluding—not allowing—Goldrich to recover interim distributions for 2018. Respondents also emphasize that they gave

Claimants notice of dissolution when the arbitration hearing commenced in July 2018, and that a press release announcing the dissolution was published on August 20, 2018. Respondents also point out that 2018 financial statements were timely provided to Goldrich, which demonstrate that all of GNP’s profits for 2018 were used to pay down LOC 1 creditors. Finally Respondents charge Claimants with having made the motion in bad faith, so as to defer required SEC filings, and prevent Dr. James from selling his Goldrich stock. Respondents request that Claimants should pay Respondents’ attorney’s fees and costs for having brought a frivolous motion.

Claimants counter by reiterating their interpretation of paragraph 45 of the Partial Final Award, which they claim is supported by the fact that if GNP had been dissolved in 2018, the Claims Lease would have expired by its terms and GNP would not have been able to do the mining work which it did perform in 2018. They also reiterate the formula for computing 2018 distributions set forth in Claimants’ moving papers.

b.Ruling

The ruling on Claimants’ motion is deferred.

Claimants’ motion is essentially a reiteration of its motion for an order “to compel repayment of misappropriated funds” (Section 5, supra). Accordingly, the Panel incorporates by reference its ruling on Claimants’ motion addressed in

Section 5. Respondents’ request for attorney’s fees and costs is denied, since, as explained above, the Panel expressly retained jurisdiction to decide the issue of interim distributions for 2018.

7.Respondents’ motion for clarification of interest payable to NyacAU and Goldrich and amounts owed to Goldrich

a.Parties’ briefing

Respondents move to clarify a finding in the Partial Final Award, relating to interest earned by amount in LOC 1 that is to be shared by the parties equally, under Article 6.1.2 of the Operating Agreement. Respondents point out that the Partial Final Award requires sharing of LOC 1 interest actually received, and represents that NyacAU has not received any interest payment earned by LOC 1.

Respondents further assert that all GNP liabilities must be paid before interest earned on LOC 1 can actually be distributed, and that since Goldrich allegedly is responsible for payment of one-half of LOC 1 (approximately $8,500,000.00) no interest payment would be due Goldrich until this alleged obligation is satisfied.

As a result, Respondents request an order that NyacAU does not owe any interest payment to Goldrich under Article 6.1.2.

Claimants oppose the motion, arguing that it is well documented that GNP actually made a payment of $240,000 to NyacAU, which was a payment of interest earned from LOC 1. Claimants also argue that the motion for clarification violates

the Alaska Arbitration Act, which requires a party to move for clarification of an Award within 20 days of its issuance (AS 09.43.470); they also note that the Act places a 90-day limit on a party to petition a court to clarify the award (AS 09.43.510). Claimants further contend that NyacAU received an interest payment from GNP via a check dated February 8, 2017, for $155,337.00. Claimants also assert that any draw down of LOC 1 first requires the payment of interest earned on LOC 1 to the Members.

In its reply, Respondents argue that the 20-day period for seeking clarification of a Final Award in the Alaska Arbitration Act (AS 09.43.270) does not apply to an arbitration if not concluded after two years, and that, in any event, the 20 day limitation would not come into play until the Panel issues its Final Award following completion of GNPs liquidation. Respondents also argue that NyacAU has not paid itself any interest on LOC 1, and that the sum of $155,377.00 was incorrectly coded in GNPs book as a “repayment”, but actually used to pay third party debt. Respondents emphasize that the Partial Final Order requires sharing of LOC 1 interest only when “actually received.”

b.Ruling

The ruling on Respondents’ motion is partially denied and partially deferred, as explained more fully below.

The Panel has no jurisdiction at this point to clarify the language of the Partial Final Award. Section 09.43.270 of the Alaska Uniform Arbitration Act, which governs procedures for the arbitration, gives a party the right to move to “clarify the award”, “within 20 days after the movant receives notice of the award. . .”. If a party wishes to have the court “modify or correct” an award—which arguably could include a clarification in some circumstances—AS 09.73.510 requires that an application be filed with the court “within 90 days after the applicant receives notice of the award . . .” These periods have long since passed with respect to the Partial Final Award. In any event, the Panel sees no need to clarify its ruling as to whether interest earned on LOC 1 funds must actually be received by NyacAU in order for Article 6.1.2 to take effect.

However, it is the Panel’s view that it does have jurisdiction to determine the amount of “interest received” under Article 6.1.2, since this could impact amounts that can properly be deducted from LOC 1, which is encompassed by the Panel’s agreed, continuing jurisdiction over the dissolution/liquidation of GNP.

The arbitration record includes Joint Exhibit 4.5, the 2012 promissory note issued by NyacAU to GNP which created LOC 1. The note provides for the annual payment of interest GNP on the unpaid balance “equal to the Applicable Federal Rate (Short Term) (as of the date hereof)", to be calculated “from the date of each advance until payment”. It further states that payments of LOC 1 “will be

applied first to accrued unpaid interest then to principal”. Article 6.1.2, in turn, obligates NyacAU (not GNP) to pay to Goldrich “50% of any interest earned on LOC 1 actually received by NyacAU.”

Claimants contend that GNP’s books show that GNP actually paid NyacAU $240,000 in interest earned by LOC 1 funds, and reference a check dated February 8, 2017 from GNP to NyacAU for $155,337 –apparently related to the alleged $240.000 payment, although this is not clear--NyacAU, on its part, asserts that GNP’s records incorrectly coded the sum of $155,337 as a “repayment”, but that the money was in fact used to satisfy GNP liabilities, and that no interest payments on LOC 1 have been received by NyacAU.

In a sense, it appears the parties may not have completely joined issue on this topic: i.e., actual payment of a check to NyacAU is obviously different than an erroneous, later corrected, entry in GNP’s books of account. And the promissory note for LOC 1, which states that payments of accrued interest on LOC 1 shall preempt drawdowns of the principal, may raise another issue. Accordingly, within ten (10) days from the date of this order, the parties shall submit the following: (i) a copy of the check for $155,337 allegedly paid to NyacAU on February 5, 2017; (ii) written evidence of what the check payment was for; (iii) written evidence showing the disposition of the check—i.e., whether the check was cashed, voided, used to pay GNP liabilities, etc.; (iv) written evidence showing how the $155, 337

was ultimately recorded on GNP’s books; (v) any written evidence as to whether, and when, the $240,000 referenced by Claimants in their submission, or any portion thereof, was actually paid to NyacAU as interest on LOC 1; and (vi) evidence of any payments made against LOC 1 which should have been applied against accrued interest on LOC 1, per the terms of the 2012 promissory note. The Panel will complete its ruling on the motion after a review of this evidence.

8.Respondents’ motion to confirm judgment

a.Parties’ briefing

Respondents have made a motion for the Panel to “confirm judgment” on a finding in the Partial Final Award concerning payment of 2012 reclamation costs. As Respondents explain, the motion arises from a petition by Respondents, in December 2019, to confirm portions of the Partial Final Award. In April of 2020, the court ordered that the award of $377,253.00 to NyacAU for 2012 reclamation costs be remanded to the Panel for clarification of the entity to whom the payment should be made.

Respondents contend that the Panel’s finding should not be changed. They point out that the Claims Lease obligates GMC (Goldrich’s parent corporation) to indemnify GNP, Goldrich and NyacAU for costs and expenses arising from any permit violation, which includes the violation by Goldrich of its general permit for

mining operations in 2009-2010 by failing to reclamate the site after operations were completed.

Claimants’ response contends that the Partial Final Award mistakenly awarded costs of the 2012 reclamation, plus interest, to NyacAU, rather than GNP, citing to the following evidence to show that both parties agreed that GNP would be the proper recipient of these funds:

(i)GNPs employees performed 2012 reclamation work, which was acknowledged by Respondents’ expert, Ron Greisen, in testimony at the arbitration hearing;

(ii)GNP sent out the invoice for the work to Goldrich;

(iii)2012 reclamation costs were entered on GNPs books as a GNP receivable; and

(iv)no claims were ever submitted by NyacAU for payment of 2012 reclamation expenses.

Claimants also point out that an entry in 2018 for $48,096.00 for 2012 reclamation expenses was never invoiced to Goldrich, and therefore should not have an interest award attached to it.

Claimants also resurrect an argument made at the arbitration hearing that Goldrich had been damaged in the amount of $291,000.00 by NyacAU overcharging Goldrich for 2012 reclamation work, although this issue is beyond the court’s directive.

Respondents reply that the $377,253.00 award was properly made to NyacAU, since;

(i)GNP had no liability for reclamation in 2012;

(ii)The Term Sheet, which is incorporated into the Operating Agreement, requires Goldrich to indemnify NyacAU for 2012 reclamation work; and

(iii)the Panel has no jurisdiction to revisit the amount of the payment, or interest thereon, to be made for 2012 reclamation work.

b.Ruling

The ruling on Respondents’ motion is deferred, as explained below.

As the Partial Final Award reflects, Claimants advanced a claim in the arbitration that NyacAU had overcharged Goldrich for reclamation work, performed by NyacAU on Goldrich’s behalf in 2012, to cure prior permitting violations issued by the USACOE based on Goldrich’s failure to reclamate the site after its 2009-2010 mining operations. NyacAU completed its reclamation work in August of 2012, and in 2014 invoiced Goldrich for the work in the amount of $377,253. However, Goldrich, took the position that it had been overcharged, and refused to pay the reclamation invoice until the overcharges were deleted. No reclamation charges had been paid at the time of the arbitration hearing, four years later. Goldrich did perform a minor amount of reclamation work, at its expense, in 2015, hiring a third party (Paul Manuel) to perform the work.

As stated above, the request for the Panel to clarify the party to whom the 2012 reclamation payment should have been made was issued by the court, in the

context of a petition by NyacAU to confirm parts of the Partial Final Award, which included the Panel’s award of damages and interest for 2012 reclamation costs

The power of a court to order clarification of an award under the Alaska Arbitration Act (Revised) (the “Act”) emanates from and is defined by Sections 09.43.270 and 09.43.510. Section 09.43.510 endows a court with limited power to itself “modify or correct” the award upon “application made within 90 days after the applicant receives notice of the award under AS 09.43.460 or within 90 days after the applicant receives notice of a modified or corrected award under AS 09.43.470”, if

(1) there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing, or property referred to in the award;

(2) the arbitrator has made an award on a claim not submitted to the arbitrator and the award may be corrected without affecting the merits of the decision on the claims submitted; or

(3) the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted.

Where an application is pending under Section 09.43.510, Section 09.43.270 also authorizes the court to submit a claim to “modify or correct” the award to the arbitrators for determination:

(1) on a ground stated in AS 09.43.510(a)(1) or (3);

(2) because the arbitrator has not made a final and definite award on a claim submitted by the parties to the arbitration proceeding; or

(3) to clarify the award.

In this case, it appears to be undisputed that Respondents filed a motion to confirm portion of the Partial Final Award in December of 2019, shortly after the Award was issued on December 3, 2019, and likely after the issuance of a partial dissent on the Partial Final Award on December 19, 2019. The Panel assumes that the court’s request for the Panel to clarify the entity to which 2012 reclamation expenses, plus interest, was awarded was triggered by a request from the Claimants under Section 09.43.510 in response to the motion to confirm, which would have been within the 90 day period required and therefore timely. Thus, the court had the power under Sections 09.43.510 and 09.43.270 to make this request of the Panel within the parameters of those Sections.

It is important to emphasize in this context that the power of the Panel, as well as the court, to modify or correct an award under these Sections of the Act is limited to situations where (i) there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing, or property referred to in the award; (ii) the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted; or (iii) the language of the award is ambiguous and needs to be clarified. The Panel is constrained to make any or all

of these decisions without a reevaluation of the merits of the issue, including an “evident mistake” in a mathematical calculation or description of (in this case—a “person”), an ”imperfection in a matter of form” (not affecting the merits), and/or the clarification of any ambiguity. Since the Panel’s award of 2012 reclamation expenses was final, the Panel has no jurisdiction to reconsider the merits of the issues presented in the arbitration hearing or to consider any new evidence cited in the parties’ briefing.

However, the court’s April 28 “Order Resubmitting Claim to Arbitration Panel for Clarification and Confirming Arbitration Award to Dr. James” raises an issue regarding the applicability of Sections 09.43.270 and 09.43.510 of the Act to the court’s request. The court prefaces its Order by citing to both Sections, but then states:

1.“Based on the parties’ agreement, the court grants the request to resubmit a claim to the arbitrator [s] to clarify Section VII (paragraphs 104-110) of the Partial Final Award related to Claimants’ Claim of Overcharges for 2012 Reclamation. Specifically, the arbitration panel is requested to clarify the specific amounts owed under this section. including any pre-Award interest, together with the identity of the specific entity entitled to receive such amounts. The parties appear to dispute whether the specific entity entitled to receive any amounts owed

under this section is Goldrich NyacAU Placer, LLC or NyacAU, LLC.”(Emphasis added).

2.The court’s wording raises a question as to whether its request was based on an agreement between the parties, in which case the jurisdictional restrictions of the above-referenced Sections of the Act might not apply.

Accordingly, within fifteen (15) days of the date of this order, the parties are requested to (i) provide the Panel with a copy of the “agreement of the parties” referenced in the court’s request; (ii) clarify whether the parties agree that the Panel retains continuing jurisdiction at this time to modify or correct the Partial Final Award, if necessary, either subject to or without regard to the jurisdictional limitations of Sections 09.43.270 and 09.43.510 of the Act; and (iii) state its position on the response the Panel should give to the Court’s request as to the “specific amounts’ of both principal and interest awarded, with a brief explanation of the basis for each -party’s response.

9.Respondents’ “alternative” motion to require Goldrich to pay one half of the reclamation expenses for the Project, and one half of the balance of LOC 1, and to reduce these amounts to judgment.

a.Parties’ briefing

Respondents have made an “alternative” motion to the Panel related to Respondents’ motion to extend NyacAU’s management of GNPs liquidation beyond the one-year period provided in the Operation Agreement. Specifically,

Respondents have demanded that Goldrich be ordered to pay one-half of the current balance of LOC 1 and one-half of the reclamation expenses incurred in connection with the liquidation, and that these obligations should be “reduced to judgment” in favor of Respondents. Respondents indicate that the alternative motion is necessitated by a transaction by Goldrich with an investor group headed by Nick Gallagher, a member of Goldrich’s Board of Directors, for a loan of $4,283,105, evidenced by a promissory note and deed of trust, secured in part by the Claims and projected hard rock mining at the Project site in the future. (“Gallagher transaction”). Respondents claim that the transaction was improperly Back-dated in order for Goldrich to avoid having to pay one-half of LOC 1 on the grounds that repayment of the Gallagher transaction would have priority over any LOC 1 repayments to NyacAU. Respondents argue that the obligation of Goldrich to repay 50% of LOC 1 should be reduced to a “judgment”, presumably in order to give the LOC 1 repayment obligation priority over Goldrich’s obligations under the Gallagher transaction.

Respondents make a similar request, for the same reason, regarding reclamation expenses incurred in the liquidation, asking the Panel to order that 50% of reclamation costs incurred to date, which allegedly are owed by Goldrich, also be “reduced to judgment.

In response, Claimants assert that there is no basis for imposing liability on Goldrich to pay either 50% of LOC 1 or 50% of reclamation expenses incurred in GNPs liquidation. They explain that Article 6.1.1 of the Operating Agreement gives NyacAU a security interest in all future placer gold produced at the site, up to 50% of LOC 1, and that Goldrich has no liability for LOC 1 beyond this.

Claimants also point out that Article 3.3 of the Operating Agreement provides that no Member of the joint venture has an obligation to make a capital contribution to GNP or to assume personal liability for any of GNPs obligations, which excuses Goldrich from making any contribution to any LOC 1 repayments or post-mining reclamation expenses.

b.Ruling

Respondents’ motion, to the extent it is not moot, is denied.

Since Respondents’ motion was brought “alternatively” to its motion for enlargement of the period for NyacAU to manage the liquidation of GNP pending assumption of the mining permit by Goldrich, which was granted, the motion may now be moot. However, assuming it is not, and to help guide the future conduct of the parties on the subjects raised by the alternative motion, the Panel rules on the merits of the alternative motion here.

(i)Request for Goldrich to repay 50% of LOC 1

Article 6.1 of the Operating Agreement clearly imposes sole responsibility on NyacAU to fund LOC 1. As collateral for this funding, Article 6.1.1 entitles NyacAU to a security interest in 50% of “all placer gold production from the Claims” NyacAU has claimed that approximately 14,000 ounces of gold are “exposed” at the site, which means that the overburden to these deposits has already been removed. Of course, the site may also contain other placer gold deposits. Claimants have acknowledged in their briefing that NyacAU’s security interest under Article 6.1.1 indeed covers proceeds from any future placer gold production at the site. NyacAU has perfected its security interest by recording a UCC-1 statement, which gives NyacAU a priority interest in the proceeds of any future placer production of the exposed placer deposits or any other placer gold production at the site, whether that production is conducted by Claimants or some third party. Should Goldrich (or its assigns) elect to continue mining and gold production at the site, as a former Member of the joint venture it would have an affirmative duty to honor NyacAU’s security interest.

However, the Operating Agreement imposes no direct obligation on Goldrich to fund (or repay) any portion of LOC 1. In fact, Article 3.3 provides: “No Member shall be required to contribute any additional capital to [GNP]. No Member shall have any personal liability for any obligation of [GNP]”. To impose

liability on Goldrich for 50% of LOC 1 funding would be a clear violation of this provision.

Respondents argue that in filings with the IRS, Goldrich has represented that it in fact is 50% liable for the unpaid balance of LOC 1. But whether or not this is true, or would have consequences concerning the IRS, under basic rules of contract construction it cannot trump unambiguous provisions of the Operating Agreement.

(ii) Request for “reduction to judgment” of 50% of the reclamation costs

In their initial briefing, Respondents also requested an order requiring Goldrich to pay 50% of reclamation costs, and to reduce this order “to judgment”. However, in their reply papers, Respondents withdrew the request for payment and asked simply that this obligation be “reduced to judgment”.

Respondents were well-advised to withdraw their request for Goldrich to pay 50% of reclamation costs, since the Operating Agreement imposes no such obligation on Goldrich, and under Article 3.3, makes clear that Goldrich is neither obligated to make further capital contributions to GNP or to assume any personal liability for any of GNP’s obligations. However, with this having been done, there is nothing left for the Panel to “reduce to judgment”. And it should be noted that, although it may be a semantical distinction, the Panel can only issue orders and awards—only the courts have authority to enter judgment on arbitration awards.

(ii)Relevance of the Gallagher transaction to the alternative motion

Respondents’ alternative motion seems to have been driven, in large part, by a concern over Goldrich’s actions concerning a transaction negotiated by one of its board members, Nick Gallagher, to obtain additional investments in Goldrich. Respondents describe the transaction in terms of the issuance of a promissory note for the funds (over $4 million), secured by a deed of trust, which includes proceeds from future “hard rock mining” at the Project site. (“Gallagher transaction”). Respondents’ argue that this was a “related party transaction” which was improperly backdated, in order to give it priority over any judgment lien that Respondents have obtained or might obtain on the Partial Final Award.

The purpose of Respondents’ requests to “reduce to judgment” 50% of the LOC 1 balance and 50% of reclamation costs may be an attempt obtain judgment liens that would be superior to the security for the Gallagher transaction. However, since Respondents’ alternative motion is denied, there is no reason to go further with this issue. More importantly, and as explained in more detail in a companion order, the Panel has no jurisdiction to make decisions regarding the priority of security interests as between NyacAU, Goldrich and investors/lenders involved in the Gallagher transaction.

10.Respondents’ motion to subordinate the Gallagher transaction to Respondents’ security and judgments on the Partial Final Award

Parties’ briefing

Respondents move for an order that would subordinate the Goldrich’s payment obligations under the Gallagher transaction to amounts awarded to Respondents under the Partial Final Award. More specifically, Respondents claim that the Gallagher transaction is a “related party transaction” and was orchestrated by Nick Gallagher a member of Goldrich’s Board of Directors. They also point out that Mr. Gallagher was fully aware of the arbitration dispute since he attended portions of the arbitration hearing. For these reasons, Respondents argue, the Panel cannot allow Goldrich to pay obligations under the Gallagher transaction ahead of the payment of obligations to NyacAU and Dr. James under the Partial Final Award.

In response Claimants contend that there was no impropriety with the Gallagher transaction, since Gallagher was simply representing an investor group of third parties. They also assert that the Gallagher transaction is fair because Mr. Gallagher recused himself from the Board of Director’s approval process. Further, Claimants explain that even though the Gallagher transaction was not consummated until February 2020, the loan was funded by investor before this date. Finally Claimants emphasize that the only security granted to NyacAU under the Operating Agreement is a 50% interest in all future placer gold production proceeds, to the extent necessary to repay one-half of LOC 1, and that this interest has already been perfected by a UCC 1 financing statement filed by Respondents.

Claimants assert that there is no overlap of security vis-à-vis the UCC 1 filing and the security for the Gallagher transaction, since the Gallagher transaction is secured by proceeds from future hard rock mining at the site, whereas the UCC-1 filing is secured by future placer gold production.

a.Ruling

Respondents’ motion is denied.

The parties have a serious factual dispute about whether the Gallagher transaction was done as an attempt by Goldrich to gain priority over any judgment liens that NyacAU has obtained (or might obtain) against Claimants, and also over NyacAU’s UCC-1 statement, securing the repayment of 50% of LOC 1 with future proceeds from placer gold production. However, this issue is beyond the jurisdiction of the Panel. The arbitration clause of the Operating Agreement (Article 15.10), upon which this arbitration is founded, is broadly worded, but does not extend to disputes regarding transactions with third parties—i.e., the Gallagher transaction—who are not signatories to the Operating Agreement or bound by its terms. The participation of such third parties would be necessary to resolve any dispute involving the subordination of the Gallagher transaction security interest to NyacAU’s recorded UCC-1 statement or to any judgment liens on the Partial Final Award.

Further, by definition the Panel cannot speak to the perfection or priority of any judgment lien on the Partial Final Award. The jurisdiction of the Panel, except as an overseer of GNP’s dissolution, legally came to an end when the Partial Final Award was issued—it does not and cannot extend to issues concerning judgments, or judgment liens, obtained on the Award.

11.Respondents’ motion for application of credit to Bear Leasing

a.Parties’ briefing

Respondent have moved for an order allowing Bear Leasing to obtain the benefits of two credits issued to GNP by third party vendors including;

(i)A credit of $35,989.00 to CMI for unused materials;

(ii)a $6,253.00 from GNR also for unused material.

Specifically, Respondent’s claim that Bear Leasing is entitled to the credits as partial repayment of $82,077.00 which it advanced to GNP to pay liquidation expenses. Respondents point out that GNP has no need for the credits, since it is in the process of liquidation. Respondents also argue that Bear Leasing should obtain the benefit of the credits as settlement for proceeds that were not ever remitted by GNP to Bear Leasing, as required under Leases 2 through 7.

In their response Claimants point out that they have confirmed with CMI that it will provide a cash refund in lieu of credit. As to the C & R credit,

Claimants argue that this credit should be given to GNPs because the material involved might be necessary for reclamation work.

b.Ruling

Respondents’ motion is granted.

CMI credit. As Manager of the GNP liquidation, NyacAU has “full power and authority to sell, assign, or encumber any or all of [GNP’s] assets and to wind up and liquidate the affairs of [GNP] in an orderly and businesslike manner”. This includes all cash and credit “refunds” made to GNP by third party vendors. Article 14 also provides that all GNP assets are to be liquidated, and used to pay GNP’s debts and liabilities (including debts and liabilities owed to Members of GNP—NyacAU and Goldrich) and liquidation expenses, with the remainder of assets/proceeds, if any, distributed to the Members. No assets or monies are to be retained by GNP.

Respondents have explained that they wish to use (i) a cash refund from CMI (a third party vendor) of $35,989 (Respondents’ initially identified this as a credit, but follow-up inquiry by Claimants appears to have established that CMI is agreeable to a cash refund); and (ii) to transfer a credit of $6532 from C & R (also a third party vendor) to reduce GNP’s obligation to repay $82,077 advanced by Bear Leasing to GNP for liquidation expenses. This request is consistent with NyacAU’s responsibilities as Manager of the GNP liquidation. Contrary to

Claimants’ assertion, it is within NyacAU’s discretion, as Manager of the liquidation, as to whether the C & R credit is used to purchase materials or equipment for the reclamation work being performed by NyacAU at the site or to help satisfy some other obligation of GNP to a third party.

12.Respondents’ motion to compel filing of SEC documents, or, alternatively, to require Goldrich to purchase Dr. James' stock

a.Parties’ briefing

Respondents move to compel Goldrich to file required SEC documentation so as to allow Dr. James to sell his Goldrich stock (2,364,864 shares), or, alternatively, to order Goldrich to purchase the stock for .03 cents a share. Respondents explain that until the required SEC filing is made, any sale by Dr. James would violate insider trading laws. Respondents also assert that Goldrich has placed a restrictive legend on the stock which apparently identifies Dr. James, and his designee, Nyac, as “affiliates” of Goldrich, and that this designation is now obsolete—and should be removed—because GNP is in liquidation and Goldrich has no obligations regarding the liquidation process. Specifically, Respondents point out that NyacAU, the Manager of the liquidation, is bearing liquidation and reclamation costs; further, that even if Goldrich did have some liquidation obligation, it would run to GNP, not to James or Nyac.

Respondents also confirm that any funds received by James from a sale would be used to pay reclamation costs. In this context, Respondents request the

following relief: (i) an order requiring Goldrich to remove the “affiliate” designation concerning Dr. James and Nyac; (ii) an order requiring Goldrich to comply with SEC 8k requirements and to promptly file 10k and 10q documents with the SEC; or, alternatively (iii) an order requiring Goldrich to purchase Dr. James’ shares at $.03 per share, for a total price of $70,945.

Claimants oppose the motion. They assert that the Panel has no jurisdiction to determine the issues raised by the motion, since (i) Nyac, the entity to whom the shares were issued, is not a party to the arbitration; and (ii) that although the Panel has jurisdiction over issues pertaining to the GNP liquidation, the motion has no relation to the liquidation process. Moreover, Claimants contend that even when the SEC filings are made, Nyac will still have inside information that would prevent it from legally selling the shares—citing as an example Respondents’ calculations of reductions ($4,322,390) that would have to be made to Goldrich’s reclamation estimate of $18.4 million.

Claimants acknowledge that the SEC filings have been delayed, but represent that the filings are in process. They further explain that the delay in filings has been on the advice of Goldrich’s auditors and legal counsel, due to the uncertainty of how the Panel will rule on the post-award motions which are the subject of this order, and because of a pending issue as to whether the SEC filings of Goldrich-related entities should be consolidated. Claimants request that the

restrictive legend on the shares not be removed until there is a change in Nyac’s affiliate and insider trading relationships with Goldrich.

In reply, Respondents argue that it is irrelevant that the stock was issued in the name of Dr. James designees, Nyac, since it is undisputed that Dr. James personally purchased the stock. They also point out that the Partial Final Award ruled that Dr. James, not Nyac, had been harmed by the purchase by awarding Dr. James a 17% reduction in the purchase price of the shares.

Respondents express incredulity that any auditor or legal counsel would recommend what Respondents contend is now over a year delay in making the SEC filings. They also assert that the issue of consolidated SEC filings was considered and rejected by Goldrich’s auditors 8 years ago, and that “no competent auditor” would suddenly change his mind and recommend consolidation. Accordingly, Respondents request that Goldrich be required, at least, to provide invoices and opinion letters confirming the advice given by Goldrich’s auditors and lawyers to delay the SEC filings, and also copies of any delayed financial statements. They further assert that Goldrich has waived the attorney client privilege by raising this issue in defense of the motion.

Ruling

Dr. James’ motion is denied.

Under Paragraph 14 of the parties’ Term Sheet, Dr. James accepted an obligation to purchase $350,000 of Goldrich stock, to be issued in his name or the name of his designee—which turned out to be Nyac, and made the purchase by personally paying for the shares. Goldrich represented that the shares would be “restricted shares” under Section 144 of the Securities Act, and that Dr. James’ would be extended “customary registration rights”. All of Goldrich’s representations in the Term Sheet were incorporated by reference in Article 4.8 of the Operating Agreement.

This formed the basis for Dr. James’ claim in the arbitration for the rescission of his purchase, and return of the full purchase price. In the Partial Final Award, the Panel denied the rescission claim, but awarded Dr. James damages in the form of a 17% reduction in the purchase price, to be reimbursed by Goldrich. Dr. James retained ownership of his shares.

However, Dr. James made no claim in the arbitration for the relief he seeks by this motion. Thus, the Panel has no jurisdiction to decide the motion on its merits, since the Partial Final Award has been issued, and the Panel’s continuing jurisdiction has been limited to issues related to the dissolution and liquidation of GNP, which cannot be said to include jurisdiction to decide a new arbitration claim by Dr. James against Goldrich. Obviously, the stock purchased by Dr. James is his

personal asset, not GNP’s, and its disposition therefore has no connection with the dissolution/liquidation of GNP.

IT IS SO ORDERED.

Dated:

Thomas J. Brewer, Arbitrator

Jason Kettrick, Arbitrator

Fred G. Bennett, Panel Chair