Edgar Filing: Pershing Gold Corp.

Average gold grade
(ounces per ton)

Average silver grade
(ounces per ton)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

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 001-37481

PERSHING GOLD CORPORATION

(Exact Name of Registrant as Specified in its Charter)

NEVADA		26-0657736
(State of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1658 Cole Boulevard
Building 6 - Suite 210
Lakewood, Colorado		80401
(Address of principal executive offices)		(Zip Code)

(720) 974-7254

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Common Stock, $0.0001 par value

Nasdaq Stock Market LLC

(Nasdaq Global Market)

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

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 ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b-2 of the Exchange Act). (Check one):

	Large accelerated filer ¨		Accelerated filer ¨

	Non-accelerated filer x		Smaller reporting company x

	Emerging growth company ¨

If 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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2018 was approximately $34.7 million, based on the closing price of the registrant’s common stock of $1.84 per share on the Nasdaq Global Market on June 29, 2018.

The number of shares of common stock outstanding on April 1, 2019 was 33,686,921.

DOCUMENTS INCORPORATED BY REFERENCE

None.

References to “the Company,” “our,” “we,” or “us” mean Pershing Gold Corporation and, unless otherwise specified, its subsidiaries. Many of the terms used in our industry are technical in nature. We have included a glossary of some of these terms below.

FORWARD-LOOKING STATEMENTS

Some information contained in or incorporated by reference into this annual report on Form 10-K may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements include statements relating to our plans to undergo a merger with Americas Silver Corporation, future management of Pershing Gold by Americas Silver Corporation, our shareholders’ investment in Americas Silver Corporation upon consummation of the merger, Americas Silver Corporation’s ability to finance and operate Relief Canyon Mine and return value to our shareholders, the conclusions of a feasibility study and related studies, the timing of any gold production, our mineralized material estimate, further permitting and development efforts required to advance the Relief Canyon Mine to various phases of production, expectations and the timing and budget for exploration and future development of our Relief Canyon properties, our planned expenditures for 2019, our estimates of the cost of future permitting changes and additional bonding requirements, future exploration plans, the estimated preliminary internal economics for the Relief Canyon Mine, our expected cash needs, our ability to fund our business with our current cash reserves based on our currently planned activities and statements concerning our financial condition, our plans with respect to future financing options, our anticipation of future environmental impacts, business and operating strategies, and operating and legal risks.

We use the words “anticipate,” “continue,” “likely,” “estimate,” “expect,” “may,” “could,” “will,” “project,” “should,” “believe” and similar expressions to identify forward-looking statements. Statements that contain these words discuss our future expectations and plans, or state other forward-looking information. Although we believe the expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct. Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various factors described in this annual report on Form 10-K, including:

Risks relating to the planned merger with Americas Silver Corporation, regulatory approval, management of Pershing Gold by Americas Silver Corporation, Americas Silver Corporation’s ability to finance and operate the Relief Canyon Mine, determining the feasibility and economic viability of commencing mining, our ability to fund future exploration costs or purchase additional equipment, and our ability to obtain or amend the necessary permits, consents, or authorizations needed to advance expansion of the deposit or recommissioning of the gold processing facility;

Risks related to the Relief Canyon properties other than the Relief Canyon Mine, including our ability to advance gold exploration, discover any deposits of gold or other minerals which can be mined at a profit, maintain our unpatented mining claims and millsites, commence mining, obtain and maintain any necessary permits, consents, or authorizations needed to continue exploration, and raise the necessary capital to finance exploration and potential expansion;

Our ability to acquire additional mineral targets;

Our ability to obtain additional external funding;

Our ability to achieve any meaningful revenue;

Our ability to engage or retain geologists, engineers, consultants and other key management and mining personnel necessary to successfully operate and grow our business;

The volatility of the market price of our common stock or our intention not to pay any cash dividends in the foreseeable future;

Changes in any federal, state or local laws and regulations or possible challenges by third parties or contests by the federal government that increase costs of operation or limit our ability to explore on certain portions of our property;

Decreases in the market price for gold and economic and political events affecting the market prices for gold and other minerals which may be found on our exploration properties; and

The factors set forth under “Risk Factors” in Item 1A of this annual report on Form 10-K.

Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risk and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this annual report on Form 10-K. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this annual report on Form 10-K.

GLOSSARY OF SELECTED MINING TERMS

The following is a glossary of selected mining terms used in this annual report on Form 10-K that may be technical in nature:

“Base metal” means a classification of metals usually considered to be of low value and higher chemical activity when compared with the precious metals (gold, silver, platinum, etc.). This nonspecific term generally refers to the high-volume, low-value metals copper, lead, tin, and zinc.

“Deposit” means an informal term for an accumulation of mineral ores.

“Doré” means a mixture of gold and silver that is produced from the refinery furnace.

“Exploration stage” means a U.S. Securities and Exchange Commission descriptive category applicable to public mining companies engaged in the search for mineral deposits and ore reserves and which are not either in the mineral development or the ore production stage.

“Feasibility study” means an engineering study designed to define the technical, economic, and legal viability of a mining project with a high degree of reliability.

“Formation” means a distinct layer of sedimentary rock of similar composition.

“Grade” means the metal content of ore, usually expressed in troy ounces per ton (2,000 pounds) or in grams per ton or metric tonnes that contain 2,204.6 pounds or 1,000 kilograms.

“Heap leach” means a mineral processing method involving the crushing and stacking of an ore on an impermeable liner upon which solutions are sprayed to dissolve metals, i.e. gold, copper, etc.; the solutions containing the metals are then collected and treated to recover the metals.

“Lode” means a classic vein, ledge, or other rock in place between definite walls.

“Millsite” means a specific location of five acres or less on public lands that are non-mineral in character. Millsites may be located in connection with a placer or lode claim for mining and milling purposes or as an independent/custom mill site that is independent of a mining claim.

“Mineralization” means the concentration of metals within a body of rock.

“Mining” means the process of extraction and beneficiation of mineral reserves or mineral deposits to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves or mineral deposits are expanded during the life of the mine operations as the exploration potential of the deposit is realized.

“Mining claim” means a mining interest giving its holder the right to prospect, explore for and exploit minerals within a defined area.

“Net smelter return royalty” means a defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of transportation, insurance, and smelting/refining costs.

“Open pit” means a mine working or excavation open to the surface.

“Ore” means material containing minerals that can be economically extracted.

“Outcrop” means that part of a geologic formation or structure that appears at the surface of the earth.

“Precious metal” means any of several relatively scarce and valuable metals, such as gold, silver, and the platinum-group metals.

“Probable reserves” means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

“Production stage” means a project that is actively engaged in the process of extraction and beneficiation of mineral reserves or mineral deposits to produce a marketable metal or mineral product.

“Proven reserves” means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.

“Reclamation” means the process of returning land to another use after mining is completed.

“Recovery” means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage.

“Reserves” means that part of a mineral deposit that could be economically and legally extracted or produced at the time of reserve determination.

“Sampling” means selecting a fractional part of a mineral deposit for analysis.

“Sediment” means solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the Earth’s surface at ordinary temperatures in a loose, unconsolidated form.

“Sedimentary” means formed by the deposition of sediment.

“Unpatented mining claim” means a mineral claim staked on federal or, in the case of severed mineral rights, private land (where the U.S. government has retained ownership of the locatable minerals) to which a deed from the U.S. government has not been received by the claimant. Unpatented claims give the claimant the exclusive right to explore for and to develop the underlying minerals and the right to use the surface for such purpose. However, the claimant does not own title to either the minerals or the surface, and the claim must include a discovery of valuable minerals to be valid and is subject to the payment of annual claim maintenance fees that are established by the governing authority of the land on which the claim is located.

“Vein” means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source.

“Waste” means rock lacking sufficient grade and/or other characteristics of ore.

PART I

ITEMS 1 AND 2: BUSINESS AND PROPERTIES

Overview

We are a gold and precious metals exploration company pursuing exploration, development and mining opportunities primarily in Nevada. We are currently focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada and, if economically feasible, commencing mining at the Relief Canyon Mine. None of our properties contain proven and probable reserves under SEC Industry Guide 7, and our activities on all of our properties are exploratory in nature.

Our principal offices are located in Lakewood, Colorado at 1658 Cole Boulevard, Building No. 6, Suite 210, Lakewood, Colorado 80401 and we have an exploration office at 1055 Cornell Avenue, Lovelock, Nevada 89419. Our telephone number is 720-974-7254. We maintain a website at www.pershinggold.com, which contains information about us. Our website and the information contained in and connected to it are not part of this annual report on Form 10-K.

Merger Agreement

On September 28, 2018, we entered into an Agreement and Plan of Merger with Americas Silver Corporation (“Americas Silver”) and R Merger Sub, Inc., a wholly-owned subsidiary of Americas Silver (“Merger Sub”), which agreement was amended on March 1, 2019 (as amended, the “Merger Agreement”). Under the terms of the Merger Agreement, we will merge with and into Merger Sub, with Pershing Gold Corporation being the surviving corporation and becoming a wholly-owned subsidiary of Americas Silver (the “Merger”).

In connection with the Merger, our common stockholders will be issued 0.715 Americas Silver common shares for each share of our common stock (the “Common Stock Exchange Ratio”). Holders of our Series E Convertible Preferred Stock (“Series E Preferred Stock”) have been given the option to (a) convert their shares of Series E Preferred Stock into our common shares immediately before the closing and exchange those common shares for Americas Silver common shares at the Common Stock Exchange Ratio, or (b) exchange their Series E Preferred Stock for non-voting preferred stock of Americas Silver (“Americas Silver Preferred Shares”) at a ratio of 461.440 Americas Silver preferred shares for each share of Series E Preferred Stock (the “Preferred Stock Exchange Ratio”).

On January 9, 2019, the Merger was approved by (i) preferred shareholders holding at least 75% of our preferred shares, voting as a separate class, and (ii) a majority of the voting shares held by our common shareholders and preferred shareholders, voting together as a single class. The issuance of the Americas Silver shares in connection with the Merger was also approved by Americas Silver’s shareholders on January 9, 2019.

Completion of the Merger will be subject to the satisfaction of other customary closing conditions, including, among others, the receipt of certain regulatory approvals necessary for the completion of the Merger. On April 1, 2019, the Committee of Foreign Investment in the United States (“CFIUS”) completed its review of the Merger and CFIUS determined that there are no unresolved national security concerns with respect to the transaction.

The Merger Agreement contains certain termination rights for both us and Americas Silver, including in the event that the Merger is not consummated by June 1, 2019.

Convertible Debenture

Concurrent with the execution of the Merger Agreement, we entered into a Convertible Secured Debenture with Americas Silver (the “Debenture”), effective October 1, 2018, that allows us to borrow up to $4,000,000 from Americas Silver. The interest rate is 16% per year on the amount drawn, accrued and compounded monthly. The loan will mature on June 1, 2019, or September 1, 2019 if we have exercised an option to extend maturity. As of April 1, 2019 we had drawn approximately $2.78 million on the Debenture and accrued interest of approximately $133,000.

Corporate Structure

We were incorporated in Nevada on August 2, 2007 under the name Excel Global, Inc., and we changed our name to Pershing Gold Corporation on February 27, 2012.

We operate our business directly and also through our wholly-owned subsidiary, Gold Acquisition Corp., a Nevada corporation. Gold Acquisition Corp. owns and is conducting exploration on the Relief Canyon Mine property in northwestern Nevada. Pershing Gold Corporation owns directly and is conducting exploration on the Relief Canyon properties adjacent to the Relief Canyon Mine property, which we refer to as the Relief Canyon expansion properties. We also have a subsidiary, Pershing Royalty Company, that holds royalty interests in 17 unpatented mining claims in Pershing County, and in 192 claims in Lander County, Nevada, and a wholly-owned subsidiary, Blackjack Gold Corporation, formed for potential purchases of exploration targets.

Business Strategy

Our business strategy is to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced stage of exploration and have previously undergone drilling but are under-explored, which we believe we can advance to increase value. We are currently focused on exploration of the Relief Canyon properties and, if economically feasible, commencing mining at the Relief Canyon Mine. We also periodically review other strategic opportunities, focused primarily in Nevada.

Relief Canyon Mine Property

We acquired the Relief Canyon Mine property in August 2011. The property then consisted of approximately 1,100 acres of unpatented mining claims and millsites and included three open pit mines and a processing plant that could be used to process material from the Relief Canyon Mine or from other mining operations. We refer to this property as the “Relief Canyon Mine” property.

We significantly expanded our Relief Canyon property position in 2012 with the acquisition of approximately 23,000 additional acres of unpatented mining claims and leased and subleased lands around the Relief Canyon Mine and south of the Relief Canyon Mine. We refer to this expanded property position as the “Relief Canyon properties.” In early 2015, we acquired 74 mining claims near the Relief Canyon Mine on which the processing facilities are located that we had previously leased from Newmont USA Ltd. (“Newmont”), and we entered into a new mining lease directly with the owner of approximately 1,600 acres of fee land that we had previously subleased from Newmont pursuant to a Mining Lease and Sublease dated June 15, 2006 (“2006 Lease Agreement”). Newmont was granted a 2% net smelter return on the claims and fee lands that were subject to the 2015 transaction; in June 2018 Newmont assigned this royalty interest to Maverix Metals (Nevada) Inc. (“Maverix”). In 2018, we exercised a right of first offer (“ROFO”) to purchase all of Newmont’s right, title, and interest in, to, and under the 2006 Lease Agreement. By exercise of the ROFO and the closing of a Purchase and Sale Agreement dated August 27, 2018 (“2018 PSA”), between the Company and Newmont, we acquired all of the assets then held under the 2006 Lease Agreement and it terminated. Assets acquired under the 2018 PSA include (i) 81 unpatented lode claims, (ii) 320 acres of private minerals (subject to an underlying 2.125% NSR royalty payable to New Nevada Resources, LLC); (iii) assignment of a Mining Lease dated effective December 31, 2014 between New Nevada Resources, LLC and New Nevada Lands, LLC (collectively “New Nevada”), covering approximately 2,458.88 acres of private lands subject to a 2.5% NSR royalty payable to New Nevada, and other customary terms and conditions. Most of the Relief Canyon Mine properties are subject to a 2% net smelter return royalty payable to either RG Royalties, LLC, a subsidiary of Royal Gold, Inc. or Maverix. In March 2017, we entered into a mining sublease with Newmont covering 960 acres of fee land leased by Newmont from New Nevada, which further consolidated our land holdings in the Pershing Pass area south of the Relief Canyon Mine. In June 2018 Newmont assigned its rights in and to the 2017 mining sublease, and to the underlying New Nevada lease (partial), with respect to the subleased 960 acres to Maverix, with Maverix now the sub-lessor. In January 2019 the Company and Maverix amended the mining sublease to recognize the Company and Maverix as the current parties to the sublease, amend the work commitment schedule, and various notice and reporting requirements.

Since we acquired the Relief Canyon Mine property in 2011, we have drilled a total of 550 drill holes totaling approximately 325,000 feet at the Relief Canyon properties. Our exploration efforts have been focused primarily on expanding the known Relief Canyon Mine deposit. Our 2011-2013 exploration drilling programs expanded the deposit. We began a drilling program in 2014 which we completed in early 2015. In this program, we drilled a total of 134 core holes, totaling approximately 74,000 feet, for the purpose of extending and upgrading the current deposit. The 2014 drill results included some gold intercepts at significantly higher grades than the average historic grade of the Relief Canyon Mine deposit of approximately one gram of gold per ton. We conducted the 2015 drilling program from May 2015 through December 2015, which demonstrated that the high-grade zone in the North Target Area has continued south under the North Pit and that the higher-grade L Zone of the Relief Canyon Mine deposit is geologically open to the west, south and southwest. In November 2016, we completed Phase 1 of our 2016 drilling program, which included 22 core holes, totaling approximately 15,000 feet. In November 2016, we commenced Phase 2 drilling and completed this drilling in December 2016, which included nine core holes totaling approximately 8,000 feet. During 2017, we drilled an additional 15 holes, totaling approximately 5,800 feet at our Blackjack Project Area, located approximately nine miles south of the Relief Canyon Mine. The 2018 drilling program focused on four target areas of the Relief Canyon properties: the West Step-out area, the North East Pit, the Main Zone, and the South East Lightbulb Pit. The budget for the 2018 drilling program was approximately $2.7 million, and included 38 core holes with 31,000 feet completed.

Feasibility Study and Mineralized Material Estimate

On May 24, 2018, Mine Development Associates of Reno, Nevada (“MDA”) completed a feasibility study on the Relief Canyon Mine. The feasibility study included an estimate of mineralized material at the Relief Canyon Mine deposit, calculated at a cut-off grade of 0.005 ounces of gold per ton for oxide material, 0.01 ounces of gold per ton for mixed material and 0.02 ounces of gold per ton for sulfide material. Silver grades were only available for a portion of the deposit. The database used for the mineralized material estimate described below includes 419 core holes and 676 reverse circulation holes for a total of 482,755 feet, of which 415 core holes and 89 reverse circulation holes were drilled by us from 2011 to September 2016.

“Mineralized material” as used in this annual report on Form 10-K, although permissible under the Securities and Exchange Commission (“SEC”) Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any part of the Relief Canyon deposit will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into SEC Industry Guide 7 compliant reserves or that mineralized material can be economically or legally extracted. In addition, in this annual report on Form 10-K we also modify our estimates made in compliance with National Instrument 43-101 to conform to SEC Industry Guide 7 for reporting in the United States. Mineralized material is substantially equivalent to measured and indicated mineral resources as disclosed for reporting purposes in Canada, except that the SEC only permits issuers to report “mineralized material” in tonnage and average grade without reference to contained ounces.

The feasibility study indicated the possibility of a viable mine and recommended that work should continue on advancing the project to a production decision. The recommended advancement work would include additional drilling to improve the knowledge of the deposit, and obtaining silver assays for continuous mineralized intervals from past core drilling and new drilling so that more silver values can be added to the economic analysis for the mine.

Permitting

We have all of the state and federal permits necessary to start mining and heap-leach processing operations at the Relief Canyon Mine. We have planned a two-phase permitting and development scenario for the project. Phase I, which has been fully authorized under our permits, is the re-purposing of previously approved disturbance and creating new surface disturbance for expanded mining to a pit bottom elevation of 5,080 feet, partial backfilling of the Phase I pit to approximately 20 feet above the historical groundwater elevation to eliminate a pit lake, expanded exploration operations, full build-out of the heap leach pad to accommodate leaching of the Phase I ore, and construction of a new waste rock storage facility. Phase II would include additional mine expansion activities and would allow mining further below the water table. We used the mine plan in the May 2018 feasibility study as the basis for the Phase II permit applications, which were submitted in June 2018.

Production Decision and Financing

While we have begun initial land clearing in preparation for potential construction at the Relief Canyon Mine, we have not yet secured sufficient financing to, and our board of directors has not yet decided to, bring the mine into production at this time. Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have senior mine and processing personnel in place, we would be required to obtain mining equipment (which could be through purchase, lease, contract mining or a combination of these), hire employees for the mine and the processing plant, purchase materials and supplies, commence mining, leaching and processing activities, and continue these activities as well as the corporate activities currently conducted for a number of months until sufficient positive cash flow is produced by gold sales to fund all of these activities.

In order to commence mining at Relief Canyon, based on the estimates contained in the feasibility study, we currently expect to incur capital expenditures and working capital expenditures of approximately $38 million. This estimate is exclusive of general and administrative expenses and other exploration costs that will be incurred by us. This estimate assumes that we would utilize a contract miner to mine ore at the pit and deliver it to the crusher.

There are no assurances that we will be successful in raising sufficient financing to commence production at Relief Canyon. Moreover, if the Merger with Americas Silver closes, the ultimate decision on when or if to put the mine into production will be made by the Americas Silver board of directors.

Relief Canyon Properties

Location, Access and Facilities

The Relief Canyon properties are located about 100 miles northeast of Reno, Nevada. The nearest town is Lovelock, Nevada, approximately 15 miles west-southwest of the Relief Canyon Mine property, which can be reached from both Reno and Lovelock on U.S. Interstate 80. The Relief Canyon Mine property is reached from Lovelock by travelling approximately seven miles northeast on I-80 to the Coal Canyon Exit (Exit No. 112), then about 10 miles southeast on Coal Canyon Road (State Route 857, a paved road maintained by Pershing County) to Packard Flat, and then north on a gravel road for two miles. All of the Relief Canyon properties can be accessed by unpaved roads from the Relief Canyon Mine property.

Through our wholly-owned subsidiary, Gold Acquisition Corp., we own 254 unpatented mining claims and 120 millsite claims, and lease approximately 1,600 acres of fee land, at the Relief Canyon Mine property. The Relief Canyon Mine property includes the Relief Canyon Mine and gold processing facility, currently on care and maintenance status. The Relief Canyon Mine includes three open pit mines, heap leach pads comprised of six cells, two solution ponds and a cement block constructed adsorption desorption-recovery (“ADR”) solution processing circuit. The ADR type process plant consists of four carbon columns, an acid wash system, a stripping vessel, and electrowinning cells. The process facility was completed in 2008 and Firstgold Corp. produced a small amount of gold there in 2009. See “Relief Canyon Properties – Property History.” The facilities are generally in good condition.

When the Relief Canyon Mine was in production in the late 1980s and early 1990s, previous operators used conventional heap leach processing methods in which ore removed from the open pit mines was crushed, stacked on heap leach pads and sprinkled with a dilute sodium cyanide solution to dissolve gold and silver from the ore. The “pregnant” gold and silver bearing solution was piped to the gold recovery plant and processed using a conventional ADR gold and silver recovery system. In the ADR system, the pregnant solution flowed through a series of carbon columns where the gold and silver were adsorbed onto activated carbon. The next step in the process involved stripping the gold from the gold-bearing carbon in electrowinning cells and then recovering the gold in an on-site refinery. The resulting doré was then sent to a third party facility for further processing into saleable gold and silver products. Following removal of the gold and silver, the cyanide solution was recycled to the heap leach pads in a closed-loop system.

We plan to add mercury pollution control equipment to the process plant to allow for onsite stripping of the gold-bearing carbon. If we elect not to add the mercury pollution control equipment we could ship gold-laden carbon from the carbon columns to a third-party refinery for further processing.

Adequate line power is available to the site to operate the existing process facility and ancillary facilities. There is a backup generator onsite that could provide the required power for the heap leach pumping system in the event of power outages. Another generator will be used to provide power for the crushing and conveying system. Sufficient water rights to operate the Relief Canyon Mine and the processing and ancillary facilities have been appropriated with two operating and permitted wells.

The maps below show the location of the Relief Canyon properties:

Figure 1: Relief Canyon properties, excluding the Coal Canyon project

Figure 2: Coal Canyon Project

Rock Formation and Mineralization

The Relief Canyon properties are located in Pershing County, Nevada at the southern end of the Humboldt Range. The range is underlain by a sequence of late Paleozoic to Mesozoic aged volcanic and sedimentary rocks. Gold-bearing rocks at the Relief Canyon properties are primarily developed within breccia zones along the contact between the Grass Valley and Cane Springs Formations.

Property History

Gold was first discovered on the property by the Duval Corp. in 1979. Subsequent exploration was performed by various companies including Lacana Mining, Santa Fe Gold Corp., and Pegasus Gold Inc., and gold was produced from the property during the late 1980s and early 1990s. Firstgold Corp. acquired the property in 1995, explored periodically from 1995 until 2009, and produced a small amount of gold in 2009. Firstgold Corp. filed for bankruptcy protection in January 2010, and in August 2011, pursuant to an order of the bankruptcy court, we (through our wholly owned subsidiary, Gold Acquisition Corp.) purchased 100% of the Relief Canyon Mine property and related assets.

Title and Ownership Rights

Our property rights currently total approximately 29,000 acres and are comprised of approximately 1,137 owned unpatented mining claims, 120 owned millsite claims, 62 leased unpatented mining claims, and 6,586 acres of leased, 960 acres of subleased private lands, and 320 acres of owned private minerals. In January 2015, we acquired certain mining claims from Newmont, entered into a new mining lease on private, or fee, lands that we previously subleased from Newmont, and amended the 2006 Minerals Lease and Sublease with Newmont with respect to certain other portions of the Relief Canyon properties. The above summary of property units, and Map Figure 2 below also reflect the land status changes resulting from the Company’s 2018 exercise of its right of first offer (“ROFO”) to purchase all of Newmont’s right, title, and interest in, to, and under the 2006 Lease Agreement. By exercise of the ROFO and the closing of a Purchase and Sale Agreement dated August 27, 2018, between the Company and Newmont, the Company acquired all of the assets then held under the 2006 Lease Agreement and the Agreement terminated. These transactions, which did not increase the size of our Relief Canyon property position, aare described below. In March 2017, we entered into a mining sublease with Newmont covering 960 acres of fee land leased by Newmont from New Nevada, which further consolidated our land holdings in the Pershing Pass area south of the Relief Canyon Mine. In June 2018 Newmont assigned its rights in and to the 2017 mining sublease, and to the underlying New Nevada lease (partial) with respect to the subleased 960 acres to Maverix, with Maverix now the sub-lessor. In January 2019 the Company and Maverix amended the mining sublease to recognize the Company and Maverix as the current parties to the sublease, and to amend the work commitment schedule and various notice and reporting requirements. We also control options to purchase two 40 acre parcels of fee land in the same vicinity. In December 2017, we entered into two mining leases in the Coal Canyon area, which is west of the Relief Canyon Mine, leasing an additional 43 unpatented claims, and 1,899 acres of fee land, as further described below under the heading “Coal Canyon Project”.

In order to maintain ownership of the unpatented mining claims and millsites at the Relief Canyon properties, we are required to make annual claim maintenance payments of $155 per mining claim or millsite to the Bureau of Land Management (the “BLM”), and to record in the county records an affidavit of payment of claim maintenance fees and notice of intent to hold and pay state and county recording fees of $12.00 per claim or millsite. Our total property maintenance costs for all of the unpatented mining claims and millsites for the Relief Canyon properties in 2018 was approximately $307,000, and we expect our land holding costs to be approximately $327,000 in 2019, which covers the cost of maintaining the additionally acquired claims, new leases covering both claims and fee lands, as noted herein, and an increase in the BLM claim maintenance fee which is anticipated to be adjusted for inflation in 2019.

January 2015 Acquisition

In January 2015, we acquired 74 unpatented mining claims totaling approximately 1,300 acres that we had previously leased from Newmont. We also entered into a new mining lease directly with New Nevada Resources, LLC and New Nevada Lands, LLC for approximately 1,600 acres of fee, or private, land that we had previously subleased from Newmont. The new lease has a primary term of twenty years that can be extended for so long thereafter as mining, development or processing operations are being conducted on the land on a continuous basis. The lease contains customary terms and conditions, including annual advance royalty payments commencing at $1.00 per acre and increasing after five years by the greater of five percent or an amount determined from the Consumer Price Index, and a 2.5% net smelter returns production royalty.

The claims that we acquired from Newmont and the fee land subject to our new lease are located near, and include portions of, the pit and the land on which the Relief Canyon Mine property processing facilities are located. These areas are shown in the map above as owned claims and leased fee. These properties also include lands to the south and west of the current mine pits that we believe are prospective for potential expansion of the Relief Canyon Mine deposit, and lands that could in the future be used for new or expanded mine support facilities, including potential waste rock storage. As a result of these transactions, the claims we purchased from Newmont and the private lands we leased from New Nevada Resources, LLC and New Nevada Lands, LLC are no longer subject to Newmont’s joint venture rights discussed below.

2018 Exercise Right of First Refusal – June 15, 2006 Lease Agreement

In 2018, we exercised the ROFO to purchase all of Newmont’s right, title, and interest in and under the Minerals Lease & Sublease dated June 15, 2006 between Newmont and Pershing Gold (as successor in interest), as amended (the “2006 Lease Agreement”) for $1,100,000. By exercise of the ROFO, and the closing of a Purchase and Sale Agreement dated August 27, 2018 (the “2018 PSA”) between us and Newmont, we acquired all of the assets then held under the 2006 Lease Agreement and the agreement terminated. By termination of the 2006 Lease Agreement, the area of interest established by the agreement also terminated. Assets acquired under the 2018 PSA include (i) 81 unpatented lode claims, (ii) 320 acres of private minerals (subject to an underlying 2.125% NSR royalty payable to New Nevada Resources, LLC); (iii) assignment of a Mining Lease dated effective December 31, 2014, between New Nevada Resources, LLC and New Nevada Lands, LLC (collectively “Owner”), covering approximately 2,458.88 acres of private lands subject to a 2.5% NSR royalty payable to Owner, and other customary terms and conditions under the Mineral Lease agreement; and (iv) termination of the 2006 Lease Agreement in its entirety, without any further force or effect.

Coal Canyon Project

In December 2017, we entered into two mining leases at Coal Canyon, which is west of the Relief Canyon Mine (see Figure 2, above). One such mining lease with Good Springs Exploration, LLC and Clancy Wendt (collectively “Lessor”) covers 43 unpatented mining claims which added 800 acres to our property holdings. The lease contains customary terms and conditions, with a primary term of ten years, which may be extended by us, annual advance royalty payments to Lessor starting at $20,000 per year, capping at $50,000, which payments are recoupable against a 3% net smelter return royalty, which royalty can be reduced by one percent of net smelter return for a payment of $1 million, and also includes a conditional purchase option for $350,000.

A second mining lease with Owner covers 1,899 acres of fee land. The lease contains customary terms and conditions, with a primary term of twenty years, which may be extended by us, with annual advance royalty payments to Owner starting at $10 per acre capping at $25 per acre, which payments are recoupable against a 3% net smelter return royalty. This royalty can be reduced by one percent of net smelter return in exchange for a payment of $1 million, and also includes a conditional purchase option at a price of $500 per acre.

Royalties

As currently defined by exploration drilling, most of the Relief Canyon deposit is located on property that is subject to a 2% net smelter return royalty, with a portion of the deposit located on property subject to net smelter return royalties totaling 4.5%. The rest of the property is subject, under varying circumstances, to net smelter return royalties ranging from 2% to 5%.

The map below shows the royalties payable on the properties on which the current Relief Canyon Mine pits and processing facilities are located and the surrounding properties we now own or lease directly from New Nevada Resources, LLC and New Nevada Lands, LLC, as the result of the January 2015 and January 2018 transactions with Newmont (Maverix), New Nevada Resources, LLC and New Nevada Lands, LLC described above.

Pershing Pass Property

With the various noted property additions, the Pershing Pass property consists of over 765 unpatented mining claims (746 owned, 19 leased) covering approximately 12,900 acres and a mining lease covering approximately 635 acres of fee land. The Pershing Pass property includes approximately 490 unpatented lode mining claims covering approximately 9,700 acres that we acquired from Silver Scott Mines in March 2012 and approximately 283 unpatented lode mining claims covering about 5,660 acres owned directly by Victoria Resources (US) Inc., a wholly-owned subsidiary of Victoria Gold Corp., prior to our purchase (collectively, “Victoria”). Victoria has reserved a 2% net smelter return royalty on the 221 claims that are located outside the area of interest related to the prior 2006 Lease Agreement, which area of interest was terminated by the 2018 ROFO exercise, discussed above. The Pershing Pass property also includes 17 unpatented mining claims acquired from a third party in April 2012 subject to a 2% net smelter return royalty, 17 unpatented mining claims that we located in mid-2012, and approximately 635 acres of private lands that we leased in December 2012. The primary term of the lease is ten years, ending in December 2022, which may be extended as long as mineral exploration, development or mining work continues on the property. Production from the private lands covered by the lease is subject to a 2% net smelter return royalty on all metals produced other than gold, and to a royalty on gold indexed to the gold price, ranging from 2% at gold prices of less than $500 per ounce to 3.5% at gold prices over $1,500 per ounce. Prior to one year after commencement of commercial production, we can repurchase up to 3% of the royalty on gold production at the rate of $600,000 for each 1%. The Blackjack Project Area is located within the Pershing Pass property.

In September 2013, we entered into a lease agreement and purchase option for 19 unpatented mining claims (approximately 400 acres) in the Pershing Pass property. The lease grants us exclusive rights to conduct mineral exploration, development and mining and an exclusive option to purchase the claims. The primary term of the lease is ten years, which may be extended as long as mineral exploration, development, or mining work continues on the property. Production from the lease is subject to a 1% net smelter return royalty on precious metals and a one-half percent net smelter royalty on all other metals produced from the lease. Pursuant to a 2011 Deed of Royalty, the claims are also subject to an additional 2% net smelter return royalty on precious metals and a one percent net smelter royalty on all other metals (a total 3% on precious metals – 1.5% on other metals). Prior to production, we are required to pay a $10,000 annual advance minimum royalty payment to Nevada Select Royalties, Inc. The advance minimum royalty remains at $10,000 per year until September 2023 when the advance royalty payment increases to $12,500 per year. The advance royalty payment increases to $15,000 per year in September 2028 and then $20,000 per year in September 2033. The advance minimum royalty payments are due on or before the anniversary dates of the lease agreement. If we decide to exercise the purchase option, which is exercisable at any time, we can acquire the 19 unpatented mining claims for $250,000.

Maverix Pershing Pass Sublease

The March 2017 mining sublease with Newmont added 960 acres of fee land to our property holdings at Pershing Pass. In June 2018, Newmont assigned its rights in and to the 2017 mining sublease, and to the underlying 2014 New Nevada lease (partial), with respect to the subleased 960 acres, to Maverix, with Maverix now being the sub-lessor. In January 2019, the Company and Maverix amended the mining sublease to recognize the Company and Maverix as the current parties to the sublease, amend the work commitment schedule, and amend various notice and reporting requirements. Under the terms of the sublease, we have the exclusive right to prospect, explore for, develop, and mine minerals on these areas. The sublease has an initial term of ten years and may be extended by us until December 3, 2034 and so long thereafter as any mining, development, or processing operations are being conducted continuously. The subleased fee lands are owned by New Nevada Resources, LLC (“NNR”) and New Nevada Lands, LLC (“NNL”), and leased by Maverix under a December 2014 Mining Lease. The underlying 2014 lease contains customary terms and conditions, with a primary term of twenty years, which may be extended by us, and annual advance royalty payments to NNR and NNL, which payments are recoupable against a 2.125% net smelter return royalty payable to NNR and NNL.

The sublease calls for us to make minimum work expenditures for the first four years of the sublease, followed by annual advance minimum royalty payments to Maverix to maintain the sublease in good standing. The sublease may be terminated any time after we have spent $500,000 toward a required $1.5 million work commitment within the first two years of the sublease. Otherwise, upon termination we must pay Maverix the difference between $500,000 and the costs already incurred by us towards the required work commitment. As of December 31, 2018, the most recent cost reporting date, the Company can credit approximately $270,000 in exploration expenditures already incurred against the $1.5 million work commitment. The sublease creates a 2.0% net smelter return royalty on all minerals, excluding industrial minerals, which have a 0.875% net smelter return produced from the subleased fee lands in favor of Maverix. The Maverix 2.0% net smelter return is in addition to the 2.125% net smelter return payable to NNR and NNL. The sublease also creates a 2.0% net smelter return royalty in favor of Maverix on minerals (excepting industrial minerals) produced from our claims located in Section 10 and 16 adjacent to the subleased fee lands.

Environmental Permitting Requirements

Various levels of governmental controls and regulations address, among other things, the environmental impact of mineral mining and exploration operations and establish requirements for reclamation of mineral mining and exploration properties after exploration operations have ceased. With respect to the regulation of mineral mining and exploration, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission limits and other design or operational requirements for various aspects of the operations, including health and safety standards. Legislation and regulations also establish requirements for reclamation and rehabilitation of mining properties following the cessation of operations and may require that some former mining properties be managed for long periods of time after mining activities have ceased.

Our activities are subject to various levels of federal and state laws and regulations relating to protection of the environment, including requirements for closure and reclamation of mineral exploration properties. Some of the laws and regulations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Emergency Planning and Community Right-to-Know Act, the Endangered Species Act, the Federal Land Policy and Management Act, the National Environmental Policy Act, the Resource Conservation and Recovery Act, and related state laws in Nevada. Additionally, much of our property is subject to the federal General Mining Law of 1872, which regulates how mining claims on federal lands are located and maintained.

The State of Nevada, where we focus our mineral exploration efforts, requires mining projects to obtain a Nevada State Reclamation Permit pursuant to the Mined Land Reclamation Act (the “Nevada MLR Act”), which establishes reclamation and financial assurance requirements for all mining operations in the state. New and expanding facilities are required to provide a reclamation plan and financial assurance to ensure that the reclamation plan is implemented upon completion of operations. The Nevada MLR Act also requires reclamation plans and permits for exploration projects that will result in more than five acres of surface disturbance on private lands.

We have an approved Plan of Operations from the BLM and a Reclamation Permit from the Nevada Division of Environmental Protection (“NDEP”) that authorizes mining, mineral processing and exploration drilling at the Relief Canyon Mine property. In March 2015, we submitted requests to the BLM and the NDEP to amend the Plan of Operations and the Reclamation Permit to allow us to expand the mine. In August 2016, the BLM approved our Environmental Assessment and Plan of Operations Modification, authorizing us to expand the pit boundary, deepen the pit, build a new waste rock storage area and heap leach pads, and increase the permissible drilling areas around the existing pits at the Relief Canyon Mine property. In December 2016, the NDEP approved our reclamation permit. Like the Plan of Operations, the state reclamation permit authorizes expansion and deepening of the pit, building new waste rock and heap leach facilities, and increases the permitted area of drilling. We estimate the annual cost of holding these permits to total approximately $40,000. NDEP issued the Water Pollution Control Permit Major Modification and Renewal, the Class I Air Quality Operating Permit to Construct, and the revised Class II air quality operating permits in February 2017. In 2017, we submitted minor modifications to BLM and NDEP for the Plan of Operations, the Reclamation Permit, and the Water Pollution Control Permit to optimize the configuration of the mining, heap leach pad, and ancillary facilities. As of December 2018, the agencies have approved the modified permit applications.

With the approval of the Environmental Assessment, the 2015 Plan of Operations Modification, and the 2017 Plan of Operations Modification, we were required to increase our reclamation bond with BLM and the NDEP from approximately $5.6 million to approximately $12.5 million, which is currently approximately $80,000 in excess of the current requirement to cover reclamation of land disturbed in our exploration and mining operations. This bond is provided through third-party insurance underwriters, collateralized by approximately 30% of the $12.5 million bond amount, or about $3.7 million.

Approximately $12.4 million of our reclamation bond with BLM and the NDEP covers both exploration and mining at the Relief Canyon Mine property, including the three open pit mines and associated waste rock disposal areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads, with an additional $22,000 covering generative exploration properties located away from the Relief Canyon Mine. The remaining approximately $80,000 can be used to satisfy, or partially satisfy, future bonding requirements for exploration or mining. Our preliminary estimate of the likely amount of additional financial assurance for future exploration is approximately $100,000, although we expect periodic increases due to effects of inflation.

Additional permitting would be required in the future for the Phase II operations to mine further below the water table. BLM may require an Environmental Impact Statement to evaluate the impacts associated with mining below the water table. In fiscal year 2018, we spent approximately $750,000 for the continuation of studies for expansion below the water table and preparing and submitting the amended plan of operations modification.

As discussed above, we have an authorized Plan of Operations from the BLM and a Reclamation Permit from the NDEP, which authorized expansion of the pit, mineral processing, and our 2018 drilling program. We may need to secure a new or modified NDEP Reclamation Permit in order to conduct exploration activities on some of the private lands subleased from Newmont. We plan to apply for additional required permits to conduct our exploration programs as necessary. These permits would be obtained from the BLM, the NDEP or both agencies. Obtaining such permits will require the posting of additional bonds for subsequent reclamation of disturbances caused by exploration. Delays in the granting of permits or permit amendments are not uncommon, and any delays in the granting of permits may adversely affect our exploration activities.

Our current exploration permit costs are minimal, although future exploration activities may require amendments to these permits. We have Notices of Intent from BLM for exploration drilling on our unpatented mining claims in the Pershing Pass area of the Relief Canyon expansion properties, located to the south of the Relief Canyon Mine property and for the Coal Canyon Property, located to the west of the Relief Canyon Mine property. A Notice of Intent includes information regarding the company submitting the notice, maps of the proposed disturbance, equipment to be utilized, the general schedule of operations, a calculation of the total disturbance anticipated, and a detailed reclamation plan and budget. We have provided a $10,500 reclamation bond for the Pershing Pass Notice of Intent and a $11,200 reclamation bond for the Coal Canyon Notice of Intent to ensure reclamation of our exploration activities on public lands based on the estimated third-party costs to reclaim and re-vegetate the disturbed acreage. It is not necessary to file a Notice of Intent prior to work on private land. Measurement of land disturbance is cumulative, and once five acres total of public lands have been disturbed and remain unreclaimed in one project area, a Plan of Operations must be filed and approved by the BLM before additional work can take place, and a Reclamation Permit must be obtained from the NDEP. Both the Plan of Operations and the NDEP Reclamation Permit require a cash bond and a reclamation plan. Future exploration at Pershing Pass or Coal Canyon could require a Plan of Operations and a NDEP Reclamation Permit.

We do not anticipate discharging water into active streams, creeks, rivers and lakes because there are no bodies of water near the Relief Canyon project area. We also do not anticipate disturbing any endangered species or archaeological sites or causing damage to our property. Re-contouring and re-vegetation of disturbed surface areas would be completed pursuant to the applicable permits. The cost of reclamation work varies according to the degree of physical disturbance. It is difficult to estimate the future cost of compliance with environmental laws since the full nature and extent of our future activities cannot be determined at this time.

Other Exploration

We conducted generative exploration on the Relief Canyon expansion properties in 2012 and 2013. Since then, we have generated geological mapping over approximately three-quarters of our broader land holdings and conducted other exploratory work, including exploratory drilling at three targets in the expansion properties: Buffalo, Buffalo Pediment and the Blackjack Project Area. We intend to continue to focus our expenditures on the Relief Canyon Mine property. Because the Relief Canyon expansion properties are at an early stage of exploration, it would take significant time to perform sufficient exploration drilling to determine whether these properties contain mineable reserves that could be put into production in the future. Although we are not currently planning to resume exploration efforts with respect to the Relief Canyon expansion properties, we may in the future increase our exploration efforts depending on results and available funding.

We intend to continue to acquire additional mineral targets in Nevada and elsewhere in locations where we believe we have the potential to quickly expand and advance known mineralization and the potential to discover new deposits. If, through our exploration program, we discover an area that potentially may be profitably mined for gold, we would focus on determining whether that is feasible, including further delineation of the location, size and economic feasibility of a potential orebody. We will require external funding to pursue our exploration programs. There is no assurance we will be able to raise capital on acceptable terms or at all.

Employees

We currently have 19 full-time employees. We believe that our relations with our employees are good. In the future, if our activities grow, we may hire personnel on an as-needed basis. For the foreseeable future, we plan to engage geologists, engineers and other consultants as necessary.

Competition

We compete with other exploration companies for the acquisition of a limited number of exploration rights, and many of the other exploration companies possess greater financial and technical resources than we do. The mineral exploration industry is highly fragmented, and we are a very small participant in this sector. Many of our competitors explore for a variety of minerals and control many different properties around the world. Many of them have been in business longer than we have and have established more strategic partnerships and relationships. We also compete with other exploration companies for the acquisition and retention of skilled technical personnel.

Our competitive position depends upon our ability to acquire and explore new and existing gold properties. However, there is significant competition for properties suitable for gold exploration. Failure to achieve and maintain a competitive position could adversely impact our ability to obtain the financing necessary for us to acquire gold properties. As a result, we may be unable to continue to acquire interests in attractive properties on terms that we consider acceptable. We will be subject to competition and unforeseen limited sources of supplies in the industry in the event spot shortages arise for supplies such as explosives, and certain equipment such as drill rigs, bulldozers and excavators that we will need to conduct exploration. If we are unsuccessful in securing the products, equipment and services we need we may have to suspend our exploration plans until we are able to secure them.

Market for Gold

In the event that gold is produced from our property, we believe that wholesale purchasers for the gold would be readily available. Readily available wholesale purchasers of gold and other precious metals exist in the United States and throughout the world. Among the largest are Handy & Harman, Engelhard Industries and Asahi Refining. Historically, these markets are liquid and volatile. In 2018 and through March 22, 2019, the London Fix AM high and low gold fixes were $1,360.25 and $1,176.70 per troy ounce, respectively, which represents an approximate 0.6% increase and 2.4% increase in gold prices as compared to the high and low gold price in 2017, respectively. Wholesale purchase prices for precious metals can be affected by a number of factors, all of which are beyond our control, including but not limited to:

fluctuation in the supply of, demand and market price for gold;

mining activities of our competitors;

sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;

interest rates;

currency exchange rates;

inflation or deflation;

fluctuation in the value of the United States dollar and other currencies; and

political and economic conditions of major gold or other mineral-producing countries.

Gold ore is typically mined and leached to produce pregnant solutions, which are processed through a series of steps to recover gold and produce doré. Doré is then sold to refiners and smelters for the value of the minerals that it contains, less the cost of further refining and smelting. Refiners and smelters then sell the gold on the open market through brokers who work for wholesalers including the major wholesalers listed above.

ITEM 1A:

RISK FACTORS

Our investors should consider the following risk factors carefully, in addition to the other information contained in, or incorporated by reference into, this annual report on Form 10-K.

Risks Related to Our Business

We do not know if our properties contain any gold or other minerals that can be mined at a profit.

The properties on which we have the right to explore for gold and other minerals do not contain SEC Industry Guide 7 compliant mineral reserves and we do not know if any deposits of gold or other minerals can be mined at a profit. Whether a gold or other mineral deposit can be mined at a profit depends upon many factors. Some but not all of these factors include: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; operating costs and capital expenditures required to start mining a deposit; the availability and cost of financing; the price of the gold or other minerals which is highly volatile and cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection. We are also obligated to pay production royalties on certain of our mineral production, including a net smelter royalty of 2% on production from most of our Relief Canyon Mine property, with a portion of the deposit located on property subject to net smelter return royalties totaling 4.5%, which would increase our costs of production and make our ability to operate profitably more difficult. We are also obligated to pay a net smelter royalty of up to 5% on production from some of our claims and lands.

We are an exploration stage company and have conducted exploration activities only since 2011. We reported a net loss for the year ended December 31, 2018, and expect to incur operating losses for the foreseeable future.

Our evaluation of our Relief Canyon Mine property is primarily based on historical production data and on new exploration data that we have developed since 2011, supplemented by historical exploration data. Our plans for recommencing mining and processing activities at the Relief Canyon Mine property are still being developed, as are our exploration programs on the Relief Canyon expansion properties. Accordingly, we are not yet in a position to precisely estimate expected amounts of minerals, yields or values or evaluate the likelihood that our business will be successful. We have not earned any revenues from mining operations. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties and commencement of mining activities that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, costs and expenses that may exceed current estimates and the requirement for external funding to continue our business. Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We reported a net loss of approximately $14.2 million for the year ended December 31, 2018. We expect to incur significant losses into the foreseeable future. Our monthly burn rate for all costs during 2018 was approximately $1.1 million, including $0.8 million for general and administrative costs (including all employee salaries, public company expenses, consultants, and land holdings costs) and $0.3 million for exploration activities. To pursue the commencement of mining and processing at Relief Canyon, additional external financing would be required. If we are unable to raise external funding, and eventually generate significant revenues from our claims and properties, we will not be able to earn profits or continue operations. We have no production history upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

Exploring for gold and other minerals is inherently speculative, involves substantial expenditures, and is frequently non-productive.

Mineral exploration (currently our only business), and gold exploration in particular, is a business that by its nature is very speculative. We may not be able to establish mineral reserves on our properties or be able to mine any gold or any other minerals on a profitable basis. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological conditions, fires, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits.

The mining industry is capital intensive and we may be unable to raise necessary funding.

We spent approximately $13.7 million on our business and exploration during the year ended December 31, 2018. In addition to anticipated G&A and exploration costs in 2019, in order to commence mining at Relief Canyon, based on the estimates contained in the feasibility study, it would require capital expenditures and working capital expenditures of approximately $38 million. To pursue the commencement of production at Relief Canyon, additional external financing would be required. Such additional financing could include streaming, royalty financing, forward sale arrangements, debt offerings (including convertible debt), additional equity financing or other alternatives. In addition, even if we do not decide to pursue the commencement of production at Relief Canyon, we will be required to raise additional funds in order to finance our operations. We may be unable to secure additional financing on terms acceptable to us, or at all. Our inability to raise additional funds would prevent us from achieving our business objectives and would have a negative impact on our business, financial condition, results of operations and the value of our securities. If we raise additional funds by issuing additional equity or convertible debt securities, the ownership of existing stockholders may be diluted and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the current holders of our common stock. Such securities may also be issued at a discount to the market price of our common stock, resulting in possible further dilution to the book value per share of common stock. If we raise additional funds by issuing debt, we could be subject to debt covenants that could place limitations on our operations and financial flexibility.

Unanticipated problems or delays may negatively affect our ability to commence mining and processing activities at Relief Canyon.

If we were to decide to pursue the commencement of mining and processing activities at Relief Canyon, additional external financing would be required. Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have senior mine and processing personnel in place, we would be required to obtain mining equipment (which could be through purchase, lease, contract mining or a combination of these), hire employees for the mine and the processing plant, purchase materials and supplies, commence mining, leaching and processing activities, and continue these activities as well as the corporate activities currently conducted for a number of months until sufficient positive cash flow is produced by gold sales to fund all of these ongoing activities. We may suffer significant delays or cost overruns as a result of a variety of factors, such as increases in the prices of materials, mining or processing problems, unanticipated variations in mined materials, shortages of workers or materials, transportation constraints, adverse weather, equipment failures, fires, damage to or destruction of property and equipment, environmental problems, unforeseen difficulties or labor issues, any of which could delay or prevent us from commencing or ramping up mining and processing. If our start-up were prolonged or delayed or our costs were higher than anticipated, we could be unable to obtain sufficient funds to cover the additional costs, and our business could experience a substantial setback. Prolonged problems could have a material adverse effect on our business, consolidated financial condition or results of operations and threaten our viability.

We must make annual lease payments, advance royalty and royalty payments and claim maintenance payments or we will lose our rights to our property.

We are required under the terms of the leases covering some of our property interests to make annual lease payments and advance royalty and royalty payments each year. We are also required to make annual claim maintenance payments to the BLM and pay a fee to Pershing County in order to maintain our rights to explore and, if warranted, to develop our unpatented mining claims. If we fail to meet these obligations, we will lose the right to explore for gold and other minerals on our property. Our total annual property maintenance costs payable to the BLM and Pershing County for all of the unpatented mining claims and millsites in the Relief Canyon area in 2018 were approximately $220,000, and we expect our annual maintenance costs to be approximately $220,000 in 2019. Our lease payments, advance royalty and royalty payments and claim maintenance payments are described above under “Business and Properties” on page 5.

Our business is subject to extensive environmental regulations that may make exploring, mining or related activities prohibitively expensive, and which may change at any time.

All of our operations are subject to extensive environmental regulations that can substantially delay exploration and mine development and make exploration and mine development expensive or prohibit it altogether. We may be subject to potential liabilities associated with the pollution of the environment and the disposal of waste products that may occur as the result of exploring and other related activities on our properties, including our plan to process gold at our processing facility. We may have to pay to remedy environmental pollution, which may reduce the amount of money that we have available to use for exploration, mine development, or other activities, and adversely affect our financial position. If we are unable to fully remedy an environmental problem, we might be required to suspend operations or to enter into interim compliance measures pending the completion of the required remedy. If a decision is made to mine our properties and we retain any operational responsibility for doing so, our potential exposure for remediation may be significant, and this may have a material adverse effect upon our business and financial position. We have not purchased insurance for potential environmental risks (including potential liability for pollution or other hazards associated with the disposal of waste products from our exploration activities) and such insurance may not be available to us on reasonable terms or at a reasonable price. All of our exploration and, if warranted, development activities will be subject to regulation under one or more local, state and federal environmental impact analyses and public review processes. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have significant impact on some portion of our business, which may require our business to be economically re-evaluated from time to time. These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capability. Inasmuch as posting of bonding in accordance with regulatory determinations is a condition to the right to operate under specific federal and state operating permits, increases in bonding requirements could prevent operations even if we are in full compliance with all substantive environmental laws. We have been required to post a substantial bond under various laws relating to mining and the environment and may in the future be required to post a larger bond to pursue additional activities. For example, we must provide BLM and the NDEP additional financial assurance (reclamation bonds) to guarantee reclamation of any new surface disturbance required for drill roads, drill sites, or mine expansion. In February 2018, we increased the amount of our reclamation bond with BLM and the NDEP to approximately $12.5 million. Approximately $12.4 million of our reclamation bond covers both exploration and mining at the Relief Canyon Mine property, including the three open pit mines and associated waste rock disposal areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads. Approximately $22,000 covers exploration on the Relief Canyon expansion properties. The reclamation bond was collateralized by approximately 30% of the $12.5 million bond amount, or about $3.7 million. Approximately $80,000 of the reclamation bond remains available for future mining or exploration operations. Our preliminary estimate of the likely amount of additional financial assurance for future exploration is approximately $100,000, although we expect periodic increases due to effects of inflation.

The government licenses and permits which we need to explore on our property may take too long to acquire or cost too much to enable us to proceed with exploration. In the event that we conclude that the Relief Canyon Mine deposit can be profitably mined, or we discover other commercially exploitable deposits, we may face substantial delays and costs associated with securing the additional government licenses and permits that could preclude our ability to develop the mine.

Exploration activities usually require the granting of permits from various governmental agencies. For example, exploration drilling on unpatented mining claims requires a permit to be obtained from the BLM, which may take several months or longer to grant the requested permit. Depending on the size, location and scope of the exploration program, additional permits may also be required before exploration activities can be undertaken. Prehistoric or Indian graves, threatened or endangered species, archeological sites or the possibility thereof, difficult access and excessive dust may all result in the need for additional permits before exploration activities can commence.

In June 2018, we submitted state and federal permit applications to expand the mine and the heap leach pad beyond the 21-million tons current capacity of the leach pad and to build an additional pond and waste rock storage areas to accommodate additional material. BLM may require an Environmental Impact Statement to evaluate the associated impacts with the expansion proposed in these permit applications. As with all permitting processes, there is substantial uncertainty about when and if the permits will be issued. There is the risk that unexpected delays and excessive costs may be experienced in obtaining required permits. The needed permits may not be granted or could be challenged by third parties, which could result in protracted litigation that could cause substantial delays, or may be granted in an unacceptable timeframe or cost too much. While permitting efforts have not encountered opposition to date, proposed mineral exploration and mining projects can become controversial and be opposed by nearby landowners and communities, which can substantially delay and interfere with the permitting process. Delays in or inability to obtain the necessary permits discussed above would result in unanticipated costs, which may result in serious adverse effects upon our business.

The value of our property and any other deposits we may seek or locate is subject to volatility in the price of gold.

Our ability to obtain additional and continuing funding, and our profitability if and when we commence mining or sell our rights to mine, will be significantly affected by changes in the market price of gold and other mineral deposits. Gold and other minerals prices fluctuate widely and are affected by numerous factors, all of which are beyond our control. The price of gold may be influenced by:

fluctuation in the supply of, demand and market price for gold;

mining activities of our competitors;

sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;

interest rates;

currency exchange rates;

inflation or deflation;

fluctuation in the value of the United States dollar and other currencies;

global and regional supply and demand, including investment, industrial and jewelry demand; and

political and economic conditions of major gold or other mineral-producing countries.

The price of gold and other minerals have fluctuated widely in recent years, and a decline in the price of gold or other minerals could cause a significant decrease in the value of our property, limit our ability to raise money, and render continued exploration and development of our property impracticable. If that happens, then we could lose our rights to our property or be compelled to sell some or all of these rights. Additionally, the future development of our mining properties beyond the exploration stage is heavily dependent upon gold prices remaining sufficiently high to make the development of our property economically viable.

Our property title may be challenged. We are not insured against any challenges, impairments or defects to our mining claims or title to our other properties.

Our property is comprised primarily of unpatented lode mining claims and millsites located and maintained in accordance with the federal General Mining Law of 1872 (the “General Mining Law”). Unpatented lode mining claims and millsites are unique U.S. 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 and millsites is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations with which the owner of an unpatented mining claim or millsite must comply in order to locate and maintain a valid claim. Moreover, if we discover mineralization that is close to the claim boundaries, it is possible that some or all of the mineralization may occur outside the boundaries on lands that we do not control. In such a case we would not have the right to extract those minerals. We do not have title reports or opinions covering all of our Relief Canyon properties. The uncertainty resulting from not having title opinions for all of our Relief Canyon properties or having detailed claim surveys on all of our properties leaves us exposed to potential title defects. Defending challenges to our property title would be costly, and may divert funds that could otherwise be used for exploration activities and other purposes.

In addition, unpatented lode mining claims and millsites are always subject to possible challenges by third parties or contests by the federal government, which, if successful, may prevent us from exploiting any discovery of commercially extractable gold. Challenges to our title may increase our costs of operation or limit our ability to explore on certain portions of our property. We are not insured against challenges, impairments or defects to our property title.

Possible amendments to the General Mining Law and other environmental regulations could make it more difficult or impossible for us to execute our business plan.

In recent years, the U.S. Congress has considered a number of proposed amendments to the General Mining Law, as well as legislation that would make comprehensive changes to the law. Although no such comprehensive legislation has been adopted to date, there can be no assurance that such legislation will not be adopted in the future. If adopted, such legislation, if it includes concepts that have been part of previous legislative proposals, could, among other things, (i) limit on the number of millsites that a claimant may use, discussed below, (ii) impose time limits on the effectiveness of plans of operation that may not coincide with mine life, (iii) impose more stringent environmental compliance and reclamation requirements on activities on unpatented mining claims and millsites, (iv) establish a mechanism that would allow states, localities and Native American tribes to petition for the withdrawal of identified tracts of federal land from the operation of the General Mining Law, (v) allow for administrative determinations that mining would not be allowed in situations where undue degradation of the federal lands in question could not be prevented, (vi) impose royalties on gold and other mineral production from unpatented mining claims or impose fees on production from patented mining claims, (viii) require conversion of mining claims to mining leases, and (ix) impose a fee on the amount of material displaced at a mine. Further, such legislation, if enacted, could have an adverse impact on earnings from our operations, could reduce estimates of any reserves we may establish and could curtail our future exploration and development activity on our unpatented claims.

Our ability to conduct exploration, development, mining and related activities may also be impacted by administrative actions taken by federal agencies. With respect to unpatented millsites, for example, the ability to use millsites and their validity has been subject to greater uncertainty since 1997. In November of 1997, the Secretary of the Interior (appointed by President Clinton) approved a Solicitor’s Opinion that concluded that the General Mining Law imposed a limitation that only a single five-acre millsite may be claimed or used in connection with each associated and valid unpatented or patented lode mining claim. Subsequently, however, on November 7, 2003, the new Secretary of the Interior (appointed by President Bush) approved an Opinion by the Deputy Solicitor which concluded that the mining laws do not impose a limitation that only a single five-acre millsite may be claimed in connection with each associated unpatented or patented lode mining claim. Current federal regulations do not include the millsite limitation. There can be no assurance, however, that the Department of the Interior will not seek to re-impose the millsite limitation at some point in the future.

In addition, a consortium of environmental groups has filed a lawsuit in the United District Court for the District of Columbia against the Department of the Interior, the Department of Agriculture, the BLM, and the U.S. Forest Service (“USFS”), asking the court to order the BLM and USFS to adopt the five-acre millsite limitation. That lawsuit also asks the court to order the BLM and the USFS to require mining claimants to pay fair market value for their use of the surface of federal lands where those claimants have not demonstrated the validity of their unpatented mining claims and millsites. If the plaintiffs in that lawsuit were to prevail, that could have an adverse impact on our ability to use our unpatented millsites for facilities ancillary to our exploration, development and mining activities, and could significantly increase the cost of using federal lands at our properties for such ancillary facilities.

In 2009, the U.S. Environmental Protection Agency (“EPA”) announced that it would develop financial assurance requirements under CERCLA Section 108(b) for the hard rock mining industry. On January 29, 2016, the U.S. District Court for the District of Columbia issued an order requiring that if the EPA intended to prepare such regulations, it had to do so by December 1, 2016. The EPA did comply with that order by issuing draft proposed regulations on December 1, 2016. The EPA subsequently issued its proposed rule on January 11, 2017. Under the proposed rule, owners and operators of facilities subject to the rule have been required, among other things, to (i) notify the EPA that they are subject to the rule; (ii) calculate a level of financial responsibility for their facility using a formula provided in the rule; (iii) obtain a financial responsibility instrument, or qualify to self-assure, for the amount of financial responsibility; (iv) demonstrate that they had obtained such evidence of financial responsibility; and (v) update and maintain financial responsibility until the EPA released the owner or operator from the CERCLA Section 108(b) regulations. As drafted, those additional financial assurance obligations could have been in addition to the reclamation bonds and other financial assurances we have and would be required to have in place under current federal and state laws. If such requirements had been retained in the final rule, they could have required significant additional expenditures on financial assurance, which could have had a material adverse effect on the our future business operations.

However, after an extended public comment period, the EPA issued a final rule on December 1, 2017 not to adopt the proposed rule, and not to impose additional financial assurance obligations on the hard rock mining industry. In 2018, a plaintiffs group comprised of several non-governmental organizations challenged EPA’s final rule (Idaho Conservation League et al. v. Andrew Wheeler et al.).

Market forces or unforeseen developments may prevent us from obtaining the supplies and equipment necessary to explore for gold and other minerals.

Gold exploration, and mineral exploration in general, is a very competitive business. Competitive demands for contractors and unforeseen shortages of supplies and/or equipment could result in the disruption of our planned exploration activities. Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to locate suitable equipment, materials, manpower and fuel if sufficient funds are available. If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower become available. Any such disruption in our activities may adversely affect our exploration activities and financial condition.

Our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines.

Most of our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines. Accordingly, although our Chief Operating Officer has significant experience with mine operations, our management may not be fully aware of many of the other specific requirements related to working within this industry. Their decisions and choices may not take into account standard engineering or managerial approaches that mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to some of our management’s lack of experience in the mining industry.

We may not be able to maintain the infrastructure necessary to conduct exploration activities.

Our exploration activities and any future mine development activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors that affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our exploration activities and financial condition.

Our exploration activities and any future mine development may be adversely affected by the local climate or seismic events, which could prevent us from gaining access to our property year-round.

Earthquakes, heavy rains, snowstorms, and floods could result in serious damage to or the destruction of facilities, equipment or means of access to our property, or may otherwise prevent us from conducting exploration activities on our property. There may be short periods of time when the unpaved portion of the access road is impassible in the event of extreme weather conditions or unusually muddy conditions. During these periods, it may be difficult or impossible for us to access our property, make repairs, or otherwise conduct exploration or mine development activities on them.

Risks Relating to Our Organization and Our Common Stock

The trading price of the common stock may experience substantial volatility.

The trading price of our common stock may experience substantial volatility that is unrelated to our financial condition or operations. The trading price of our common stock may also be significantly affected by short-term changes in the price of gold and other minerals. The market price of our securities is affected by many other variables which may be unrelated to its success and are, therefore, not within our control. These include other developments that affect the market for all resource sector-related securities, the breadth of the public market for the common stock and the attractiveness of alternative investments. The effect of these and other factors on the market price of the common stock is expected to make the price of the common stock volatile in the future, which may result in losses to investors.

We have relied on certain stockholders to provide significant investment capital to fund our operations.

We have in the past relied on cash infusions primarily from Frost Gamma Investments Trust (“Frost Gamma”), Donald Smith, and one of our former directors, Barry Honig. During the year ended December 31, 2012, Frost Gamma provided approximately $4.6 million in consideration for the issuance of certain of our securities. In the year ended December 31, 2013, Mr. Honig provided approximately $5.6 million to us in consideration for the issuance of shares of our Series E Preferred Stock. Additionally, Mr. Honig and Frost Gamma provided approximately $1.9 million and $150,000, respectively, to us in consideration for the issuance of shares of common stock and warrants to purchase shares of common stock in July 2014 private placements. Mr. Honig invested $150,000 in a private placement of our common stock in October 2014, $2.5 million in an April 2015 private placement, $1.25 million in a February 2016 private placement, and $3.0 million in a December 2017 private placement. Mr. Smith invested $6 million in a March 2016 private placement. We can provide no assurances that these or any other significant investors will provide us with additional cash investments, which failure would detrimentally impact our cash availability and our ability to fund our operations.

Our principal stockholders, officers and directors own a substantial interest in our voting securities, and investors may have limited voice in our management.

Our principal stockholders, Barry Honig, Donald Smith, and Ruffer LLP (“Ruffer”), as well as our officers and directors, own, in the aggregate, in excess of approximately 53.2% of our voting securities, including shares of common stock issuable upon the conversion of our Series E Preferred Stock. As of April 1, 2019, Mr. Honig owned 13,269,621 shares, or approximately 36.0%, of our voting securities, Mr. Smith owned 3,257,930 shares, or approximately 8.8%, of our voting securities, and Ruffer owned 1,960,329 shares, or approximately 5.3%, of our voting securities. As of that date, our officers and directors owned 1,107,497, or approximately 3.0%, of our voting securities. Additionally, the holdings of our officers and directors may increase in the future upon exercise of options, warrants or convertible securities they may hold or be granted in the future or if they otherwise acquire additional shares of our common stock, including through grants under our employee benefit plans.

As a result of their ownership and positions, our principal stockholder, directors and executive officers collectively may be able to influence all matters requiring stockholder approval, including the following matters:

election of our directors;

amendment of our articles of incorporation or bylaws; and

effecting or preventing a merger, sale of assets or other corporate transaction.

In addition, their stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

We are subject to the information and reporting requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other federal securities laws, as well as the listing rules of Nasdaq and the Toronto Stock Exchange (“TSX”).

The costs of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we were privately held. These costs for the years ended December 31, 2017 and December 31, 2018 were approximately $650,000 and $625,000 respectively. We estimate that these costs will be approximately $625,000 for the year ending 2019.

It may be time consuming, difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock and our ability to file registration statements pursuant to registration rights agreements and other commitments.

Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result of our small size, any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. Although, as of December 31, 2018, management has concluded that our internal control over financial reporting is effective, there can be no assurance that our internal control over financial reporting will remain effective.

Public company compliance may make it more difficult to attract and retain officers and directors.

The Sarbanes-Oxley Act and rules implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these rules and regulations to further increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that these rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers, and to maintain insurance at reasonable rates, or at all.

Our stock price may be volatile.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

results of our operations and exploration efforts;

fluctuation in the supply of, demand and market price for gold;

our ability to obtain working capital financing;

additions or departures of key personnel;

limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

our ability to execute our business plan;

sales of our common stock and decline in demand for our common stock;

regulatory developments;

economic and other external factors;

investor perception of our industry or our prospects; and

period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. As a result, you may be unable to resell your shares of our common stock at a desired price.

Volatility in the price of our common stock may subject us to securities litigation.

As discussed above, the market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our common stock price appreciates.

There is currently a limited trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

Although our common stock is currently quoted on Nasdaq, the TSX, and the Frankfurt Stock Exchange, there is limited trading activity. We can give no assurance that an active market will develop, or if developed, that it will be sustained. If an investor acquires shares of our common stock, the investor may not be able to liquidate our shares should there be a need or desire to do so. Only a small percentage of our common stock is available to be traded and is held by a small number of holders and the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity of our common stock is limited and may be dependent on the market perception of our business, among other things. We may, in the future, take certain steps, including utilizing investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading may be at an inflated price relative to the performance of our Company due to, among other things, availability of sellers of our shares. If a market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions in the securities or accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of low priced shares of common stock as collateral for any loans.

Sales, offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

Sales of substantial amounts of the common stock, or the availability of such securities for sale, could adversely affect the prevailing market prices for the common stock. A decline in the market prices of the common stock could impair our ability to raise additional capital through the sale of securities should we desire to do so. If we were to decide to pursue the commencement of production at Relief Canyon, additional external financing would be required in addition to the amounts raised in our most recent offering and private placement. Such external financing could include streaming, royalty financing, forward sale arrangements, debt offerings (including convertible debt), additional equity financing or other alternatives, and may result in additional dilution to existing holders of our common stock.

In addition, if our stockholders sell substantial amounts of our common stock in the public market or upon the expiration of any statutory holding period, under Rule 144, or upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” in anticipation of which the market price of our common stock could decline. The existence of an overhang, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

The conversion of preferred stock, a change in the conversion rate of preferred stock and exercise of options or warrants may result in substantial dilution to existing stockholders.

Conversions of our Series E Preferred Stock presently owned by our principal shareholders and others and exercise of options and warrants would have a dilutive effect on our common stock. As of March 27, 2019, we have reserved (i) 3,163,051 shares of our common stock that are issuable upon conversion of our Series E Preferred Stock at a conversion rate of one share of Series E Preferred Stock for approximately 353.571 shares of common stock (following an adjustment in the conversion ratio effective December 19, 2017), (ii) 1,383,671 shares of our common stock that are issuable upon exercise of options to purchase our common stock, (iii) 2,078,914 shares of our common stock that are issuable upon exercise of warrants to purchase our common stock, and (iv) 968,549 shares of our common stock that are issuable pursuant to restricted stock units upon vesting and/or upon termination of service or in connection with a change of control. In the event that we sell or otherwise dispose of our common stock at an effective price less than $2.80, the conversion rate will be adjusted and the number of shares of common stock issuable upon conversion of outstanding Series E Preferred Stock will increase. Further, any additional financing that we secure is likely to require the sale of additional common stock and the granting of rights, preferences or privileges senior to those of our common stock and will result in additional dilution of the existing ownership interests of our common stockholders.

Our issuance of additional shares of common stock or securities convertible into common stock in exchange for services or to repay debt would dilute the proportionate ownership and voting rights of existing stockholders and could have a negative impact on the market price of our common stock.

Our board of directors may generally issue shares of common stock or securities convertible into common stock to pay for debt or services, without further approval by our stockholders, based upon such factors that our board of directors may deem relevant at that time. We have, in the past, issued securities for debt to reduce our obligations. We have also issued securities as payment for services. It is likely that we will issue additional securities to pay for services and reduce debt in the future. We cannot give you any assurance that we will not issue additional shares of common stock or securities convertible into common stock under circumstances we may deem appropriate at the time.

Our articles of incorporation allow for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of our common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

The elimination of monetary liability against our directors, officers and employees under our articles of incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers and employees.

Our articles of incorporation contain provisions which eliminate the liability of our directors for monetary damages to our Company and stockholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resultant costs may also discourage our Company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our Company and stockholders.

Anti-takeover provisions may impede the acquisition of our Company.

Certain provisions of the Nevada General Corporation Law have anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so.

Non-U.S. holders of our common stock, in certain situations, could be subject to U.S. federal income tax upon sale, exchange or disposition of our common stock.

It is likely that we are, and will remain for the foreseeable future, a U.S. real property holding corporation for U.S. federal income tax purposes because our assets consist primarily of “United States real property interests” as defined in the Internal Revenue Code of 1986, as amended, or the Code, and applicable Treasury regulations. As a result, under the Foreign Investment in Real Property Tax Act, or FIRPTA, certain non-U.S. investors may or may in the future be subject to U.S. federal income tax on any gain from the disposition of shares of our common stock, in which case they would also be required to file U.S. tax returns with respect to such gain. In general, whether these FIRPTA provisions apply depends on the amount of our common stock that such non-U.S. investors hold. In addition, such non-U.S. investors may or may in the future be subject to withholding if, at the time they dispose of their shares, our common stock is not regularly traded on an established securities market within the meaning of the applicable Treasury regulations. So long as our common stock continues to be regularly traded on an established securities market, only a non-U.S. investor who has owned, actually or constructively, more than 5% of our common stock at any time during the shorter of (i) the five-year period ending on the date of disposition and (ii) the non-U.S. investor’s holding period for its shares may or may in the future be subject to U.S. federal income tax on the disposition of our common stock under FIRPTA.

Risks Related to the Merger

The Common Stock Exchange Ratio will not be adjusted in the event of any change in either our stock price or Americas Silver’s share price.

In the Merger, each share of our common stock will be converted into the right to receive 0.715 of an Americas Silver common share (subject to adjustment as described herein). This Common Stock Exchange Ratio will not be adjusted for changes in the market price of either our common stock or Americas Silver common shares that have occurred subsequent to the execution date of the Merger Agreement, being September 28, 2018, or occur prior to the closing of the Merger. Changes in the price of Americas Silver common shares prior to completion of the Merger will affect the value of the consideration that our common stockholders will receive on the closing date of the Merger. Share price changes may result from a variety of factors (many of which are beyond the control of Americas Silver and Pershing Gold), including, but not limited to, the following:

changes in Pershing Gold’s and Americas Silver’s respective businesses, operations, finances and prospects, or the market assessments thereof;

market assessments of the likelihood that the Merger will be completed, including related considerations regarding regulatory approvals of the Merger; and

general market and economic conditions, including fluctuations in the spot price of gold, silver or other precious metals and other factors generally affecting the price of our common stock and Americas Silver common shares.

The price of Americas Silver common shares at the closing of the Merger may vary from the price on the date the Merger Agreement was executed or on the date of this Annual Report on Form 10-K. As a result, the market value represented by the Common Stock Exchange Ratio will also vary. For example, based on the range of closing prices of Americas Silver common shares on the NYSE American during the period from September 28, 2018, the last trading day completed before public announcement of execution of the Merger Agreement, through April 1, 2019, the Common Stock Exchange Ratio represented a market value ranging from a low of $0.89 to a high of $1.83 for each share of our common stock.

Our stockholders will not know the exact market value of the Americas Silver common shares that they will receive or have a right to receive until completion of the Merger.

If the price of Americas Silver common shares increases prior to the closing of the Merger, our common stockholders will receive Americas Silver common shares that have a market value that is greater than the current market value of such shares. If the price of Americas Silver common shares decreases prior to the closing of the Merger, Our stockholders will receive Americas Silver common shares at closing that have a market value that is less than the current market value of such shares. Therefore, because the Common Stock Exchange Ratio will not be adjusted based on the market value of our common stock or Americas Silver common shares, Our stockholders cannot be sure at any given time of the market value of the consideration that will be paid to Our stockholders upon completion of the Merger.

Furthermore, because Americas Silver Preferred Shares will be convertible into Americas Silver common shares, holders of Series E Preferred Stock who exchange their stock for Americas Silver Preferred Shares will not know the derivative value of their Americas Silver Preferred Shares until the closing of the Merger.

The Americas Silver Preferred Shares will not be listed on any stock exchange.

Holders of Series E Preferred Stock may elect to receive Americas Silver Preferred Shares pursuant to the Merger. The Americas Silver Preferred Shares will not be listed on any exchange and there is currently no market through which the Americas Silver Preferred Shares may be sold. Holders of Series E Preferred Stock may, therefore, not be able to resell the Americas Silver Preferred Shares that they elect to receive in connection with the Merger. This may affect the price of the Americas Silver Preferred Shares in the secondary market (if one were to develop), the transparency and availability of trading prices and the liquidity of the Americas Silver Preferred Shares.

Failure to complete the Merger could negatively impact the market price of our common stock, future business and financial results.

If the Merger is not completed for any reason, Pershing Gold’s ongoing business and financial results may be adversely affected. In addition, if the Merger is not completed, Pershing Gold will be subject to a number of additional risks, including the following:

Under the terms of the Merger Agreement, in certain circumstances, if the Merger is not completed by reason of certain circumstances attributable to Pershing Gold, Pershing Gold will be required to pay a break fee of $4.0 million to Americas Silver;

The price of our common stock may decline to the extent that the current market price of the our common stock reflects a market assumption that the Merger will be completed and that the related benefits will be realized, or as a result of the market’s perceptions that the Merger was not consummated due to an adverse change in Pershing Gold’s business or financial condition;

Pershing Gold will continue to be liable to repay the amount outstanding under the Debenture to Americas Silver on the repayment dates agreed in the Debenture. Although in certain circumstances specified in the Debenture, each of Americas Silver and Pershing Gold may elect to convert the principal and interest amounts of the Debenture into shares of our common stock, in many circumstances Pershing Gold will be required to repay outstanding amounts in cash. There can be no certainty that Pershing Gold will have the financial capacity to repay the Debenture when due, or at all. If either Americas Silver or Pershing Gold elects to convert outstanding amounts under the Debenture into shares of our common stock, holders of our common stock will be diluted. In addition, conversion may trigger certain anti-dilution protections under the terms of the Series E Preferred Stock, further diluting holders of our common stock.

Whether or not the Merger is completed, the pending Merger could adversely affect Pershing Gold’s or Americas Silver’s operations because matters relating to the Merger require substantial commitments of time and resources by Pershing Gold’s and Americas Silver’s management and employees which could otherwise have been devoted to other opportunities that may have been beneficial to Pershing Gold or Americas Silver.

Pershing Gold and Americas Silver cannot guarantee when, or whether, the Merger will be completed, that there will not be a delay in the completion of the Merger or that all or any of the anticipated benefits of the Merger will be obtained. If the Merger is not completed or is delayed, Pershing Gold and/or Americas Silver may experience the risks discussed above which may adversely affect Pershing Gold’s and/or Americas Silver’s business, financial results and share price.

The application of interim operating covenants may restrict Pershing Gold’s or Americas Silver’s ability to pursue certain opportunities.

Pursuant to the Merger Agreement, each of Pershing Gold and Americas Silver has agreed to certain interim operating covenants intended to ensure that each of Pershing Gold and Americas Silver and their subsidiaries carry on business in the ordinary course of business consistent with past practice, except as required or expressly authorized by the Merger Agreement or any applicable law, or unless the prior written consent of the other party is obtained. These operating covenants cover a broad range of activities and business practices. Consequently, it is possible that a business opportunity will arise that is out of the ordinary course or is not consistent with past practices, and that, as applicable, Pershing Gold or Americas Silver will not be able to pursue or undertake the opportunity due to its covenants in the Merger Agreement unless the prior written consent of the other party is obtained (such consent not to be unreasonably withheld, conditioned or delayed).

The rights of our stockholders who become shareholders of Americas Silver (“Americas Silver Shareholders”) in the Merger will be governed by the Canada Business Corporations Act (the “CBCA”) and subject to Americas Silver’s articles of incorporation, as amended (“Americas Silver Articles” and Americas Silver bylaws (“Americas Silver Bylaws”).

Our stockholders who receive Americas Silver common shares in the Merger will become Americas Silver Shareholders. Americas Silver is a corporation existing under the laws of Canada. As a result, the rights of our stockholders who become Americas Silver Shareholders will be subject to the CBCA, the Americas Silver Articles and Americas Silver Bylaws, rather than being governed by the Nevada Revised Statutes and our articles of incorporation and bylaws, each as amended. There may be material differences between the current rights of our stockholders, as compared to the rights they will have as Americas Silver Shareholders.

These material differences may include, but are not limited to, the following:

Americas Silver had only one class of authorized shares, Americas Silver common shares, and in connection with the consummation of the Merger, the Americas Silver Articles were amended to create the Americas Silver Preferred Shares, and under the Americas Silver Articles, Americas Silver’s board of directors has the authority to issue an unlimited number of Americas Silver common shares;

pursuant to the CBCA, at least 25% of the directors of Americas Silver must be resident Canadians;

directors of Americas Silver may be removed only by a majority vote of the shareholders of Americas Silver whereas Pershing Gold directors may be removed only by two-thirds of the voting power of the our stockholders;

our articles of incorporation require a majority of the voting power to repeal or amend certain provisions, while the Americas Silver Articles require 66 2∕3 % of the votes cast, in person or by proxy, of the shares of Americas Silver to amend the Americas Silver Articles;

our bylaws provide that the presence, in person or by proxy, of the holders of a majority (over 50%) of the shares entitled to vote at any meeting of our stockholders shall constitute a quorum for the Merger of business while under the Americas Silver Bylaws, two shareholders entitled to vote at such meeting, whether present in person or represented by proxy, and holding not less than 10% of the total number of the issued Americas Silver common shares, shall constitute a quorum; and

the CBCA, being the corporate statute that governs Americas Silver, provides an oppression remedy that enables a court to make any order, including awarding money damages, appointing a receiver, dissolving the corporation, forcing the acquisition of securities and amending charter documents, to rectify matters that are oppressive or unfairly prejudicial to, or that unfairly disregard the interests of, any securityholder, creditor, director or officer of the corporation if an application is made to a court by a recognized complainant under the CBCA.

Risks Relating to Americas Silver Following Completion of the Merger

The market price of the Americas Silver common shares has been, and may continue to be, volatile, and our stockholders could lose all or part of their investment.

The market price of the Americas Silver common shares has fluctuated substantially, may continue to do so, and may be higher or lower than the initial price received upon the exchange. As a result, Americas Silver’s future stock price may be volatile. Over the twelve-month period ending on April 1, 2019, the market price of Americas Silver common shares on the TSX has ranged from a low of C$1.67 to a high of C$5.09. Over the twelve-month period ending on April 1, 2019, the market price of the Americas Silver common shares on the NYSE American stock exchange has ranged from a low of $1.24 to a high of $4.30. The market price of the Americas Silver common shares following the Merger will depend on a number of factors many of which are beyond Americas Silver’s control. These fluctuations could cause our stockholders to lose all or part of their investment in the Americas Silver common shares since our stockholders might be unable to sell their shares at or above the price initially received upon the exchange of shares of our common stock. Factors that could cause fluctuations in the market price of the Americas Silver common shares include the following:

price and volume fluctuations in the overall stock market from time to time;

volatility in the market prices and trading volumes of mining stocks and/or the spot price of gold and silver;

changes in operating performance and stock market valuations of other precious or base metal mining companies generally, or those in Americas Silver’s industry in particular;

future capital raising activities of Americas Silver;

sales of Americas Silver common shares by holders thereof;

failure of securities analysts to maintain coverage of Americas Silver, changes in financial estimates by securities analysts who follow Americas Silver, or Americas Silver’s failure to meet these estimates or the expectations of investors;

the financial projections Americas Silver may provide to the public, any changes in those projections or Americas Silver’s failure to meet those projections;

the announcements by Americas Silver or its competitors of new projects or acquisitions or divestitures;

the public’s reaction to Americas Silver’s press releases, other public announcements and filings with the SEC and the applicable Canadian securities regulatory authorities;

rumors and market speculation involving Americas Silver or other companies in Americas Silver’s industry;

actual or anticipated changes in Americas Silver’s operating results or fluctuations in Americas Silver’s operating results;

actual or anticipated developments in Americas Silver’s business, Americas Silver’s competitors’ businesses or the competitive landscape generally;

litigation involving Americas Silver, Americas Silver’s industry or both, or investigations by regulators into Americas Silver’s operations or those of Americas Silver’s competitors;

announced or completed acquisitions of businesses by Americas Silver or Americas Silver’s competitors;

new laws or regulations or new interpretations of existing laws or regulations applicable to Americas Silver and its business;

changes in accounting standards, policies, guidelines, interpretations or principles;

any significant change in Americas Silver’s management; and

general economic conditions and slow or negative growth of Americas Silver’s markets.

Current holders of our common stock will have reduced ownership and voting interests in Americas Silver after the Merger than they currently have in Pershing Gold.

Based on 33,686,921 shares of our common stock and 968,549 shares of our common stock issuable pursuant to Pershing Gold RSUs outstanding on April 1, 2019, and the Common Stock Exchange Ratio, it is anticipated that Americas Silver will issue approximately 24,332,633 Americas Silver common shares to our current common stockholders and certain of our preferred stockholders who have elected to convert their Series E Preferred Stock to our common stock prior to completion of the Merger, and 3,678,135 shares of Americas Silver Preferred Shares to our preferred stockholders who have elected to receive such Americas Silver Preferred Shares (not including Americas Silver common shares issuable upon conversion of a Pershing Gold Warrant to be exchanged in the Merger or issuable pursuant to outstanding Pershing Gold RSUs). Based on the number of Americas Silver common shares outstanding as of March 4, 2019, current Americas Silver Shareholders and current Pershing Gold common stockholders would own approximately 65.1% and 34.9% of Americas Silver common shares, respectively, upon the completion of the Merger, assuming no additional issuances of Americas Silver common shares or shares of our common stock between the record date and the effective time of the Merger. However, Americas Silver could issue up to 8,286,615 Americas Silver common shares upon the exercise of outstanding Americas Silver warrants and Americas Silver options prior to the effective time. In addition, it is expected that Americas Silver will issue 692,512 Americas Silver common shares in exchange for the currently outstanding 968,549 Pershing Gold RSUs. In addition, up to 15,889 Americas Silver common shares may be issuable upon exercise of an existing Pershing Gold Warrant. Based on the current market price of our common stock, it is not expected that any Americas Silver common shares will be issuable in connection with the cancellation of other warrants or stock options issued by Pershing Gold.

Our stockholders currently have the right to vote for the directors of Pershing Gold and on other matters affecting Pershing Gold. At the closing of the Merger, each of our stockholders who receives Americas Silver common shares will become a shareholder of Americas Silver. As a result, the percentage ownership of Americas Silver held by each of our current stockholders will be smaller than such stockholder’s percentage ownership of Pershing Gold prior to the Merger. The current Pershing Gold stockholders will, therefore, have proportionately less ownership and voting interests in Americas Silver following the Merger than they have now in Pershing Gold.

Any delay in completing the Merger may reduce or eliminate the benefits expected to be achieved thereunder.

In addition to the required regulatory approvals and clearances, the Merger is subject to a number of other conditions beyond Pershing Gold’s or Americas Silver’s control that may prevent, delay, or otherwise materially adversely affect its completion. It is not predicable whether and when these other conditions will be satisfied. Furthermore, the requirements for obtaining the required clearances and approvals could delay the completion of the Merger for a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause our stockholders not to realize some or all of the synergies and other benefits that are expected to be achieved if the Merger is successfully completed within its expected time frame.

Uncertainties associated with the Merger may cause a loss of management personnel and other key employees which could adversely affect the future business and operations following the Merger.

Following the completion of the Merger, Americas Silver will be dependent on the experience and industry knowledge of Americas Silver and the continuing Pershing Gold officers and other key employees to execute its business plans. Americas Silver’s success after the Merger will depend in part upon its ability to retain key management personnel and other key employees. Americas Silver’s and Pershing Gold’s current and prospective employees may experience uncertainty about their roles within Americas Silver following the Merger or other concerns regarding its operations following the Merger, any of which may have an adverse effect on Americas Silver’s ability to attract or retain key management and other key personnel. Accordingly, no assurance can be given that Americas Silver and Pershing Gold will be able to attract or retain key management personnel and other key employees until the Merger is consummated or following the Merger to the same extent that Americas Silver and Pershing Gold have previously been able to attract or retain such employees.

The integration of Americas Silver and Pershing Gold may not occur as planned.

The Merger Agreement has been entered into with the expectation that its successful completion will result in increased precious metal production and an enhanced platform for growth for Americas Silver following completion of the Merger. These anticipated benefits will depend in part on whether Americas Silver’s and Pershing Gold’s operations can be integrated in an efficient and effective manner. The integration of the two companies will present challenges to management, including the integration of systems and personnel of the two companies, and special risks, including possible unanticipated liabilities and unanticipated costs. As a result of these factors, it is possible that the cost reductions and synergies expected from the Merger will not be realized by Americas Silver. In addition, such synergies assume certain realized long-term metals prices and foreign exchange rates. If actual prices are below such assumed prices, the realization of potential synergies could be adversely affected.

Americas Silver and Pershing Gold may not realize the benefits of the Merger currently anticipated due to challenges associated with integrating the operations, technologies and personnel of Americas Silver and Pershing Gold.

The anticipated success of Americas Silver with respect to the Merger will depend in large part on the success of management of Americas Silver in integrating the operations, technologies and personnel of Pershing Gold with those of Americas Silver. The failure of Americas Silver to successfully integrate Pershing Gold, or the occurrence of any unanticipated operational problems or interruptions, expenses and liabilities could result in the failure of Americas Silver to realize the anticipated benefits of the Merger and could impair the results of operations, profitability and financial results of Americas Silver.

The overall integration of the operations, technologies and personnel of Pershing Gold into Americas Silver may also result in unanticipated operational problems, expenses, liabilities and diversion of management’s time and attention. There can be no assurance that Pershing Gold or Americas Silver will not incur additional material costs in subsequent periods to reflect additional costs associated with the Merger or that the benefits of the Merger will be realized.

The obligations and liabilities of Pershing Gold, some of which may be unanticipated or unknown, may be greater than anticipated, which may diminish the value of Pershing Gold to Americas Silver.

Pershing Gold’s obligations and liabilities, some of which may be unanticipated or unknown, or may be greater than anticipated, may not be reflected or reserved for in Pershing Gold’s historical financial statements. The obligations and liabilities of Pershing Gold could have a material adverse effect on Pershing Gold’s business, financial condition, or results of operations following the Merger. Americas Silver will not be able to realize any indemnification from Pershing Gold under the Merger Agreement with respect to obligations or liabilities of Pershing Gold, whether known or unknown. Any such liabilities could substantially reduce Americas Silver’s earnings and cash flows or otherwise materially and adversely affect its business, financial condition, or results of operations following the Merger.

Additional reporting requirements may apply if Americas Silver loses its status as a “foreign private issuer” under the Exchange Act.

Americas Silver is currently considered a “foreign private issuer” under the rules of the SEC. However, following completion of the Merger it is may lose its “foreign private issuer” status at future assessment dates. As a foreign private issuer, Americas Silver is subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. Americas Silver is required to file its annual report on Form 40-F with the SEC at the time it files its annual information form with the applicable Canadian securities regulatory authorities. In addition, Americas Silver must furnish reports on Form 6-K to the SEC regarding certain information required to be publicly disclosed by Americas Silver in Canada or filed with the TSX and which was made public by the TSX, or regarding information distributed or required to be distributed by Americas Silver to its shareholders. Moreover, although Americas Silver is required to comply with Canadian disclosure requirements, in some circumstances Americas Silver is not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. Americas Silver is required to file financial statements in accordance with IFRS, and therefore does not file financial statements prepared in accordance with generally accepted accounting principles in the United States as do U.S. companies that file reports with the SEC. Furthermore, Americas Silver is not required to comply with the U.S. proxy rules or with Regulation FD, which addresses certain restrictions on the selective disclosure of material information, although it must comply with Canadian disclosure requirements. In addition, among other matters, Americas Silver’s officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Americas Silver common shares. Americas Silver also presents information regarding mineral resources and reserves in accordance with Canadian National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”) rather than SEC Industry Guide 7 with which U.S. companies must comply. If Americas Silver loses its status as a foreign private issuer, it will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements with the content and in the form permitted as if it were a U.S. company, and incur additional costs to make such filings. Americas Silver does, however, file quarterly financial information under Canadian periodic reporting requirements for public corporations, which is accessible through the Internet at www.sedar.com, and will furnish such quarterly financial information to the SEC under cover of Form 6-K, which is available at www.sec.gov. Insiders of Americas Silver are generally required to disclose their trading in Americas Silver common shares within 5 days of the date of the trade and these trading activity reports can be accessed through the Internet at www.sedi.ca.

Pershing Gold and Americas Silver expect to incur substantial expenses related to the Merger and the integration of the two companies.

Americas Silver and Pershing Gold expect to incur significant transaction costs and significant synergy planning and integration costs in connection with the Merger. While Americas Silver has assumed that this level of expense will be incurred, there are many factors beyond its control that could affect the total amount or the timing of the Merger and integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. To the extent these Merger and integration expenses are higher than anticipated or are incurred at different times than anticipated, Americas Silver’s future operating results and financial condition may be materially adversely affected.

Americas Silver may be subject to significant capital requirements and operating risks associated with its expanded operations and its expanded portfolio of growth projects.

Americas Silver must generate sufficient internal cash flows and/or be able to utilize available financing sources to finance its growth and sustaining capital requirements. If Americas Silver does not realize satisfactory prices for the commodities that it produces, it could be required to raise significant additional capital through the capital markets and/or incur significant borrowings to meet its capital requirements. These financing requirements could adversely affect Americas Silver’s ability to access the capital markets in the future to meet any external financing requirements Americas Silver might have. If there are significant delays in terms of when any exploration, development and/or expansion projects are completed and producing on a commercial and consistent scale, and/or their capital costs were to be significantly higher than estimated, these events could have a significant adverse effect on Americas Silver’s results of operation, cash flow from operations and financial condition.

Americas Silver may need additional financing in connection with the implementation of its business and strategic plans from time to time after closing of the Merger. The exploration and development of mineral properties, including Relief Canyon, and the ongoing operation of mines require a substantial amount of capital and may depend on Americas Silver’s ability to obtain financing through joint ventures, debt financing, equity financing or other means. The combined entity may accordingly need further capital depending on exploration, development, production and operational results and market conditions, including the prices at which Americas Silver sells its production, or in order to take advantage of further opportunities or acquisitions. Americas Silver’s financial condition, general market conditions, volatile metals markets, volatile interest rates, a claim against Americas Silver, a significant disruption to Americas Silver’s business or operations or other factors may make it difficult to secure financing necessary for the expansion of mining activities or to take advantage of opportunities for acquisitions. Further, continuing volatility in the credit markets may affect the ability of Americas Silver, or third parties it seeks to do business with, to access those markets. There is no assurance that Americas Silver will be successful in obtaining required financing as and when needed on acceptable terms, if at all. If Americas Silver raises funding by issuing additional equity securities or securities convertible, exercisable or exchangeable for equity securities, such financing may substantially dilute the interests of the shareholders of Americas Silver and reduce the value of their investment.

In addition, Americas Silver’s mining operations and processing and related infrastructure facilities are subject to risks normally encountered in the mining and metals industry. Such risks include, without limitation, environmental hazards, industrial accidents, labor disputes, changes in laws, technical difficulties or failures, late delivery of supplies or equipment, unusual or unexpected geological formations or pressures, cave-ins, pit-wall failures, rock falls, unanticipated ground, grade or water conditions, flooding, periodic or extended interruptions due to the unavailability of materials and force majeure events. Such risks could result in damage to, or destruction of, mineral properties or producing facilities, personal injury, environmental damage, delays in mining or processing, losses and possible legal liability. Any prolonged downtime or shutdowns at Americas Silver’s mining or processing operations could materially adversely affect Americas Silver’s business, results of operations, financial condition and liquidity. See the information under the heading “Risk Factors” in Americas Silver’s Management’s Discussion and Analysis filed as an Exhibit to its Form 6-K for the fiscal year ended December 31, 2018 filed with the SEC on March 4, 2019.

Labor relations, employee recruitment, retention and pension funding issues may adversely affect Americas Silver’s operations.

Americas Silver may experience labor disputes, work stoppages or other disruptions in production that could adversely affect its operations. Americas Silver is dependent on its workforce at its material producing properties and mills. Americas Silver endeavors to maintain good relations with its workforce in order to minimize the possibility of strikes, lock-outs and other stoppages at the site. Relations between Americas Silver and its employees may be impacted by changes in labor relations which may be introduced by, among other things, employee groups, competing labor unions, and the relevant governmental authorities in whose jurisdictions Americas Silver carries on business. Many of Americas Silver’s employees at its operations are represented by a labor union under a collective labor agreement. Americas Silver may not be able to satisfactorily renegotiate the collective labor agreement when it expires. In addition, the existing labor agreement may not prevent a strike or work stoppage at Americas Silver’s facilities in the future, and any such work stoppage could have a material adverse effect on its earnings.

Americas Silver also hires its employees or consultants in Mexico to assist it in conducting its operations in accordance with Mexican laws. Americas Silver also purchases certain supplies and retains the services of various companies in Mexico to meet its business plans. It may be difficult to find or hire qualified people in the mining industry who are situated in Mexico or to obtain all the necessary services or expertise in Mexico or to conduct operations on its projects at reasonable rates. If qualified people and services or expertise cannot be obtained in Mexico, Americas Silver may need to seek and obtain those services from people located outside Mexico, which will require work permits and compliance with applicable laws and could result in delays and higher costs to Americas Silver to conduct its operations in Mexico. Recruiting and retaining qualified personnel is critical to Americas Silver’s success. The number of persons skilled in acquisition, exploration and development of mining properties is limited and competition for such persons is intense. As Americas Silver’s business activity grows, Americas Silver will require additional key executive, financial, operational, administrative and mining personnel. Although Americas Silver believes that it will be successful in attracting, training and retaining qualified personnel, there can be no assurance of such success. If Americas Silver is not successful in attracting and training qualified personnel, the efficiency of its operations could be affected, which could have a material adverse effect on Americas Silver’s results of operations and profitability. Americas Silver strongly depends on the business and technical expertise of its small group of management and key personnel. There is little possibility that this dependence will decrease in the near term. Key man life insurance is not in place on management and key personnel. If the services of Americas Silver’s management and key personnel were lost, it could have a material adverse effect on future operations.

The volatility in the equity markets over the last several years and other financial impacts have affected Americas Silver’s costs and liquidity through increased requirements to fund Americas Silver’s defined benefit pension plans for its employees. There can be no assurance that financial markets will sufficiently recover in the future with the effect of causing a corresponding reduction in Americas Silver’s future pension funding requirements. Furthermore, there can be no assurance that unforeseen changes in pensioner longevity, government regulation or other financial market uncertainties will not cause pension funding requirements to differ from the requirements projected by professional actuaries. Americas Silver intends to continue to fund its pension plan for hourly and salary employees of Americas Silver pursuant to all relevant regulatory requirements.

Americas Silver’s future results will suffer if it does not effectively manage its expanded operations following the Merger.

Following the Merger, the size of Americas Silver’s business will increase significantly. Its future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations, and associated increased costs and complexity. There can be no assurances that Americas Silver will be successful following the Merger.

The market price of Americas Silver common shares may be affected by factors different from those affecting Americas Silver common shares or our common stock prior to the consummation of the Merger.

Americas Silver’s mining methods and historical business differ from that of Pershing Gold. Accordingly, the results of operations of Americas Silver following completion of the Merger and the market price of Americas Silver common shares may be affected by factors different from those that previously affected the independent results of operations and the market price of the Americas Silver common shares or our common stock. The ability to produce, and level and timing of production at Americas Silver’s existing mines are different from those of Pershing Gold. These differences may lead to different production profiles in different price scenarios from Americas Silver’s production facilities, which could lead to adverse impacts on the market price for Americas Silver common shares.

Americas Silver is an “emerging growth company” and Americas Silver and Pershing Gold cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make Americas Silver common shares less attractive to investors.

Americas Silver is an “emerging growth company” as defined in the JOBS Act, whereas Pershing Gold is not an emerging growth company. Americas Silver will continue to qualify as an “emerging growth company” until the earliest to occur of: (a) the last day of the fiscal year during which Americas Silver has total annual gross revenues of US$1.07 billion or more; (b) the last day of the fiscal year of Americas Silver following the fifth anniversary of the date of the first sale of common equity securities of Americas Silver pursuant to an effective registration statement under the Securities Act, such as this proxy statement/prospectus; (c) the date on which Americas Silver has, during the previous 3-year period, issued more than US$1,000,000,000 in non-convertible debt; or (d) the date on which Americas Silver is deemed to be a “large accelerated filer”.

For so long as Americas Silver continues to qualify as an emerging growth company, it will be exempt from the requirement to include an auditor attestation report relating to internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act in its annual reports filed under the Exchange Act, even if it does not qualify as a “smaller reporting company”. In addition, section 103(a)(3) of the Sarbanes-Oxley Act has been amended by the JOBS Act to provide that, among other things, auditors of an emerging growth company are exempt from any rules of the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the registrant (auditor discussion and analysis).

Any U.S. domestic issuer that is an emerging growth company is able to avail itself of the reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and to not present to its stockholders a nonbinding advisory vote on executive compensation, obtain approval of any golden parachute payments not previously approved, or present the relationship between executive compensation actually paid and such issuer’s financial performance. In contrast, Pershing Gold is currently subject to all of these requirements. As a foreign private issuer, Americas Silver is not subject to such requirements, and will not become subject to such requirements even if Americas Silver ceases to be an emerging growth company, unless Americas Silver also ceases to be a “foreign private issuer”.

Until Americas Silver ceases to be an emerging growth company Americas Silver may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies. Investors in Pershing Gold who are familiar with Pershing Gold’s reporting regime, may find Americas Silver common shares less attractive because Americas Silver relies on these exemptions. If some of Pershing Gold’s investors find Americas Silver common shares less attractive as a result, there may be a less active trading market for Americas Silver common shares and Americas Silver common share price may be more volatile.

Section 7874 of the Code may limit the ability of Pershing Gold, and U.S. persons related to Pershing Gold, to utilize certain U.S. tax attributes to offset certain U.S. taxable income, if any, generated by the Merger and the transactions contemplated by the Merger Agreement, or certain specified transactions for a period of time following the Merger.

Section 7874 of the Code may limit the ability of a U.S. corporation acquired by a foreign corporation, and U.S. persons related to the acquired U.S. corporation, to utilize certain U.S. tax attributes (including net operating losses and certain tax credits) to offset certain U.S. taxable income. Specifically, if the stockholders of the acquired U.S. corporation own, following an acquisition by a foreign corporation, at least 60%, but less than 80%, measured either by vote or by value, of the shares of the acquiring foreign corporation, the taxable income of the acquired U.S. corporation (and any U.S. person related to the U.S. corporation) for any given year, within a ten-year period beginning on the date of the acquisition will be no less than that person’s “inversion gain” for that taxable year. A person’s inversion gain includes gain from the transfer of shares, or any other property (other than property held for sale to customers), and income from the license of any property that is either transferred or licensed as part of the acquisition, or that is transferred or licensed to a non-U.S. related person after the acquisition.

Pursuant to the Merger Agreement, and subject to changes in the current share prices of Americas Silver common shares and shares of our common stock with respect to outstanding Pershing Gold and Americas Silver options and warrants, our stockholders are expected to own less than 60% of the vote and value of Americas Silver common shares after the Merger. As a result, under current law, we and U.S. persons related to us are not expected to be subject to such limitations on the use of U.S. tax attributes. However, there can be no assurance that there will not exist in the future a change in the facts or in the law that might cause us to be subject to such limitations, including with retroactive effect. Further, there can be no assurance that the IRS will agree with the position that the 60% ownership requirement is not satisfied.

Recent and future changes to U.S. tax laws could materially adversely affect us and Americas Silver.

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law and significantly revised the Code. The Tax Cuts and Jobs Act, among other things, reduces the backup withholding tax rate from 28% to 24% and contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), implementation of a “base erosion anti-abuse tax” which requires U.S. corporations to make an alternative determination of taxable income without regard to tax deductions for certain payments to affiliates, taxation of certain non-U.S. corporations’ earnings considered to be “global intangible low taxed income” repeal of the alternative minimum tax (“AMT”) for corporations and changes to a taxpayer’s ability to either utilize or refund the AMT credits previously generated, revision in the attribution rules relating to shareholders of certain “controlled foreign corporations”, limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modification or elimination of many business deductions and credits. Notwithstanding the reduction in the U.S. corporate income tax rate, the overall impact of the Tax Cuts and Jobs Act is uncertain, and Pershing Gold or Americas Silver’s business and financial condition could be adversely affected. The impact of the Tax Cuts and Jobs Act on holders of Americas Silver common shares after the Merger is also uncertain and could be adverse. For example, recent changes in federal income tax law resulting in additional taxes owed by U.S. shareholders related to “controlled foreign corporations” may discourage U.S. investors from owning or acquiring (directly, indirectly or constructively) 10% or greater of outstanding Americas Silver common shares, which other shareholders may have viewed as beneficial or may otherwise negatively impact the trading price of Americas Silver common shares. Pershing Gold and Americas Silver are unable to predict what U.S. federal tax law may be proposed or enacted in the future or what effect such changes would have on Pershing Gold or Americas Silver’s business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect Americas Silver’s effective tax rates in the future where it has operations and have an adverse effect on its overall tax rate in the future, along with increasing the complexity, burden and cost of tax compliance. Our stockholders are urged to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding Americas Silver common shares.

If Americas Silver is, or becomes, a “passive foreign investment company,” adverse U.S. federal income tax consequences may result for U.S. shareholders of Americas Silver

U.S. holders of Americas Silver common shares or Americas Silver Preferred Shares should be aware that Americas Silver believes it was not classified as a passive foreign investment company (“PFIC”) for its tax year ended December 31, 2017, and based on current business plans and financial expectations, Americas Silver expects that it will not be a PFIC for the current tax year. Americas Silver has not made any determination as to its PFIC status for future tax years. PFIC classification is fundamentally factual in nature, generally cannot be determined until the close of the tax year in question, and is determined annually. Consequently, there can be no assurance that Americas Silver will not become a PFIC for any tax year during which U.S. holders own Americas Silver shares.

If Americas Silver is a PFIC for any year during a U.S. holder’s holding period, then such U.S. holder generally will be required to treat any gain realized upon a disposition of Americas Silver common shares or Americas Silver Preferred Shares, or any “excess distribution” received on its Americas Silver common shares, as ordinary income, and to pay an interest charge on a portion of such gain or distribution, unless the U.S. holder makes a timely and effective “qualified electing fund” election (“QEF Election”) or a “mark-to-market” election with respect to its Americas Silver common shares or Americas Silver Preferred Shares. A U.S. holder who makes a QEF Election generally must report on a current basis its share of Americas Silver’s net capital gain and ordinary earnings for any year in which Americas Silver is a PFIC, whether or not Americas Silver distributes any amounts to its shareholders. However, U.S. holders should be aware that there can be no assurance that Americas Silver will satisfy the record keeping requirements that apply to a QEF, or that Americas Silver will supply U.S. holders with information that such U.S. holders require to report under the QEF Election rules, in the event that Americas Silver is a PFIC and a U.S. holder wishes to make a QEF Election. Thus, U.S. holders may not be able to make a QEF Election with respect to their Americas Silver common shares or Americas Silver Preferred Shares. A U.S. holder who makes a mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the Americas Silver common shares or Americas Silver Preferred Shares over the taxpayer’s basis therein. Each U.S. holder should consult its own tax advisors regarding the PFIC rules and the U.S. federal income tax consequences of the Merger and the acquisition, ownership, and disposition of Americas Silver common shares or Americas Silver Preferred Shares.

The Merger is expected to result in an ownership change for Pershing Gold under Section 382 of the Code, potentially limiting the use of Pershing Gold’s net operating loss carryforwards and certain other tax attributes in future years. In addition, Pershing Gold’s ability to use its net operating loss carryforwards may be further limited if taxable income does not reach sufficient levels.

As of December 31, 2018, Pershing Gold had approximately $88.6 million of net operating loss (“NOL”) carryforwards available to reduce U.S. federal taxable income in future years. Under Section 382 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period.

The Merger is expected to result in an ownership change under Section 382 of the Code for Pershing Gold, potentially limiting the use of Pershing Gold’s NOL carryforwards in future taxable years for U.S. federal income tax purposes. These limitations may affect the timing of when these NOL carryforwards can be used which, in turn, may impact the timing of when cash is used to pay the taxes of Pershing Gold and have a negative impact on Pershing Gold’s financial position and results of operations. In addition, Pershing Gold’s ability to use its NOL carryforwards will be dependent on its ability to generate taxable income.

The applicable Canadian and U.S. income tax laws may be changed or interpreted in a manner that is adverse to Americas Silver and its securityholders following completion of the Merger.

There can be no assurance that the Canada Revenue Agency (the “CRA”), the IRS or other applicable taxing authorities will agree with the Canadian and U.S. federal income tax consequences of the Merger, as applicable, as set forth in this proxy statement/prospectus. Furthermore, there can be no assurance that applicable Canadian and U.S. income tax laws, regulations or tax treaties will not be changed or interpreted in a manner, or that applicable taxing authorities will not take administrative positions, that is adverse to Americas Silver and its securityholders following completion of the Merger. Such taxation authorities may also disagree with how Americas Silver or Pershing Gold calculate or have in the past calculated their income for income tax purposes. Any such events could adversely affect Americas Silver, its share price or the dividends or other payments to be paid to Americas Silver’s securityholders following completion of the Merger.

The issuance of a significant number of Americas Silver common shares and resulting “market overhang” could adversely affect the market price of Americas Silver common shares after completion of the Merger.

On completion of the Merger, a significant number of additional Americas Silver common shares will be available for trading in the public market. The increase in the number of Americas Silver common shares may lead to sales of such Americas Silver common shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market price of, Americas Silver Common Shares. The potential that an Americas Silver common shareholder may sell its Americas Silver common shares in the public market (commonly referred to as “market overhang”), as well as any actual sales of Americas Silver common shares in the public market, could adversely affect the market price of the Americas Silver common shares.

ITEM 1B:

UNRESOLVED STAFF COMMENTS

None.

ITEM 3:

LEGAL PROCEEDINGS

We are not currently a party to any material pending legal proceedings, although may from time to time be subject to ordinary routine litigation.

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 on Form 10-K.

PART II

ITEM 5:

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

Our common stock commenced trading on August 20, 2009 and was quoted on the OTC Bulletin Board under the symbol EXCX.OB from June 23, 2009 through May 31, 2011. Prior to August 20, 2009, there was no active market for our common stock. Our common stock traded under the symbol SAGE.OB from June 1, 2011 until March 26, 2012. On March 26, 2012, our symbol was changed to PGLC.OB. On June 18, 2015 our common stock underwent a 1-for-18 reverse stock split. On July 6, 2015, our common stock began trading on Nasdaq under the symbol PGLC. On November 17, 2016, our common stock began trading on the TSX under the symbol PGLC. Our stock trades on the Frankfurt Stock Exchange under the symbol 7PG1.

Dividend Policy

In the past, we have not declared or paid cash dividends on our common stock, and we do not intend to pay any cash dividends on our common stock. Rather, we intend to retain future earnings (if any) to fund the operation and expansion of our business and for general corporate purposes. Subject to legal and contractual limits, our board of directors will make any decision as to whether to pay dividends in the future.

Recent Sales of Unregistered Securities

On February 23, 2018, the Company issued 85,135 shares of Common Stock upon the vesting of 85,135 restricted stock units to a former director of the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On September 12, 2018, the Company issued 47,661 shares of Common Stock upon the vesting of 47,661 restricted stock units to a former director of the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On January 10, 2019, the Company issued 10,000 shares of Common Stock upon the vesting of 10,000 restricted stock units to a former employee of the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

ITEM 6:

SELECTED CONSOLIDATED FINANCIAL DATA

Not applicable.

ITEM 7:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes in this annual report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors,” “Forward-Looking Statements,” and in other parts of this annual report on Form 10-K.

Overview

During the year ended December 31, 2018, we focused primarily on continuing permitting and bonding; engineering and other work related to the potential commencement of mining at the Relief Canyon Mine; completion of our feasibility study; an expansion drilling program at the Relief Canyon Mine; financing efforts; and entering into the Merger Agreement with Americas Silver. An overview of certain significant events follows:

On April 1, 2019, the Committee of Foreign Investment in the United States (“CFIUS”) completed its review of the Merger and CFIUS determined that there are no unresolved national security concerns with respect to the transaction.

On January 9, 2019 we announced that we and Americas Silver each received the requisite shareholder approvals in respect of the Merger.

On September 28, 2018 we announced that we entered into a Merger Agreement with Americas Silver whereby holders of our common stock will receive 0.715 common shares of Americas Silver for each Pershing share by way of a share exchange (the “Common Stock Exchange Ratio”) and holders of our preferred shares may elect to exchange those shares for new non-voting preferred shares of American Silver at a ratio of 461.440 Americas Silver preferred shares for each share of Series E Preferred Stock (the “Preferred Stock Exchange Ratio”) or receive common shares of Americas Silver by converting our preferred shares to our common shares prior to consummation of the Merger.

On August 28, 2018 we completed the exercise of a right of first offer to acquire all of the Newmont USA Limited royalty and other rights on specific lands around our Relief Canyon project.

During the year ended December 31, 2018 we drilled 39 holes, totaling approximately 33,000 feet, at the Relief Canyon Mine. The objective of this drilling program is to expand the mineralized material at the Relief Canyon Mine.

During June 2018, we submitted the 2018 Plan of Operations Modification for the Phase II expansion of the mining and heap leach facilities to the Bureau of Land Management and the Nevada Department of Environmental Protection.

In May 2018 we completed a final positive feasibility study for the Relief Canyon Mine.

On April 23, 2018, we appointed Jeffrey G. Clevenger to our Board of Directors. Mr. Clevenger has over 40 years of experience in the mining industry.

During the first quarter, we commenced preliminary construction activities at the Relief Canyon Mine by hiring a contractor to perform initial ground clearing in preparation for potential construction.

Agreement and Plan of Merger

On September 28, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Americas Silver Corporation (“Americas Silver”) and R Merger Sub, Inc., a wholly-owned subsidiary of Americas Silver (“Merger Sub”). Under the terms of the Merger Agreement, we will merge with and into Merger Sub, with Pershing being the surviving corporation and becoming a wholly-owned subsidiary of Americas Silver (the “Merger”).

In connection with the Merger, our common stockholders will be issued 0.715 Americas Silver common shares for each share of our common stock (the “Common Stock Exchange Ratio”). Holders of our Series E Convertible Preferred Stock (“Series E Preferred Stock”) will be given the option to (a) convert their shares of Series E Preferred Stock into our common shares immediately before the closing and exchange those common shares for Americas Silver common shares at the Common Stock Exchange Ratio, or (b) exchange their Series E Preferred Stock for non-voting preferred stock of Americas Silver at a ratio of 461.440 Americas Silver Preferred Shares for each share of Series E Preferred Stock (the “Preferred Stock Exchange Ratio”).

The Merger Agreement provides that, upon consummation of the Merger, Americas Silver will cause one nominee of Pershing to be appointed to the board of directors of Americas Silver. The Merger required approved by (i) preferred shareholders holding 75% of our preferred shares, voting as a separate class, and (ii) a majority of the voting shares held by the common shareholders and preferred shareholders, voting together as a single class on an as-converted basis. The issuance of the Americas Silver shares in connection with the Merger required approval by a majority of the Americas Silver shares voted at the meeting called for that purpose. On January 9, 2019, both companies held their respective special meetings whereby the Merger was approved by the requisite shareholders of both us and Americas Silver. Completion of the Merger remains subject to satisfaction or waiver of certain customary conditions. On April 1, 2019, the CFIUS completed its review of the Merger and determined that there are no unresolved national security concerns with respect to the transaction.

If the Merger Agreement is terminated because we accept a superior proposal, we will be obligated to pay a termination fee to Americas Silver in the amount of $4,000,000.

Convertible Secured Debenture

Concurrent with the execution of the Merger Agreement, we and Americas Silver entered into a Convertible Secured Debenture (“Debenture”), effective October 1, 2018, that entitles us to borrow up to $4,000,000 from Americas Silver, subject to certain conditions.

The interest rate is 16% per year on the amount drawn, accrued and compounded monthly. The loan will mature on June 1, 2019, or September 1, 2019 if we have exercised an option to extend maturity. As of December 31, 2018 we had drawn $1,977,205 against the Debenture. We paid original issuance cost of $85,000 in connection with this Debenture which is being amortized over the term of the note. We have recorded interest expense related to this Debenture amounting to $47,529 during the year ended December 31, 2018 and corresponding accrued interest of $47,529 as of December 31, 2018.

We intend to use the proceeds from the Debenture to fund our near-term working capital requirements, including permit advancements, ongoing property maintenance and corporate requirements.

If the Merger Agreement is terminated, in most circumstances, the outstanding principal amount, plus any accrued and unpaid interest, will be due and payable in cash within 90 days following the date of termination (or 10 days if the Merger Agreement is terminated by us in order to accept a superior proposal or following a change of the board of directors’ recommendation to stockholders). However, if the Merger Agreement is terminated because (i) Americas Silver fails to obtain the approval of its shareholders, (ii) a law or government order prevents consummation of the Merger, or (iii) Americas Silver breaches the Merger Agreement, we will have the option to repay the borrowed amount in cash or in shares of our common stock.

If repayment will be accomplished by conversion into our common stock, the number of shares issuable will be determined by dividing the amount outstanding under the Debenture by a conversion price equal to the volume-weighted average price of our common stock for the five trading days immediately preceding the date of the election, but never less than $1.18. The issuance of common shares in exchange for amounts outstanding under the Debenture is subject to receipt of prior approval by The NASDAQ Stock Market and the Toronto Stock Exchange.

The Debenture is secured by a lien on substantially all of our assets.

Results of Operations

Years ended December 31, 2018 and 2017

Net Revenues

We are an exploration stage company with no operations, and we generated no revenues for the years ended December 31, 2018 and 2017.

Operating Expenses

Total operating expenses for the year ended December 31, 2018 as compared to the year ended December 31, 2017 were approximately $14.1 million and $12.7 million, respectively. The $1.4 million increase in operating expenses for the year ended December 31, 2018 is comprised of (i) a $2.0 million increase in exploration expenses on our Relief Canyon properties to approximately $3.2 million from $1.2 million in the prior period due to increased direct drilling activities during the current period, (ii) an increase in consulting fees of approximately $0.2 million to approximately $2.6 million from $2.4 million in the prior period related to increased consulting costs related to the completion of our feasibility study, (iii) an increase of approximately $0.7 million in general and administrative expenses to approximately $5.0 million from $4.3 million in the prior period related to increased legal fees and public company related expenses offset by (iv) a decrease of approximately $1.6 million in compensation to approximately $3.2 million from $4.8 million in the prior period as a result of decreased stock-based compensation in connection with restricted stock grants to employees.

Loss from Operations

We reported a loss from operations of $14.1 million and $12.7 million for the years ended December 31, 2018 and 2017, respectively. The increase in operating loss was due primarily to the increase in operating expenses described above.

Other Income (Expenses)

Total other income (expense) was approximately ($139,000) and ($370,000) for the years ended December 31, 2018 and 2017, respectively. The decrease in other income (expense) is primarily attributable to a decrease in interest expense and other financing costs due to the write-off of debt financing costs in the prior period.

Net Loss

As a result of the operating expense and other income (expense) discussed above, we reported a net loss of approximately ($14.2) million for the year ended December 31, 2018 as compared to a net loss of ($13.1) million for the year ended December 31, 2017.

Liquidity and Capital Resources

We reported a net loss of approximately $(14.2) million for the year ended December 31, 2018. We expect to incur significant losses into the foreseeable future and our monthly “burn rate” for the fiscal 2019 is expected to be approximately $0.7 million (including approximately $0.5 million for general and administrative costs (which administrative costs include transactional costs related to the Merger but exclude one-time costs contingently payable upon closing of the Merger) and approximately $0.2 million for exploration, permitting and additional work at the Relief Canyon Mine. These estimates of our liquidity are for the full 12-month period ending December 31, 2019. If the Merger is consummated at any time prior our costs can be expected to materially change based upon the plans of Americas Silver. In addition, and not included in the monthly burn, at or following the closing of the Merger an approximate $2.8 million in aggregate costs for employee severance and compensation agreements and $750,000 minimum success fee to Canaccord, our financial advisor, are due and payable.

We have primarily relied on public and private offerings of our equity securities for our liquidity. If the Merger is not consummated, we would need to repay the principal and interest outstanding under the Debenture in the form of cash or, under certain circumstances, conversion of the debt into our common stock, and would require additional external financing to fund exploration, operations and the advancement of the Relief Canyon Mine into production. We can provide no assurances that we will be able to raise external funding. If the Merger is not consummated, and we are unable to raise external funding to cover the near-term capital needs outlined above, our business will most likely fail. In addition, if the Merger is not consummated and we are unable to raise external funding sufficient to cover our longer-term capital needs in order to further advance the Relief Canyon project, and eventually generate significant revenues from our claims and properties, we will not be able to earn profits or continue operations. We have no production history upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

As part of the Merger, Americas Silver agreed to provide us with a loan of up to $4 million to fund our working capital needs until the close of the Merger. The interest rate is 16% per year on the amount drawn, accrued and compounded monthly. The loan will mature on June 1, 2019, or September 1, 2019 if we have exercised an option to extend maturity. As of December 31, 2018 we had drawn $1,977,205 against the Debenture. We paid original issuance cost of $85,000 in connection with this Debenture which is being amortized over the term of the note.

If the Merger Agreement is terminated, in most circumstances, the outstanding principal amount, plus any accrued and unpaid interest, will be due and payable in cash within 90 days following the date of termination (or 10 days if the Merger Agreement is terminated by us in order to accept a Superior Proposal or following a change of the board of directors’ recommendation to stockholders). However, if the Merger Agreement is terminated because (i) Americas Silver fails to obtain the approval of its shareholders, (ii) a law or government order prevents consummation of the Merger, or (iii) Americas Silver breaches the Merger Agreement, we will have the option to repay the borrowed amount in cash or in shares of our common stock.

The Debenture is secured by a lien on substantially all of our assets.

At December 31, 2018, our cash, cash equivalents and restricted cash totaled approximately $4.7 million. Our cash, cash equivalents and restricted cash decreased during the year ended December 31, 2018 by approximately $11.9 million from our cash, cash equivalents and restricted cash balance at December 31, 2017 of approximately $16.5 million. The decrease in cash, cash equivalents and restricted cash was primarily the result of cash used in operations of approximately $12.5 million that was comprised of costs for our feasibility study, continued permitting and additional work on the Relief Canyon Project, exploration expenditures on our Relief Canyon properties, and general and administrative expenses, including consultant fees, compensation costs, legal fees and public company expenses and cash used in investing activities of approximately $1.3 million that was comprised from the exercise of our right to purchase certain royalty interests owned by Newmont for $1.2 million and the purchase of property plant and equipment for approximately $0.1 million.

At December 31, 2018, we had approximately $1.0 million in cash and cash equivalents and approximately $3.7 million in restricted cash – noncurrent. The amount held as restricted cash – noncurrent consists of collateral under surface management bonds issued on our behalf and is therefore not available for general corporate purposes. Even if we draw down the full amount available under the Debenture of $4 million, we expect to require additional financing to fund our current operations if the Merger is not completed prior to the end of the second fiscal quarter of 2019. There is no assurance that we will be able to obtain additional financing on acceptable terms or at all.

We plan the following expenditures for fiscal year 2019:

$5.7 million on general and administrative expenses, including transactional costs related to the Merger but excluding one-time costs payable contingent upon closing of the Merger, and including employee salaries, public company expenses, consultants, land holding costs and annual insurance premium renewals;

$1.8 million on additional work at the Relief Canyon properties including further metallurgy tests, geographic surveys and continued planning, engineering and design work to advance the Relief Canyon mine into production; and

$0.3 million for the continuation of studies for expansion below the water table and the amended plan of operations modification.

The actual amount we spend for our year ending 2019 may vary significantly from the amounts specified above if we decide to advance the Relief Canyon Mine toward production in 2019. Based on the estimates contained in the feasibility study, we currently expect to incur capital expenditures and working capital expenses of approximately $38 million. We are evaluating various sources of additional financing. No development decision with respect to the Relief Canyon Mine is expected to be made unless and until we are able to solidify our financing plans. Moreover, if the Merger is consummated, the timeline for any development decision with respect to the Relief Canyon Mine will be made by Americas Silver.

Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. The additional funds necessary to fund the development of the Relief Canyon Mine may not be available to us on acceptable terms or at all.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires lessees to recognize right-of-use (“ROU”) assets and a lease liability for the rights and obligations created by most leases on the balance sheet. This update is effective for fiscal years, including interim periods, beginning after December 15, 2018. These changes become effective for our fiscal year beginning January 1, 2019.

We plan to adopt ASU 2016-02 using the modified retrospective transition approach with a cumulative-effect adjustment, which does not require us to adjust the comparative periods presented when transitioning to the new guidance on January 1, 2019. We have also elected to utilize the transition related practical expedients permitted by the new standard. By electing to utilize the practical expedients, we will not be required to reassess whether a contract is or contains a lease, will not need to separate lease and non-lease components for the majority of underlying asset classes, classify leases by operating or capital lease, may use hindsight in determining lease term, and will not reassess its land easements.

We have substantially completed our assessment regarding what the adoption of ASU 2016-02 will have on our consolidated financial statements. Based upon the contracts outstanding at December 31, 2018, the adoption of ASU 2016-02 will result in the recognition of additional ROU assets and lease liabilities relating to operating leases of approximately $122,000. We do not expect a material impact to the consolidated statements of operations or the consolidated statements of cash flows. We will provide additional qualitative and quantitative disclosures related to leasing arrangements beginning in the period of adoption.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” or ASU 2016-18. ASU 2016-18 is intended to clarify how entities present restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash and cash equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. When cash and cash equivalents and restricted cash are presented in more than one line-item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. This reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively. Early adoption was permitted, including adoption in an interim period. We early adopted ASU 2016-18 for the three-month period ended December 31, 2017 and its adoption did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates Step 2 from the goodwill impairment test. When an indication of impairment was identified after performing the first step of the goodwill impairment test, Step 2 required that an entity determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) using the same procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the amendments in ASU No. 2017-04, an entity would perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value. An entity would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. In addition, an entity must consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a SEC filer should adopt the amendments in ASU No. 2017-04 for its annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. We do not believe the guidance will have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation”. The update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9, unless all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The provisions of this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. Our adoption of this guidance on January 1, 2018 did not have a material impact on our consolidated results of operations, financial position and related disclosures.

In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260)”. The amendments in the update change the classification of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Our adoption of this guidance on January 1, 2019 did not have a material impact on our consolidated results of operations, financial position and related disclosures.

In August 2017, the FASB issued ASU 2017-12 “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities”. ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The guidance is effective for us beginning after December 15, 2018, although early adoption is permitted. Our adoption of this guidance on January 1, 2019 did not have a material impact on our consolidated results of operations, financial position and related disclosures.

In June 2018, the FASB issued ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. The guidance is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. Our adoption of this guidance on January 1, 2019 did not have a material impact on our consolidated results of operations, financial position and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We will be evaluating the impact this standard will have on our consolidated 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. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.

Principles of Consolidation

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles and present the financial statements of us and our wholly-owned subsidiaries. In the preparation of our consolidated financial statements, intercompany transactions and balances are eliminated.

Use of Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the useful life of property and equipment, amounts and timing of closure obligations, the assumptions used to calculate fair value of restricted stock units, options and warrants granted, stock-based compensation, beneficial conversion on preferred stock, capitalized mineral rights, asset valuations, timing of the performance criteria of restricted stock units and the fair value of common stock issued.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.

We adopted ASU 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2016-09”), which makes several modifications to Topic 718. Upon adoption of ASU 2016-09, we recognize the effect of forfeitures in compensation cost as they occur, rather than estimating forfeitures as of the award date. Any previously recognized compensation cost will be reversed in the period of forfeiture.

Property and Equipment

Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally from one to twenty-five years.

Mineral Property Acquisition and Exploration Costs

Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred given that we are still in the exploration stage. Once we have identified proven and probable reserves in our investigation of our properties and upon development of a plan for operating a mine, we would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized, using the units-of-production method over proven and probable reserves. When we have capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, we have not established the commercial feasibility of any exploration prospects; therefore, all costs are being expensed.

ASC 930-805 states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights are considered tangible assets under ASC 805. ASC 805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, our direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims and mill sites. If proven and probable reserves are established for the property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over proven and probable reserves. For mineral rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Long-Lived Assets

We review for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets”. An impairment is considered to exist when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its carrying amount.

Asset Retirement Obligations

Asset retirement obligations, consisting primarily of estimated mine reclamation and closure costs at our Relief Canyon property, are recognized in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. Asset retirement obligations are periodically adjusted to reflect changes in the estimated present value resulting from revisions to the estimated timing or amount of reclamation and closure costs. We review and evaluate the asset retirement obligations annually or more frequently at interim periods if deemed necessary.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Contractual Obligations

Not applicable.

ITEM 7A:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8:

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements filed as part of this Item 8 are listed under Part IV, Item 15, “Exhibits, Financial Statement Schedules” and are contained in this annual report on Form 10-K beginning at page F-1.

ITEM 9:

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A:

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Vice President Finance and Controller, the effectiveness of our disclosure controls and procedures as of December 31, 2018.

Based on that evaluation, the Chief Executive Officer and Vice President Finance and Controller have concluded that, as of December 31, 2018, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), were effective and designed to provide reasonable assurance that (i) information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information is accumulated and communicated to management, including the Chief Executive Officer and Vice President Finance and Controller, as appropriate to allow timely decisions regarding required disclosures.

Our management, including the Chief Executive Officer and Vice President Finance and Controller, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of management, including our Chief Executive Officer and Vice President Finance and Controller, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on our assessment, management has concluded that, as of December 31, 2018, our internal control over financial reporting is effective based upon these criteria.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three-months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B:

OTHER INFORMATION

None.

PART III

ITEM 10:

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth information regarding the members of our Board of Directors and our executive officers. All directors hold office for one-year terms until the election and qualification of their successors. Officers are appointed by the Board of Directors and serve at the discretion of the Board of Directors.

Name	Age	Position with the Company
Stephen Alfers	73	Chief Executive Officer and President, Chairman of the Board of Directors
Eric Alexander	52	Vice President Finance and Controller
Timothy Janke	67	Chief Operating Officer
Jeffrey Clevenger	69	Director
Edward Karr	49	Director
Pamela Saxton	66	Director

Stephen Alfers. Mr. Alfers has served as our Chief Executive Officer and Chairman since February 2012 and as our President since August 2012. Mr. Alfers served as the President and Chief of U.S. Operations of Franco-Nevada Corporation from January 2010 to September 2011 and its Vice President (Legal) from December 2007 to December 2009. Mr. Alfers is the founder and, since 2007, the President of Alfers Mining Consulting, which performs consulting services from time to time for mining and exploration companies and investors in these industries, including providing continuing services from time to time for Franco-Nevada Corporation, with Mr. Alfers serving as an officer and director of certain of the U.S. subsidiaries of Franco-Nevada Corporation. Mr. Alfers served as the President and Chief Executive Officer of NewWest Gold Corporation, a publicly traded Canadian corporation listed on the Toronto Stock Exchange, from 2006 to 2007. Mr. Alfers also served on the board of directors of NewWest Gold Corporation from 2005 to 2007. Mr. Alfers served as President and Chief Executive Officer of the NewWest Resources Group from 2001 to 2005 and as President and Chief Executive Officer of NewWest Gold Corporation, a privately-held Delaware Corporation, from 2005 to 2006. Mr. Alfers founded Alfers & Carver LLC, a boutique natural resources law firm, in 1995, and served as its managing partner from 1995 to 2001. Mr. Alfers received a J.D. from the University of Virginia, an M.A. in Monetary Policy and Public Finance from the University of Denver and a B.A. in Economics from the University of Denver. Mr. Alfers was chosen to be a director of the Company based on his extensive mining industry and operational experience, and his mining industry legal expertise. Mr. Alfers is currently the chair of the Technical Committee.

Eric Alexander. Mr. Alexander joined the Company in September 2012 as its Vice President Finance and Controller and was appointed as the Company’s principal financial officer and principal accounting officer in November 2012. Prior to joining the Company, Mr. Alexander was the Corporate Controller for Sunshine Silver Mines Corporation, a privately held mining company with exploration and pre-development properties in Idaho and Mexico, from March 2011 to August 2012. He was a consultant to Hein & Associates LLP from August 2012 to September 2012 and a Manager with Hein & Associates LLP from July 2010 to March 2011. He served from July 2007 to May 2010 as the Corporate Controller for Golden Minerals Company (and its predecessor, Apex Silver Mines Limited), a publicly traded mining company with operations and exploration activities in South America and Mexico. He has over 25 years of corporate, operational and business experience, and 12 years of mining industry experience. In addition to working in the industry, he has also held the position of Senior Manager with the public accounting firm KPMG LLP, focusing on mining and energy clients. Mr. Alexander has a B.S. in Business Administration (concentrations in Accounting and Finance) from the State University of New York at Buffalo and is also a licensed CPA.

Timothy Janke. Mr. Janke joined the Company in August 2014 as its Chief Operating Officer. Since November 2010, Mr. Janke has been the president of his own consulting business, providing mine operating and evaluation services to several mining companies. Beginning in July 2012, he provided consulting services at the Relief Canyon Project, advising the Company on mine start-up plans and related activities. From June 2010 to August 2014, Mr. Janke served as Vice President and Chief Operating Officer of Renaissance Gold, Inc. and its predecessor, Auex Ventures, Inc. He was General Manager-Projects for Goldcorp Inc. and its predecessor Glamis Gold, Inc. from July 2009 to May 2010, Vice President and General Manager of the Marigold Mine from February 2006 to June 2009, and its Manager of Technical Services from September 2004 to January 2006. Mr. Janke has served as a director for Renaissance Gold since August 2011 and as a director for US Gold since April 2016. Mr. Janke has over 40 years of engineering and operational experience in the mining industry. He has a B.S. in Mining Engineering from the Mackay School of Mines.

Jeffrey Clevenger. Mr. Clevenger was appointed director on April 23, 2018. Mr. Clevenger has over 40 years of experience in the mining industry. Since March 2009, he has served as chairman of the board of Golden Minerals Company, also serving as its President from March 2009 to May 2015 and as its Chief Executive Officer from March 2009 to September 2015. Mr. Clevenger served as a director, president and chief executive officer of Apex Silver Mines Limited from October 2004 until March 2009. Mr. Clevenger worked as an independent consultant from 1999 when Cyprus Amax Minerals Company, his previous employer, was sold until he joined Apex Silver in 2004. Mr. Clevenger served as senior vice president and executive vice president of Cyprus Amax Minerals Company from 1993 to 1998 and 1998 to 1999, respectively, and as president of Cyprus Climax Metals Company and its predecessor, Cyprus Copper Company, a large integrated producer of copper and molybdenum with operations in North and South America, from 1993 to 1999. He was senior vice president of Cyprus Copper Company from August 1992 to January 1993. From 1973 to 1992, Mr. Clevenger held various technical, management and executive positions at Phelps Dodge Corporation, including president and general manager of Phelps Dodge Morenci, Inc. He is a member of the American Institute of Mining, Metallurgical and Petroleum Engineers and the Metallurgical Society of America. Mr. Clevenger holds a B.S. in Mining Engineering with Honors from the New Mexico Institute of Mining and Technology and is a graduate of the Advanced International Senior Management Program of Harvard University. Mr. Clevenger was selected to serve as a director due to his experience and expertise in the mining industry, including the operating, management, and executive positions he has held previously at several other mining companies. Mr. Clevenger is a member of the Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee.

Edward Karr. Mr. Karr was appointed to the Board of Directors in June 2015. Mr. Karr is an international entrepreneur and the founder of several investment management and investment banking firms based in Geneva, Switzerland. Since April 2016, he has been President and CEO of U.S. Gold Corp., a junior exploration company. From 2005 to June 2015, Mr. Karr was the Chief Executive Officer of RAMPartners SA, an investment advisory firm based in Geneva, Switzerland. Mr. Karr was also Managing Director of Strategic Asset Management SA and Managing Director of Strategic Swiss Advisors Sàrl, both Swiss asset management companies, from February 2013 to December 2015. Mr. Karr served as a director of Spherix Corporation from November 2012 to December 2014 and he served as a Director of Majesco Entertainment from September 2015 to December 2016. He is currently on the boards of Levon Resources Ltd. and U.S. Gold Corp. (formerly Dataram Corporation), and serves as chairman of the audit committee of Levon Resources Ltd. Mr. Karr previously worked for Prudential Securities in the United States. He has been in the financial services industry for over twenty years. Before his entry into the financial services arena, Mr. Karr was affiliated with the United States Antarctic Program and spent thirteen consecutive months working in Antarctica, receiving the Antarctic Service Medal. Mr. Karr studied at Embry-Riddle Aeronautical University, Lansdowne College in London, England and received a B.S. in Economics/Finance with Honors (magna cum laude) from Southern New Hampshire University. He is an Executive Committee member, past President and current Nominating Committee Chair of the American International Club of Geneva. Mr. Karr was selected to serve as a director due to his experience in capital markets and financial expertise. Mr. Karr is currently a member of the Audit Committee and serves as the chair of the Corporate Governance and Nominating Committee.

Pamela Saxton. Ms. Saxton has served as a director since October 2017. Ms. Saxton is a business executive with over 35 years of experience in domestic and international public company finance roles, primarily in mining, software and oil and gas. Ms. Saxton has held senior executive finance positions at several mining and oil and gas companies, most recently serving as Executive Vice President and Chief Financial Officer of Thompson Creek Metals Company Inc. from August 2008 to October 2016. Prior to 2008, Ms. Saxton was Vice President Finance—U.S. Operations of Franco-Nevada Corporation, Vice President and Chief Financial Officer of New West Gold Corporation, Vice President and Controller of Amax Gold Inc. and Assistant Controller of Cyprus Amax Minerals Inc. Ms. Saxton also was the Vice President and Controller-Payments Division of Western Union/First Data Corporation and served as Vice President of Finance, Corporate Controller and Chief Accounting Officer for J.D. Edwards & Company. Ms. Saxton began her career with Arthur Andersen & Company after receiving her Bachelor of Science in Accounting from the University of Colorado. Since September 1987, she has served as a Trustee and since January 2017 serves as Vice President for the Viola Vestal Coulter Foundation, which provides scholarships to various colleges and universities, with a focus on mining. She is also the Past Chair of the Board for the Colorado Association of Commerce and Industry, a state chamber of commerce. Ms. Saxton was selected to serve as a director due to her extensive mining, financial and governance and compliance expertise. Ms. Saxton serves as the chair of the Audit Committee and the Compensation Committee, and is a member of the Corporate Governance and Nominating Committee.

Family Relationships

There are no family relationships among the executive officers and directors.

Director or Officer Involvement in Certain Legal Proceedings

Our directors and executive officers were not involved in any legal proceedings, as described in Item 401(f) of Regulation S-K, in the past ten years.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our equity securities to file reports of ownership and changes in ownership of our equity securities with the SEC. Based on the information available to us for 2018, we believe that all applicable Section 16(a) filing requirements were met on a timely basis.

Code of Ethics

Our Board of Directors has adopted a Code of Ethics and Business Conduct that applies to all of our directors, officers and employees. Our Code of Ethics and Business Conduct can be viewed on our website at www.pershinggold.com.

Stockholder Nominations

We do not currently have a policy or specified procedures in place pursuant to which security holders may recommend nominees to the Board of Directors. We believe that the Corporate Governance and Nominating Committee and the Board of Directors can appropriately consider and respond to stockholder nominations.

Audit Committee

We have a standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee was formed in June 2015 and met four times during 2018 and acted two times by written consent. Our Audit Committee is currently comprised of Mr. Clevenger, Mr. Karr and Ms. Saxton, with Ms. Saxton serving as the chairperson. Mr. Morrison was the chair of the Audit Committee from June 2015 until his resignation in February 2018.

On February 23, 2018, Mr. Morrison resigned as a member of the Board of Directors and as the chair of the Audit Committee. Following the resignation of Mr. Morrison, the Audit Committee was reduced to two members. As a result, the Company was not compliant with Nasdaq Listing Rule 5605(c)(2), which requires that the Audit Committee consist of at least three members. On February 26, 2018, the Company notified Nasdaq of Mr. Morrison’s resignation and the resulting non-compliance. On March 8, 2018, we received a written notice from Nasdaq confirming the Audit Committee’s non-compliance with Listing Rule 5605(c)(2), and providing a period in which the Company could cure the non-compliance. The Board appointed Mr. Clevenger to the Board and the Audit Committee on April 23, 2018, and the Company notified Nasdaq it had regained compliance with Nasdaq Listing Rule 5605(c)(2) on April 24, 2018.

Our Board of Directors has determined each of the members of the Audit Committee is, and Mr. Morrison was, independent and financially sophisticated, as defined by the Nasdaq listing standards. Our Board of Directors has determined that each of Mr. Karr and Ms. Saxton qualifies as an “Audit Committee Financial Expert” as that term is defined in rules promulgated by the SEC.

The Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities, primarily through overseeing management’s conduct of the Company’s accounting and financial reporting process and systems of internal accounting and financial controls; selecting, retaining and monitoring the independence and performance of the Company’s outside auditors, including overseeing the audits of the Company’s financial statements, approving any non-audit services; and providing an avenue of communication among the outside auditors, management and the Board. The Audit Committee regularly reviews the Company’s financial statements and reports, earnings press releases, financial reporting process, system of internal controls, and compliance with applicable law.

ITEM 11:

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes the compensation through December 31, 2018 of each of our named executive officers.

Name and Principal Position	Year	Salary ($)		Bonus ($)			Option Awards ($)			Stock Awards ($)		All Other Compensation ($)		Total ($)
Stephen Alfers Chief Executive Officer, President and Chairman	2018		425,000		—			—			—		—		425,000
	2017		425,000		50,000	(1)		236,000	(1)		—		—		711,000

Debra Struhsacker Former Senior Vice President (2)	2018		22,500		—			—			—		195,063		217,563
	2017		270,000		25,313	(3)		148,680	(3)		—		—		443,993

Timothy Janke Chief Operating Officer (4)	2018		225,350		—			—			—		—		225,350
	2017		131,363		15,000	(5)		94,400	(5)		—		—		240,763

Eric Alexander Vice President Finance and Controller	2018		200,000		—			—			—		—		200,000
	2017		183,750		23,888	(6)		139,240	(6)		—		—		346,878

(1) Reflects Mr. Alfers’ bonus earned in 2017 but paid in 2018 and consists of (a) $50,000 in cash, and (b) the grant date fair market value of 100,000 stock options when granted on January 29, 2018 and valued at $236,000, calculated in accordance with FASB ASC Topic 718.

(2) Ms. Struhsacker resigned as the Company’s Senior Vice President on January 31, 2018. However, she remains a “named executive officer” as such term is defined in Item 402(m)(2)(iii) of Regulation S-K.

(3) Reflects Ms. Struhsacker’s bonus earned in 2017 but paid in 2018 and consists of (a) $25,313 in cash, and (b) the grant date fair market value of 63,000 stock options when granted on January 29, 2018 and valued at $148,680, calculated in accordance with FASB ASC Topic 718.

(4) Mr. Janke devotes approximately half of his time to serving as Chief Operating Officer.

(5) Reflects Mr. Janke's bonus earned in 2017 but paid in 2018 and consists of (a) $15,000 in cash, and (b) the grant date fair market value of 40,000 stock options when granted on January 29, 2018 and valued at $94,400, calculated in accordance with FASB ASC Topic 718.

(6) Reflects Mr. Alexander’s bonus earned in 2017 but paid in 2018 and consists of (a) $23,888 in cash, and (b) the grant date fair market value of 59,000 stock options when granted on January 29, 2018 and valued at $139,240, calculated in accordance with FASB ASC Topic 718.

Agreements with Named Executive Officers

Stephen Alfers

We entered into an amended and restated employment agreement (the “Alfers Employment Agreement”) with Mr. Alfers on June 28, 2015 that provides that Mr. Alfers will serve as our Chief Executive Officer until December 31, 2018, subject to renewal. Pursuant to the terms of the agreement, Mr. Alfers is entitled to a base salary of $425,000 per year, subject to adjustment by the board of directors of Pershing Gold. Mr. Alfers will also receive an annual bonus if we meet or exceed certain criteria adopted by our board of directors. The annual target bonus amount for Mr. Alfers is equal to 100% of his annualized base salary for that year if target levels of performance for that year are achieved, with greater or lesser amounts paid for performance above and below such target. Mr. Alfers’ bonus amounts are subject to claw-back rights in the event of certain restatements of our financial information for a period of three years.

Upon Mr. Alfers’ termination without “Cause” or upon Mr. Alfers’ resignation for “Good Reason”, in either case where such termination is outside of a “Change in Control Period”, we are required to pay to Mr. Alfers, in addition to any “Accrued Obligations” (in each case, as defined in the Alfers Employment Agreement), an amount equal to two times the sum of (i) Mr. Alfers’ base salary plus (ii) the average of the actual bonus amounts paid to Mr. Alfers’ in the two years prior to termination. Such severance amount is payable in a lump sum.

In addition, upon Mr. Alfers’ termination without Cause within six months prior to or twenty-four months following a Change in Control (as defined in the Alfers Employment Agreement and with such period to be referred to as a “Change in Control Period”) or upon Mr. Alfers’ resignation for Good Reason during a Change in Control Period, we are required to pay to Mr. Alfers, in addition to any Accrued Obligations, an amount equal to two times the sum of (i) Mr. Alfers’ base salary plus (ii) Mr. Alfers’ target bonus for the year of termination equal to Mr. Alfers’ base salary. Such double-trigger severance amount is payable in a lump sum. Additionally, upon such qualifying termination within the Change in Control Period, Mr. Alfers is entitled to accelerated vesting of any unvested equity awards that were granted prior to such Change in Control, however, all Pershing Gold Options held by Mr. Alfers are currently out-of-the-money and Mr. Alfers is, therefore, not expected to be entitled to receive any payment in respect of such accelerated Pershing Gold Options.

The severance benefits described above, other than any Accrued Obligations, are contingent upon Mr. Alfers executing and not revoking a general release of all claims substantially in the form attached to the Alfers Employment Agreement. In addition, in the event that the aggregate payments or distributions payable by us to Mr. Alfers pursuant to the Alfers Employment Agreement or otherwise would constitute “excess parachute payments” under Section 280G of the Code, then such payments and distributions would be either (i) delivered to Mr. Alfers in full, or (ii) delivered to such lesser extent that would result in no portion of the payments or distributions being subject to the limitations of Section 280G of the Internal Revenue Code, whichever results in the receipt by Mr. Alfers, on an after-tax basis, of the greatest amount of benefits.

In addition, the Alfers Employment Agreement contains the following restrictive covenants: (i) a perpetual confidentiality covenant, (ii) a non-competition covenant applicable during employment and for a period of one year thereafter, and (iii) an employee and customer non-solicitation covenant applicable during employment and for a period of one year thereafter.

In connection with the Alfers Employment Agreement, Mr. Alfers was awarded restricted stock units pursuant to a Restricted Stock Unit Grant Agreement dated June 28, 2015 (the “2015 RSU Agreement”). Under the terms of the 2015 RSU Agreement, Mr. Alfers was granted a total of 700,000 restricted stock units. 300,000 restricted stock units are time-based units and are fully vested as of the date hereof.

The remaining 400,000 restricted stock units (the “Performance RSUs”) are subject to vesting upon the attainment of certain performance-based milestones set forth in the 2015 RSU Agreement and, to the extent unvested, will become fully vested upon a Change in Control. For each fully vested Performance RSU, Mr. Alfers will be entitled to receive one share of Pershing Gold Common Stock upon the earlier of December 31, 2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in the 2015 RSU Agreement), all as set forth in the RSU Agreement. In June 2016, 120,000 Performance RSUs vested upon the attainment of certain performance-based milestones and in March 2017, 60,000 additional Performance RSUs vested upon the attainment of certain other performance-based milestones. As of the date hereof, 220,000 Performance RSUs remain unvested and will accelerate and become fully vested upon the consummation of the Merger.

Pershing Gold and Mr. Alfers entered into a Restricted Stock Unit Grant Agreement dated March 21, 2017 (the “Alfers Bonus RSU Agreement”) pursuant to which Mr. Alfers was awarded 50,000 restricted stock units (the “Bonus RSUs”) as a discretionary bonus for his performance in 2016. The Bonus RSUs were fully vested on the date of grant. The Pershing Gold Common Stock underlying the Bonus RSUs will be issued upon the earlier of December 31, 2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in the Alfers Bonus RSU Agreement). Each Bonus RSU entitles Mr. Alfers to receive one share of Pershing Gold Common Stock within 30 days of the aforementioned events.

Debra Struhsacker

We entered into an offer letter with Ms. Struhsacker on September 23, 2013 pursuant to which Ms. Struhsacker was hired to serve as the Company’s Corporate Vice President and was entitled to an annual base salary, subject to adjustment at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors (the “Struhsacker Offer Letter”). In connection with the Struhsacker Offer Letter, we also entered into a severance compensation agreement with Ms. Struhsacker on September 19, 2013 (the “Struhsacker Severance Compensation Agreement”). Upon a Qualifying Termination (as defined in the Struhsacker Severance Compensation Agreement) occurring on or within twelve months following a Change in Control (as defined in the Struhsacker Severance Compensation Agreement), we were required to pay Ms. Struhsacker a lump-sum severance payment equal to one and a half times the sum of (i) Ms. Struhsacker’s base salary, plus (ii) the greater of Ms. Struhsacker’s Annual Bonus Amount or Ms. Struhsacker’s Assumed Bonus Amount (both as defined in the Struhsacker Severance Compensation Agreement).

On August 15, 2016, the Company and Ms. Struhsacker entered into an Extension Severance Compensation Agreement extending the term of the Struhsacker Severance Compensation Agreement to March 18, 2017 and increasing Ms. Struhsacker’s salary to $270,000. On January 11, 2017, the Company and Ms. Struhsacker entered into a Second Extension Severance Compensation Agreement extending the term of the Struhsacker Severance Compensation Agreement to December 31, 2017.

Ms. Struhsacker resigned as an officer of the Company effective January 31, 2018. On January 29, 2018, the Company and Ms. Struhsacker entered into a Consulting Agreement effective February 1, 2018 (the “Struhsacker Consulting Agreement”). Pursuant to the Struhsacker Consulting Agreement, Ms. Struhsacker will be paid a retainer fee of $15,000 per month for 60 hours of consulting services per month relating to the Company’s Relief Canyon Mine project and other exploration and mining projects. In addition, Ms. Struhsacker will be paid an hourly rate of $250 per hour for professional time required in excess of 60 hours per month. Ms. Struhsacker will be paid performance bonuses of up to an aggregate of $300,000 in cash and stock options upon the achievement of certain performance milestones relating to Phase II of the Company’s Relief Canyon Mine project and government relations activities.

Eric Alexander

We entered into a revised offer letter with Mr. Alexander on November 21, 2012, amended on February 8, 2013, pursuant to which Mr. Alexander joined the Company as our Vice President Finance and Controller and is entitled to an annual base salary of $175,000, subject to adjustments at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors (the “Alexander Offer Letter”). In addition, in connection with his appointment as the Company’s principal financial officer and principal accounting officer, the Company granted Mr. Alexander 11,112 shares of restricted stock, vesting over three years. The amendment deferred vesting of certain of the restricted shares, of which 3,704 vested in equal tranches on March 14, 2014 and November 30, 2014, and a final tranche of 3,704 shares vested on November 30, 2015, subject to acceleration under certain events, including upon a Change in Control as defined in the Company’s 2012 Equity Incentive Plan.

In connection with the Alexander Offer Letter, we also entered into a severance compensation agreement with Mr. Alexander on November 21, 2012 that was amended on November 19, 2015 (as amended, the “Alexander Severance Compensation Agreement”). Pursuant to the Alexander Severance Compensation Agreement, Mr. Alexander will be entitled to receive certain benefits if he incurs a separation from service (as defined in the Alexander Severance Compensation Agreement) during the term of the agreement which is initiated by the Company for any reason other than Cause, death, or Disability (as such terms are defined in the Alexander Severance Compensation Agreement) or is initiated by Mr. Alexander for Good Reason (as defined in the Alexander Severance Compensation Agreement). These benefits depend on whether the separation occurs prior to or after a Change in Control (as defined in the Alexander Severance Compensation Agreement). If the separation occurs prior to a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment equal to Mr. Alexander’s base salary plus the average of the annual cash bonuses paid to Mr. Alexander in the two years prior to separation. If the separation occurs within 12 months following a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment equal to (x) 1.125 times (y) the sum of (a) Mr. Alexander’s base salary plus (b) the greater of (i) the average annual cash bonus paid to Mr. Alexander in the two years prior to separation or (ii) the target bonus amount established for Mr. Alexander in the fiscal year in which the separation occurs or, if none, an amount equal to 80% of Mr. Alexander’s base salary. On January 11, 2017, the Company and Mr. Alexander entered into a Third Amended Severance Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to December 31, 2017. On December 21, 2017, the Company and Mr. Alexander entered into a Fourth Amended Severance Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to December 31, 2018. On September 28, 2018, the Company and Mr. Alexander entered into an Amendment to Fourth Amended Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to March 31, 2018. On March 1, 2019, the Company and Mr. Alexander entered into a Second Amendment to Fourth Amended Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to June 1, 2019.

Timothy Janke

On January 11, 2018, we entered into an Offer of Employment with Timothy Janke dated January 10, 2018 and effective January 16, 2018 (the "Offer Letter"). The Offer Letter amended and superseded Mr. Janke’s prior Offer of Employment dated August 27, 2014, as amended on January 11, 2017. Pursuant to the Offer Letter, Mr. Janke will devote approximately 1,200 hours per year as the Company's Chief Operating Officer and will be paid an annual salary of $195,000. Mr. Janke will be paid at an hourly rate of $162.50 for work in excess of 100 hours per month. In addition, Mr. Janke is entitled to participate in the Company's bonus incentive plans with a target bonus of 50% of Mr. Janke's base salary. On September 28, 2018, the Company and Mr. Janke entered into an Amendment to Officer Letter extending the term of the severance and change in control provisions of the Offer Letter to March 31, 2019. On March 1, 2019, the Company and Mr. Janke entered into a Second Amendment to Offer of Employment further extending the term of severance and change of control provisions in the Offer Letter to June 1, 2019.

Indemnification Agreements

The Company has entered into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law. The indemnification agreements also provide for the advancement of expenses (including attorneys’ fees) incurred by the indemnitee in connection with any action, suit, alternative dispute resolution mechanism or proceeding (subject to the terms and conditions set forth therein). The indemnification agreements contain certain exclusions, including proceedings initiated by the indemnitee unless such advancement is specifically approved by a majority of our disinterested directors. The Company expects that it will enter into similar indemnification agreements with any new directors and executive officers.

Outstanding Equity Awards at Fiscal Year-End

The following table provides information on the holdings of equity awards of our named executive officers at December 31, 2018. This table includes unexercised and unvested options and equity awards. Vesting schedules are subject to acceleration or forfeiture in certain circumstances, including a change of control.

	Option awards									Stock awards
Name	Number of securities underlying unexercised options (#) Exercisable		Number of securities underlying unexercised options (#) Unexercisable		Equity incentive plan awards: number of securities underlying unexercised unearned options (#)		Option exercise price ($)		Option expiration date	Number of shares or units of stock that have not vested (#)		Market value of shares or units of stock that have not vested ($)		Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)			Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) ⁽¹⁾
Stephen Alfers		555,556		—		—	$	8.82	2/9/22		—		—		220,000	⁽²⁾	$	233,200
		277,778		—		—	$	6.12	6/18/22		—		—		—			—
		34,000		66,000		—	$	2.80	1/28/28		—		—		—			—

Debra Struhsacker		22,223		—		—	$	8.10	3/6/22						—			—
		22,223		—		—	$	6.12	6/18/22		—		—		—			—
		21,420		41,580		—		2.80	1/28/28		—		—		—			—

Eric Alexander		20,060		35,940		—		2.80	1/28/28		—		—		—			—

Timothy Janke		13,600		26,400		—	$	2.80	1/28/28		—		—		—			—

(1) The market value of stock awards is calculated at $1.06 per share, the closing price of our common stock on December 31, 2018.

(2) Includes 220,000 restricted stock units that vest upon the attainment of certain performance-based milestones.

Director Compensation

Our directors who are also our employees receive no fees for board service. Mr. Alfers is the only director who is also an employee. The compensation for all non-employee directors includes a $25,000 annual cash retainer and a $1,000 cash fee for attendance at each Board of Directors meeting. Directors receive a $1,000 cash fee for attendance at all committee meetings, and the chairs of the Technical, Audit, Compensation and Corporate Governance and Nominating committees receive annual cash retainers of $15,000, $15,000, $10,000 and $7,500 respectively. Non-employee directors on the Technical Committee receive a fee of $150 per hour up to a maximum of $1,000 per day for Technical Committee service that occurs other than at a meeting of the Technical Committee. As an employee director, Mr. Alfers will not receive an annual cash retainer or hourly fees for his role as chairman of the Technical Committee. Directors may elect to receive restricted stock units in lieu of cash. Non-employee directors are also eligible to receive annual grants of restricted stock units in such amounts and with such vesting provisions as are determined annually by the Compensation Committee and the Board of Directors. These equity grants related to 2017 service were granted in January 2018. For each vested restricted stock unit, the non-employee director is entitled to receive one unrestricted share of common stock upon termination of the director’s service on our Board of Directors. Directors eligible to receive other equity awards, including stock options, under our equity incentive plans, as determined from time to time by the Board of Directors.

The following table sets forth compensation paid to our non-employee directors in 2018.

Name	Fees Earned or Paid in Cash ($)			Stock Awards ($)			Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Barry Honig	$	22,667	⁽¹⁾	$	—		$	—	$	—	$	—	$	—	$	22,667
Edward Karr	$	43,000	⁽²⁾	$	—		$	—	$	—	$	—	$	—	$	43,000
Alex Morrison	$	11,584	⁽³⁾	$	—		$	—	$	—	$	—	$	—	$	11,584
Pamela Saxton	$	57,167	⁽⁴⁾	$	—		$	—	$	—	$	—	$	—	$	57,167
Jeff Clevenger	$	27,014	⁽⁵⁾	$	25,373	⁽⁶⁾	$	—	$	—	$	—	$	—	$	52,387

(1) Amount represents Mr. Honig’s $16,667 annual retainer for service on the Board of Directors, as pro-rated for the year until his resignation from the Board of Directors, and $6,000 for attendance at six Board of Director and committee meetings. In satisfaction of $16,500 of these payments, the Company issued an aggregate of 8,475 restricted stock units (the “Honig Retainer RSUs”) on April 26, 2018 and June 29, 2018 calculated based on (x) the dollar amount of the director fees earned for the relevant fiscal quarter, divided by (y) the fair market value of one share of the Company’s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest whole number. The Honig Retainer RSUs were granted as follows: (a) 4,513 units for director services rendered between January 1, 2018 and March 31, 2018 and (b) 3,962 units for director services rendered between April 1, 2018 and June 30, 2018.

(2) Amount represents Mr. Karr’s $25,000 annual retainer for service on the Board of Directors, $13,000 for attendance at thirteen Board of Director and committee meetings and $5,000 retainer as chair of the Corporate Governance and Nominating Committee. In satisfaction of $17,500 of these payments, the Company issued an aggregate of 9,022 fully vested restricted stock units (the “Karr Retainer RSUs”) on April 26, 2018 and June 29, 2018 calculated based on (x) the dollar amount of the director fees earned for the relevant fiscal quarter, divided by (y) the fair market value of one share of the Company’s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest whole number. The Karr Retainer RSUs were granted as follows: (a) 4,513 units for director services rendered between January 1, 2018 and March 31, 2018 and (b) 4,509 units for director services rendered between April 1, 2018 and June 30, 2018.

(3) Amount represents Mr. Morrison’s $4,167 annual retainer for service on the Board of Directors, as pro-rated for the year until his resignation from the Board of Directors, $2,500 retainer as the chair of the Audit Committee, $1,667 retainer as chair of the Compensation Committee, $1,250 retainer as chair of the Corporate Governance and Nominating Committee, and $2,000 for attendance at two Board of Director and committee meetings.

(4) Amount represents Ms. Saxton’s $25,000 annual retainer for service on the Board of Directors in 2018, $12,500 retainer as chair of the Audit Committee, $6,667 retainer as chair of the Compensation Committee Charter, and $13,000 for attendance at 13 Board of Director and committee meetings.

(5) Amount represents Mr. Clevenger’s $17,014 annual retainer, as pro-rated for the portion of the year he served as director, and $10,000 for attendance at 10 Board of Director and committee meetings.

(6) Amount represents the grant date fair market value of 12,377 restricted stock units when granted to Mr. Clevenger on April 29, 2018, calculated in accordance with FASB ASC Topic 718.

ITEM 12:

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial ownership of our voting securities as of April 1, 2019 by:

each person known by us to beneficially own more than 5.0% of any class of our voting securities;

each of our directors;

each of our named executive officers; and

all of our directors and executive officers as a group.

All information is taken from or based upon ownership filings made by such persons with the SEC or upon information provided by such persons to us. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned. Percentage computations are based on 33,686,921 shares of our common stock outstanding as of April 1, 2019.

	Common Stock ⁽¹⁾
Name of Beneficial Owner ⁽²⁾	Shares Beneficially Owned			Percent of Class
5% Owners
Barry Honig		13,665,660	⁽³⁾		37.1	%
Donald Smith Value Fund, L.P. ⁽⁴⁾		3,257,930	⁽⁴⁾		9.7	%
Ruffer LLP		1,960,329	⁽⁵⁾		5.8	%

Named Executive Officers and Directors
Stephen Alfers		1,639,870	⁽⁶⁾		4.7	%
Timothy Janke		89,436	⁽⁷⁾		*	%
Debra Struhsacker		122,789	⁽⁸⁾		*	%
Eric Alexander		93,869	⁽⁹⁾		*	%
Jeffrey Clevenger		4,126	⁽¹⁰⁾		*	%
Edward Karr		248,988	⁽¹¹⁾		*	%
Pamela Saxton		12,873	⁽¹²⁾		*	%

Executive Officers and Directors as a Group (seven persons)		2,211,951			6.4	%

* Less than one percent (1.0%).

(1)

Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock includes for each person or entity shares issuable on the exercise of all options and warrants and the conversion of other convertible securities beneficially owned by such person or entity that are currently exercisable or can, at the option of the holder, become exercisable or convertible within 60 days following April 1, 2019. Such shares, however, are not included for the purpose of computing the percentage ownership of any other person.

(2)

The address of these persons, unless otherwise noted, is c/o Pershing Gold Corporation, 1658 Cole Blvd., Bldg. 6, Suite 210, Lakewood, CO 80401.

(3)

Total of 13,665,660 shares includes:

(i)

(a) 2,845,890 shares held directly by Mr. Honig; (b) 432,077 shares held by Mr. Honig and his spouse, Renee Honig, as tenants by the entirety, (c) 130,892 shares held by GRQ Consultants, Inc. with Mr. Honig as President and holding voting and dispositive power; (d) 5,269,167 shares held by GRQ Consultants, Inc. 401K Plan for which Mr. Honig is Trustee and holds voting and dispositive power; (e) 1,767,575 shares held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig for which Mr. Honig is Trustee and holds voting and dispositive power; and (f) 89,147 shares held by GRQ Consultants, Inc. Defined Benefit Plan for which Mr. Honig is President and holds voting and dispositive power.

(ii)

396,039 warrants held by GRQ Consultants, Inc. 401K Plan for which Mr. Honig is Trustee and holds voting and dispositive power.

(iii)

7,735 Series E Preferred stock shares, which are convertible into 2,734,873 shares of Common Stock, comprised of: (a) 854 shares of Series E (301,950 shares of Common Stock issuable upon conversion) held directly by Mr. Honig; (b) 4,230 shares of Series E (1,495,606 shares of Common Stock issuable upon conversion) held by GRQ Consultants, Inc. 401K Plan for which Mr. Honig is Trustee and holds voting and dispositive power; (c) 2,070 shares of Series E (731,892 shares of Common Stock issuable upon conversion) held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig for which Mr. Honig is Trustee and holds voting and dispositive power; and (d) 581 shares of Series E (205,425 shares of Common Stock issuable upon conversion) held by GRQ Consultants, Inc. Defined Benefit Plan for which Mr. Honig is Trustee and holds voting and dispositive power. Each share of Series E Preferred Stock is convertible into shares of the Company's Common Stock at a conversion rate of approximately 353.571 shares of Common Stock for each share of Series E Preferred.

(iv)

Mr. Honig is the trustee of GRQ 401K, GRQ Roth 401K and GRQ Defined and President of GRQ Consultants, and, in such capacities, has voting and dispositive power over the securities held by GRQ 401K, GRQ Roth 401K, GRQ Defined and GRQ Consultants.

(4)

The address of Donald Smith Value Fund, L.P. is 152 West 57^th Street, 22^nd Floor, New York, NY 10019.

(5)

The address of Ruffer LLP is 80 Victoria Street, London, SW1E 5JL, United Kingdom.

(6)

Includes: (i) 737,178 shares of Common Stock that are fully vested. Reflects a sale of 207,271 shares of Common Stock on December 27, 2013 to satisfy tax liabilities in connection with the vesting of restricted Common Stock; (ii) 867,334 shares of Common Stock issuable upon exercise of outstanding stock options, which are all vested; and (iii) 100 shares of Series E Preferred Stock. Each share of Series E Preferred Stock is convertible into shares of the Company's Common Stock at a conversion rate of approximately 353.571 shares of Common Stock for each share of Series E Preferred Stock.

Excludes (i) 66,000 shares of Common Stock issuable upon exercise of outstanding stock options, which are not vested; (ii) 300,000 units which vested and are issuable due to continuous employment through December 31, 2018; (iii) 400,000 units which vest upon the attainment of certain performance goals, of which 180,000 are vested and issuable; and (iv) 50,000 units granted in March 2017 which vested on the date of grant and are issuable. Mr. Alfers has no right to vote the shares of common stock underlying the units or options until such shares are issued.

(7)

Includes: (i) 13,600 stock options granted on January 29, 2018 which vested on January 29, 2019; (ii) 42,500 shares of unrestricted stock granted on December 11, 2014; (iii) 16,667 shares of unrestricted stock granted on February 12, 2013; and (iv) 16,667 shares of unrestricted stock granted on December 16, 2013.

Excludes: (i) 26,400 stock options granted on January 29, 2018; 13,200 options vest on January 29, 2020 and 13,200 options vest on January 29, 2021; (ii) 16,002 restricted stock units granted on February 3, 2017, all of which have vested; and (iii) 9,250 restricted stock units granted on December 23, 2015, all of which have vested. Mr. Janke has no right to vote the shares of common stock underlying the units or options until such shares are issued.

(8)

Includes: (i) 56,923 shares of Common Stock that are fully vested; (ii) reflects the return of 5,025 shares of Common Stock to the Company’s treasury to satisfy tax withholding liabilities in connection with the vesting of restricted Common Stock; (iii) 65,866 shares of Common Stock issuable upon exercise of outstanding stock options, which are 100% vested.

Excludes: (i) 41,580 shares of Common Stock issuable upon exercise of outstanding stock options which are not vested; (ii) 16,000 restricted stock units granted on December 23, 2015; 5,334 units vested on December 23, 2015, 5,333 units vested on December 23, 2016, and 5,333 units vested on December 23, 2017; and (iii) 21,900 restricted stock units granted on February 3, 2017; 10,950 units vested February 3, 2017 and 10,950 units vested on February 3, 2018. Ms. Struhsacker has no right to vote the shares of common stock underlying the units or options until such shares are issued.

(9)

Includes: (i) 73,809 shares of Common Stock that are fully vested and (ii) 20,060 shares of Common Stock issuable upon exercise of outstanding stock options, which are 100% vested. Reflects the return of 8,971 shares of Common Stock to the Company’s treasury to satisfy tax withholding liabilities in connection with the vesting of restricted Common Stock.

Excludes: (a) 6,750 restricted stock units granted on December 23, 2015; 2,250 units vested on December 23, 2015, 2,250 units vested on December 23, 2016, and 2,250 units vested on December 23, 2017; (b) 16,653 restricted stock units granted on February 3, 2017; 8,326 units vested on February 3, 2017 and 8,327 units vested on February 3, 2018, and (c) 59,000 shares of Common Stock issuable upon exercise of outstanding stock options which are not vested. Mr. Alexander has no right to vote the shares of common stock underlying the units or options until such shares are issued.

(10)

Includes: 4,126 restricted stock units granted on April 29, 2018 which vest on April 29, 2019. These units are deemed to be beneficially owned by Mr. Clevenger and are issuable upon Mr. Clevenger’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances).

Excludes: 8,251 restricted stock units granted on April 29, 2018; 4,126 units vest on April 29, 2020, and 4,125 units vest on April 29, 2021. These units are not deemed to be beneficially owned by Mr. Clevenger and are issuable upon Mr. Clevenger’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Mr. Clevenger has no right to vote the shares of common stock underlying the units until such shares are issued

(11)

Includes: (i) 3,704 vested restricted stock units granted on June 9, 2015; 1,852 units vested on June 9, 2016, 1,852 units vested on June 9, 2017, and 1,852 units vested on June 9, 2018; (ii) 12,500 vested restricted stock units granted on December 12, 2015; all units vested on the date of grant; (iii) 5,000 vested restricted stock units granted on February 3, 2017, which units vested on February 3, 2017; (iv) 12,460 vested restricted stock units granted April 28, 2017, all of which vested on the date of grant; (v) 3,316 vested restricted stock units granted June 30, 2017, all of which units vested on the date of grant; (vi) 2,797 vested restricted stock units granted September 29, 2017, all of which units vested on the date of grant; (vii) 3,021 vested restricted stock units granted December 29, 2017, all of which units vested on the date of grant; (viii) 5,000 vested restricted stock units granted on February 3, 2017, which units vested on February 3, 2018; and (ix) 5,000 restricted stock units granted January 29, 2018, all of which units vested on the date of grant. These units are deemed to be beneficially owned by Mr. Karr and are issuable upon Mr. Karr’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances).

(12)

Includes: (a) 10,000 vested restricted stock units granted January 29, 2018, all of which units vested on the date of grant, and (b) 2,873 restricted stock units granted October 30, 2017 that vested October 30, 2018. These units are deemed to be beneficially owned by Ms. Saxton and are issuable upon Ms. Saxton’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances).

Excludes: 5,748 unvested restricted stock units granted on October 30, 2017; 2,874 units vest on October 30, 2019 and 2,874 units vest on October 30, 2020. These units are not deemed to be beneficially owned by Ms. Saxton and are issuable upon Ms. Saxton’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Ms. Saxton has no right to vote the shares of common stock underlying the units until such shares are issued.

Equity Compensation Plan Information

The following table summarizes information related to our equity compensation plans under which our equity securities are authorized for issuance as of December 31, 2018.

	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 under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		1,736,132	⁽¹⁾	$	7.11		3,131,845	⁽²⁾
Equity compensation plans not approved by security holders		214,089		$	6.09		—
Total		1,950,221		$	7.01		3,131,845	⁽²⁾

(1) Includes 983,549 restricted stock units. These shares have been excluded from the weighted average exercise price calculation.

(2) Represents 58,334 shares of common stock remaining available for issuance under the 2010 Plan, 726,512 shares of common stock remaining available for issuance under the 2012 Plan, and 2,346,999 shares of common stock remaining available for issuance under the 2013 Plan.

Our Board of Directors and stockholders have adopted three equity incentive plans: (i) the 2010 Equity Incentive Plan, adopted September 29, 2010 (the “2010 Plan”), pursuant to which 155,557 shares of our common stock were reserved for issuance as awards, and as of December 31, 2017, 58,334 shares remained available for issuance prior to the termination of the 2010 Plan on April 29, 2018; (ii) the 2012 Equity Incentive Plan, adopted February 9, 2012 (the “2012 Plan”), pursuant to which 2,222,223 shares of our common stock were reserved for issuance as awards, and as of December 31, 2017, 726,512 shares remained available for issuance prior to the termination of the 2012 Plan on April 29, 2018; and (iii) the 2013 Equity Incentive Plan, adopted February 12, 2013 (the “2013 Plan”), pursuant to which 4,575,000 shares of our common stock were reserved for issuance as awards. As of December 31, 2017, 2,346,999 shares of common stock remained available for issuance under the 2013 Plan after the amendments adopted by the Board of Directors on April 29, 2018.

The Company issued 19,446 options to consultants in 2012 and 2013 that were not issued under a company plan and were not approved by shareholders. In addition, the Company granted 354,651 shares of restricted common stock and options to acquire 296,264 shares of common stock pursuant to individual equity compensation plans from June 18, 2012 to November 30, 2012. The individual equity compensation plans have not been approved by the Company’s stockholders. The material terms of the individual equity compensation plans are consistent with the terms of the 2010 Plan and 2012 Plan. No securities remain available for issuance under the individual equity compensation plans.

The purpose of the 2010 Plan, the 2012 Plan and the individual equity incentive plans is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. The purpose of the 2013 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.

The equity incentive plans provide for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to our employees, officers, directors and consultants. The equity incentive plans are administered by our Board of Directors.

ITEM 13:

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Review of Related Person Transactions

Our Audit Committee is responsible for assisting the Board of Directors with the review and approval of transactions with related parties. We annually request each of our directors and executive officers complete a directors’ or officers’ questionnaire, respectively, that elicits information about related party transactions. The Audit Committee and legal counsel annually review all transactions and relationships disclosed in the directors’ and officers’ questionnaires, and the Board of Directors makes a formal determination regarding each director’s independence. If a transaction were to present a conflict of interest, the Board of Directors would determine the appropriate response.

Related Person Transactions

We have entered into agreements and arrangements with our executive officers and directors that are more fully described above under “Executive Compensation — Agreements with Named Executive Officers”, “Executive Compensation — Indemnification Agreements”, and “Director Compensation”.

Transactions or Relationships with or involving Mr. Honig

In December 2017, we sold to Barry Honig, one of our former directors, 990,099 units of the Company’s securities for a purchase price of $3.03 per unit, or $3,000,000 in the aggregate, as part of a private placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase 0.4 of a share of the Company’s common stock. The sale was completed on equivalent terms to other investors purchasing in the private placement, except that the unit price for all other investors in the private placement was $2.80. The terms of Mr. Honig’s participation in the private placement were reviewed and approved by the Audit Committee.

Transactions or Relationships with or involving Jonathan Honig

In December 2017, we sold to Jonathan Honig 535,714 units of the Company’s securities for a purchase price of $2.80 per unit, or $1,500,000 in the aggregate, as part of a private placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase 0.4 of a share of the Company’s common stock. The sale was completed on equivalent terms to other investors purchasing in the private placement except for Barry Honig, as discussed above. The terms of Jonathan Honig’s participation in the private placement were reviewed and approved by the Audit Committee. Jonathan Honig is a sibling of Barry Honig.

Board Independence

We currently have four directors serving on our Board of Directors: Messrs. Alfers, Clevenger, and Karr, and Ms. Saxton. Mr. Honig served on the Board of Directors until his resignation on August 29, 2018. Mr. Alexander Morrison served on our Board until his resignation in February 2018. We have determined Messrs. Clevenger, Karr, and Ms. Saxton are, and both Messrs. Honig and Morrison were, independent in accordance with the definition of independence set forth in the Nasdaq listing rules. Each director who is a member of a committee subject to independence standards under the Nasdaq listing rules is independent under such standards. In reaching these determinations, the Board of Directors considered payments for consulting services made to Mr. Karr prior to his appointment to the Board of Directors, a grant of 12,500 restricted stock units to Mr. Karr in December 2015, payments for consulting services made to Mr. Morrison prior to the formation of the Audit Committee and the Company’s uplisting to Nasdaq, fees paid to Mr. Morrison for his service on the Technical Committee, Mr. Honig’s status as a significant stockholder, committee memberships by the Company’s employees on the boards of other companies, and Mr. Karr’s position and Mr. Honig’s former position on the board of directors of Levon Resources, a former significant stockholder of the Company.

ITEM 14:

PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets out the aggregate fees billed by KBL, LLP for the fiscal years ended December 31, 2018 and 2017 for the categories of fees described.

	Fiscal Year Ended December 31,
	2018		2017
Audit Fees ⁽¹⁾	$	93,000	$	82,659
Audit-Related Fees ⁽²⁾		10,400		11,500
Tax Fees		—		—
All Other Fees		—		—
Total Fees	$	103,400	$	94,150

(1) Audit fees include fees for services rendered for the audit of our annual financial statements and reviews of our quarterly financial statements.

(2) Audit-related fees include fees related to the review of the Company’s prospectus supplements and other registration statements

The Audit Committee charter includes certain policies and procedures regarding the pre-approval of audit and non-audit services performed by an outside accountant. The Audit Committee is required to pre-approve all engagement letters and fees for all auditing services (including providing comfort letters in connection with securities underwritings) and non-audit services performed by the outside auditors, subject to any exception under Section 10A of the Exchange Act and any rules promulgated thereunder. Pre-approval authority may be delegated to a committee member or a subcommittee, and any such member or subcommittee must report any decisions to the full committee at its next scheduled meeting. All of the fees and services provided by KBL subsequent to the formation of the Audit Committee in June 2015 were approved by the Audit Committee pursuant to its pre-approval policy as provided in the Audit Committee charter.

PART IV

ITEM 15:

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

Documents filed as part of this annual report on Form 10-K or incorporated by reference:

(1)

Our consolidated financial statements are listed on the “Index to Consolidated Financial Statements” on Page F-1 to this report.

(2)

Financial Statement Schedules (omitted because they are either not required, are not applicable, or the required information is disclosed in the notes to the financial statements or related notes).

(3)

The following exhibits are filed with this annual report on Form 10-K or incorporated by reference.

EXHIBITS

Exhibit No.		Description
1.1		Underwriting Agreement, by and among Pershing Gold Corporation and the underwrites named therein, for whom Canaccord Genuity Corp., BMO Nesbitt Burns Inc. and Cantor Fitzgerald Canada Corporation are acting as representatives, dated as of December 11, 2017 (Incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2017)
2.1		Share Exchange Agreement dated as of September 29, 2010, by and among The Empire Sports & Entertainment Holdings Co., The Empire Sports & Entertainment, Co. and the shareholders of The Empire Sports & Entertainment Co. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010)
2.2		Agreement and Plan of Merger dated September 28, 2018 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2018)
3.1		Amended and Restated Articles of Incorporation, as amended by certificates of amendment dated May 16, 2011, February 27, 2012, December 11, 2014 and June 17, 2015 (Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 22, 2016)
3.2		Certificate of Designation for Series E Convertible Preferred Stock, as amended on September 28, 2018 (Incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 2, 2018).
3.3		Certificate of Amendment to the Amended and Restated Articles of Incorporation of Pershing Gold Corporation, as filed with the Nevada Secretary of State on June 17, 2015 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 22, 2015)
3.4		Second Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2017)
4.1		Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015)
4.2		Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015)
4.3		Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
4.4		Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
4.5		Warrant, dated March 28, 2016 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016)
4.6		Form of Warrant (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2017)
4.7		Form of Private Placement Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2017)
4.8		Convertible Secured Debenture dated October 1, 2018 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2018)
10.1		The Empire Sports & Entertainment Holdings Co. 2010 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) +
10.2		Form of 2010 Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) +
10.3		Form of 2010 Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) +
10.4		Indemnification Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 13, 2012)
10.5		2012 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 13, 2012) +
10.6		Consulting Agreement with Barry Honig (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 11, 2012) +

10.7		Revised Offer Letter, dated November 21, 2012, between the Company and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012) +
10.8		Severance Compensation Agreement, dated November 21, 2012, between the Company and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012) +
10.9		Form of the 2012 Equity Incentive Plan Restricted Stock Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 15, 2013) +
10.10		Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 19, 2013) +
10.11		Pershing Gold Corporation 2013 Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 19, 2013) +
10.12		Form of 2012 Equity Incentive Plan Amended and Restated Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
10.13		Form of 2012 Equity Incentive Plan Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
10.14		Form of 2012 Equity Incentive Plan Amended and Restated Restricted Stock Agreement (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
10.15		Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
10.16		Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2013)
10.17		Registration Rights Agreement, dated July 2, 2014 and July 18, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 18, 2014)
10.18		Registration Rights Agreement, dated July 30, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 30, 2014)
10.19		Registration Rights Agreement, dated October 15, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 21, 2014)
10.20		Asset Purchase Agreement dated effective January 13, 2015 among Newmont USA Limited, Pershing Gold Corporation and Gold Acquisition Corporation (Incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2015)
10.21		Mining Lease dated January 15, 2015, between New Nevada Resources, LLC and New Nevada Lands, LLC, as lessor, and Gold Acquisition Corp., as lessee (Incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2015)
10.22		Third Amendment to Restricted Stock Agreement, dated February 5, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) +
10.23		Third Amendment to Amended and Restated Restricted Stock Agreement, dated February 5, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) +
10.24		Form of Subscription Agreement among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 5, 2015)
10.25		Form of Registration Rights Agreement among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 5, 2015)
10.26		Amended and Restated Executive Employment Agreement, dated June 28, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 29, 2015) +

10.27		Restricted Stock Unit Grant Agreement, dated June 28, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 29, 2015) +
10.28		Form of the 2013 Equity Incentive Plan Restricted Stock Grant Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
10.29		Form of 2013 Equity Incentive Plan Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
10.30		Severance Compensation Agreement, dated September 19, 2013, between the Company and Debra Struhsacker (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
10.31		Amended Severance Compensation Agreement, dated November 19, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 24, 2015) +
10.32		First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.33		First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.34		Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.35		First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.36		First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.37		Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.38		First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.39		First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.40		Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
10.41		Form of Registration Rights Agreement, dated February 4, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.57 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2016)
10.42		Form of Subscription Agreement, dated February 4, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.58 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2016)
10.43		Form of Subscription Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
10.44		Form of Unit Purchase Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)

10.45		Form of Registration Rights Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
10.46		Form of Subscription Agreement, dated March 24, 2016 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016)
10.47		Registration Rights Agreement, dated March 28, 2016 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016)
10.48		Extension Severance Compensation Agreement, dated August 15, 2016, between Pershing Gold Corporation and Debra Struhsacker (“Amended Severance Agreement”) (Incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) +
10.49		Second Amended Severance Compensation Agreement, dated September 15, 2016, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 21, 2016) +
10.50		Amendment No. 1 to the Pershing Gold Corporation 2013 Equity Incentive Plan, dated October 7, 2016 (Incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) +
10.51		Third Amended Severance Compensation Agreement, dated January 11, 2017, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) +
10.52		Amendment to Offer of Employment, dated January 11, 2017, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) +
10.53		Second Extension Severance Compensation Agreement, dated January 11, 2017, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) +
10.54		Restricted Stock Unit Grant Agreement, dated March 21, 2017, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2017) +
10.55		Form of Subscription Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2017)
10.56		Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2017)
10.57		Fourth Amended Severance Compensation Agreement, dated December 21, 2017, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 28, 2017) +
10.58		Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.58 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2018) +
10.59		Offer Letter, dated January 10, 2018, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2018) +
10.60		Consulting Agreement, dated as of January 29, 2018, between the Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 1, 2018) +
10.61		Amended and Restated 2013 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2018) +
10.62		Form of Director and Officer Support Agreement dated September 28, 2018 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2018)
10.63		Amendment to Fourth Amended Compensation Agreement, dated September 28, 2018, between Pershing Gold Corporation and Eric Alexander (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2018) +

10.64		Amendment to Offer Letter, dated September 28, 2018, between Pershing Gold Corporation and Timothy Janke (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2018) +
10.65		First Amendment to Agreement and Plan of Merger, dated March 1, 2019, among Pershing Gold Corporation, Americas Silver Corporation, and R Merger Sub, Inc. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2019) +
10.66		Second Amendment to Fourth Amended Severance Compensation Agreement, dated March 1, 2019, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2019) +
10.67		Second Amendment to Offer of Employment, dated March 1, 2019, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2019) +
21.1		List of Subsidiaries*
23.1		Consent of KBL, LLP *
23.2		Consent of Mine Development Associates Inc.*
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)*
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)*
32.1		Certificate of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)**
95.1		Mine Safety Disclosure *
101.INS		XBRL Instance Document*
101.SCH		XBRL Taxonomy Schema Document*
101.CAL		XBRL Taxonomy Calculation Document*
101.DEF		XBRL Taxonomy Definition Document*
101.LAB		XBRL Taxonomy Label Document*
101.PRE		XBRL Taxonomy Presentation Document*

* Filed herewith

** Furnished herewith

+ Management contract or compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

April 2, 2019	PERSHING GOLD CORPORATION Registrant

	By:	/s/ Stephen Alfers
		Stephen Alfers Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Stephen Alfers	Chief Executive Officer and President	April 2, 2019
Stephen Alfers	(Principal Executive Officer) and Chairman of the Board of Directors

/s/ Eric Alexander	Vice President Finance and Controller	April 2, 2019
Eric Alexander	(Principal Financial and Accounting Officer)

/s/ Jeffrey Clevenger	Director	April 2, 2019
Jeffrey Clevenger

/s/ Edward Karr	Director	April 2, 2019
Edward Karr

/s/ Pamela Saxton	Director	April 2, 2019
Pamela Saxton

PERSHING GOLD CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

PERSHING GOLD CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

CONTENTS

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Financial Statements:

Consolidated Balance Sheets - As of December 31, 2018 and 2017	F-3

Consolidated Statements of Operations - For the Years Ended December 31, 2018 and 2017	F-4

Consolidated Statement of Changes in Stockholders’ Equity - For the Years Ended December 31, 2018 and 2017	F-5

Consolidated Statements of Cash Flows – For the Years Ended December 31, 2018 and 2017	F-6

Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
of Pershing Gold Corporation and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Pershing Gold Corporation and Subsidiaries (the “Company”) as of December 31, 2018 and 2017, 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 “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and the results of its consolidated operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 audit to obtain reasonable assurance about whether the consolidated 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 controls 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.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Going Concern Consideration

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has sustained significant operating losses and needs to obtain additional financing to continue the services they provide. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KBL, LLP

We have served as the Company’s auditor since 2011.

KBL, LLP

New York, NY

April 02, 2019

F-2

PERSHING GOLD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in United States dollars)

	December 31,
	2018			2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	995,590		$	12,858,873
Prepaid expenses and other current assets		654,167			1,006,779
Deposits		23,111			27,884

Total Current Assets		1,672,868			13,893,536

NON - CURRENT ASSETS:
Property and equipment, net		2,606,855			3,303,366
Mineral rights		23,973,912			22,803,912
Restricted cash		3,690,000			3,690,000
Reclamation bond deposit		50,000			50,000
Other non-current assets		38,987			9,689

Total Non - Current Assets		30,359,754			29,856,967

Total Assets	$	32,032,622		$	43,750,503

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	999,706		$	1,651,461
Convertible notes payable, net of debt discount		1,924,036			-
Deferred rent		2,900			4,513
Deposit		-			1,750

Total Current Liabilities		2,926,642			1,657,724

LONG-TERM LIABILITIES:
Deferred rent - long term portion		8,132			-
Asset retirement obligation		1,215,436			963,303

Total Liabilities		4,150,210			2,621,027

Commitments and Contingencies

STOCKHOLDERS' EQUITY :
Preferred stock, $0.0001 par value; 50,000,000 authorized
Convertible Series A Preferred stock ($0.0001 Par Value; 2,250,000 Shares Authorized; none issued and outstanding as of December 31, 2018 and 2017)		-			-
Convertible Series B Preferred stock ($0.0001 Par Value; 8,000,000 Shares Authorized; none issued and outstanding as of December 31, 2018 and 2017)		-			-
Convertible Series C Preferred stock ($0.0001 Par Value; 3,284,396 Shares Authorized; none issued and outstanding as of December 31, 2018 and 2017)		-			-
Convertible Series D Preferred stock ($0.0001 Par Value; 7,500,000 Shares Authorized; none issued and outstanding as of December 31, 2018 and 2017)		-			-
Convertible Series E Preferred stock ($0.0001 Par Value; 15,151 Shares Authorized; 8,946 shares issued and outstanding; liquidation preference of $9,742,194 as of December 31, 2018 and 2017)		1			1
Common stock ($0.0001 Par Value; 200,000,000 Shares Authorized; 33,676,921 and 33,544,125 shares issued and outstanding as of December 31, 2018 and 2017)		3,368			3,354
Additional paid-in capital		212,768,349			211,817,072
Accumulated deficit		(184,889,306	)		(170,690,951	)

Total Stockholders' Equity		27,882,412			41,129,476

Total Liabilities and Stockholders' Equity	$	32,032,622		$	43,750,503

See accompanying notes to consolidated financial statements.

F-3

PERSHING GOLD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in United States dollars)

	For the Years Ended December 31,
	2018			2017

Net revenues	$	-		$	-

Operating expenses:
Compensation and related taxes		3,184,929			4,797,984
Exploration cost		3,197,208			1,219,608
Consulting fees		2,644,238			2,418,726
General and administrative expenses		5,032,979			4,287,909

Total operating expenses		14,059,354			12,724,227

Loss from operations		(14,059,354	)		(12,724,227	)

Other income (expenses):
Other income (expense)		(75,000	)		9,673
Foreign currency gain (loss)		(3,811	)		(10,029	)
Interest expense and other finance costs		(87,893	)		(380,987	)
Interest income		27,703			11,069

Total other income (expenses) - net		(139,001	)		(370,274	)

Loss before provision for income taxes		(14,198,355	)		(13,094,501	)

Provision for income taxes		-			-

Net loss	$	(14,198,355	)	$	(13,094,501	)

Preferred deemed dividend		-			(1,068,624	)

Net loss available to common stockholders	$	(14,198,355	)	$	(14,163,125	)

Net loss per common share, basic and diluted	$	(0.42	)	$	(0.50	)

Weighted average common shares outstanding - basic and diluted		33,632,857			28,567,344

See accompanying notes to consolidated financial statements.

F-4

PERSHING GOLD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017

(in United States dollars)

	Preferred Stock - Series A				Preferred Stock - Series B				Preferred Stock - Series C				Preferred Stock - Series D				Preferred Stock - Series E				Common Stock												Total
	$0.0001 Par Value				$0.0001 Par Value				$0.0001 Par Value				$0.0001 Par Value				$0.0001 Par Value				$0.0001 Par Value						Additional			Accumulated			Stockholder’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount			Paid-in Capital			Deficit			Equity

Balance, December 31, 2016		-	$	-		-	$	-		-	$	-		-	$	-		8,946	$	1		28,389,378		$	2,839		$	195,705,344		$	(156,527,826	)	$	39,180,358

Issuance of common stock for cash		-		-		-		-		-		-		-		-		-		-		5,141,736			514			13,193,317			-			13,193,831

Issuance of common stock for services		-		-		-		-		-		-		-		-		-		-		21,586			2			(2	)		-			-

Issuance of common stock for payment of accounts payable		-		-		-		-		-		-		-		-		-		-		2,351			-			8,250			-			8,250

Issuance of restricted common stock unit for accounts payable		-		-		-		-		-		-		-		-		-		-		-			-			65,000			-			65,000

Issuance of restricted common stock unit for services		-		-		-		-		-		-		-		-		-		-		-			-			68,002			-			68,002

Stock-based compensation in connection with restricted common stock unit grants		-		-		-		-		-		-		-		-		-		-		-			-			1,110,111			-			1,110,111

Stock-based compensation in connection with stock warrant grants		-		-		-		-		-		-		-		-		-		-		-			-			86,899			-			86,899

Cancellation of common stock		-		-		-		-		-		-		-		-		-		-		(10,926	)		(1	)		1			-			-

Vested accrued restricted stock unit bonuses		-		-		-		-		-		-		-		-		-		-		-			-			511,526			-			511,526

Preferred stock deemed dividend		-		-		-		-		-		-		-		-		-		-		-			-			1,068,624			(1,068,624	)		-

Net loss		-		-		-		-		-		-		-		-		-		-		-			-			-			(13,094,501	)		(13,094,501	)

Balance, December 31, 2017		-		-		-		-		-		-		-		-		8,946		1		33,544,125			3,354			211,817,072			(170,690,951	)		41,129,476

Issuance of common stock upon conversion of restricted stock units		-		-		-		-		-		-		-		-		-		-		132,796			14			(14	)		-			-

Issuance of restricted common stock units for services		-		-		-		-		-		-		-		-		-		-		-			-			34,000			-			34,000

Stock-based compensation in connection with restricted common stock unit grants		-		-		-		-		-		-		-		-		-		-		-			-			565,402			-			565,402

Vested accrued restricted stock unit and stock option bonuses		-		-		-		-		-		-		-		-		-		-		-			-			351,889			-			351,889

Net loss		-		-		-		-		-		-		-		-		-		-		-			-			-			(14,198,355	)		(14,198,355	)

Balance, December 31, 2018		-	$	-		-	$	-		-	$	-		-	$	-		8,946	$	1		33,676,921		$	3,368		$	212,768,349		$	(184,889,306	)	$	27,882,412

See accompanying notes to consolidated financial statements.

F-5

PERSHING GOLD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in United States dollars)

	For the Years Ended December 31,
	2018			2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(14,198,355	)	$	(13,094,501	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		961,541			1,071,942
Accretion		35,255			38,529
Non-cash consulting		75,000			-
Stock-based compensation		576,721			1,260,179
Amortization of debt discount		31,831			-

Changes in operating assets and liabilities:
Other receivables		-			(9,689	)
Prepaid expenses and other current assets		352,612			132,981
Accounts payable and accrued expenses		(277,185	)		90,875
Deposits		(861	)		(24,000	)
Other non-current assets		(25,414	)		-
Deferred rent		6,519			(6,737	)

NET CASH USED IN OPERATING ACTIVITIES		(12,462,336	)		(10,540,421	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in reclamation bond deposits		-			(25,000	)
Purchase of mineral rights		(1,170,000	)		(17,000	)
Purchase of property and equipment		(123,152	)		(34,639	)

NET CASH USED IN INVESTING ACTIVITIES		(1,293,152	)		(76,639	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of issuance costs		-			13,193,831
Proceeds from issuance of convertible notes, net of issuance costs		1,892,205			-

NET CASH PROVIDED BY FINANCING ACTIVITIES		1,892,205			13,193,831

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(11,863,283	)		2,576,771

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of year		16,548,873			13,972,102

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - end of year	$	4,685,590		$	16,548,873

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	13,245		$	6,747
Income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Reduction of accrued bonuses in connection with vested restricted common stock unit grants	$	73,035		$	511,526
Reduction of accrued bonuses in connection with vested stock options	$	256,173		$	-
Reduction of accrued bonuses in connection with expired stock options	$	22,681		$	-
Net book value of equipment in exchange for consulting fees	$	75,000		$	-
Reduction of accounts payable in connection with issuance of common stock	$	-		$	8,250
Reduction of accounts payable in connection with issuance of restricted stock unit grants	$	-		$	65,000
Increase in asset retirement obligations	$	216,878		$	29,689
Preferred stock deemed dividend	$	-		$	1,068,624

See accompanying notes to consolidated financial statements.

F-6

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS

Pershing Gold Corporation (the “Company”), formerly named Sagebrush Gold Ltd., was incorporated under the laws of the State of Nevada on August 2, 2007. The Company is a gold and precious metals exploration company pursuing exploration, development, and mining opportunities primarily in Nevada. The Company is currently focused on exploration of its Relief Canyon properties in Pershing County in northwestern Nevada. None of the Company’s properties contain proven and probable reserves, and the Company’s activities on all of its properties are exploratory in nature.

On August 30, 2011, the Company, through its wholly-owned subsidiary, Gold Acquisition Corp. (“Gold Acquisition”), acquired the Relief Canyon Mine property (“Relief Canyon”) located in Pershing County, near Lovelock, Nevada.

A wholly-owned subsidiary, Pershing Royalty Company, a Delaware corporation, was formed on May 17, 2012 to hold royalty interests in two gold exploration properties. On July 5, 2016, a wholly-owned subsidiary, Blackjack Gold Corporation, a Nevada corporation, was formed for potential purchases of exploration targets.

Agreement and Plan of Merger

On September 28, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Americas Silver Corporation (“Americas Silver”) and R Merger Sub, Inc., a wholly-owned subsidiary of Americas Silver (“Merger Sub”). Under the terms of the Merger Agreement, the Company will merge with and into Merger Sub, with the Company being the surviving corporation and becoming a wholly-owned subsidiary of Americas Silver (the “Merger”).

In connection with the Merger, common stockholders of the Company will be issued 0.715 Americas Silver common shares for each share of Company common stock (the “Exchange Ratio”). Holders of the Company’s Series E Convertible Preferred Stock (“Series E Preferred Stock”) will be given the option to (a) convert their shares of Series E Preferred Stock into Company common shares immediately before the closing and exchange those common shares for Americas Silver common shares at the Exchange Ratio, or (b) exchange their Series E Preferred Stock for non-voting preferred stock of Americas Silver (“Purchaser Preferred Stock”).

The Merger Agreement provides that, upon consummation of the Merger, Americas Silver will cause one nominee of the Company to be appointed to the board of directors of Americas Silver.

If the Merger Agreement is terminated because the Company accepts a Superior Proposal, or the board of directors of the Company changes its recommendation to its stockholders regarding the approval of the Merger, the Company will be obligated to pay a termination fee to Americas Silver in the amount of $4,000,000 (the “Termination Fee”).

On March 1, 2019, the Company entered into a First Amendment (the “First Amendment”) to the Merger Agreement dated September 28, 2018 with Americas Silver and Merger Sub. The First Amendment extends the “Outside Date”, as defined in the Merger Agreement, to June 1, 2019. The Outside Date is the date after which either party may terminate the Merger Agreement if the Merger has not been consummated on or before such date. Additionally, the First Amendment makes technical and immaterial adjustments to the process by which shares will be issued and distributed by Americas Silver and Merger Sub upon closing.

Convertible Secured Debenture

Concurrent with the execution of the Merger Agreement, the Company and Americas Silver entered into a Convertible Secured Debenture (“Debenture”), effective October 1, 2018, that will entitle the Company to borrow up to $4,000,000 from Americas Silver.

The interest rate is 16% per year on the amount drawn, accrued and compounded monthly. The loan will mature on June 1, 2019, or September 1, 2019 if the Company has exercised an option to extend maturity. As of December 31, 2018 the Company has drawn $1,977,205 against the Debenture.

If the Merger Agreement is terminated, in most circumstances, the outstanding principal amount, plus any accrued and unpaid interest, will be due and payable in cash within 90 days following the date of termination (or 10 days if the Merger Agreement is terminated by the Company in order to accept a Superior Proposal or following a change of the board of directors’ recommendation to stockholders). However, if the Merger Agreement is terminated because (i) Americas Silver fails to obtain the approval of its shareholders, (ii) a law or government order prevents consummation of the Merger, or (iii) Americas Silver breaches the Merger Agreement, the Company will have the option to repay the borrowed amount in cash or in shares of Company common stock.

F-7

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

If repayment will be accomplished by conversion into Company common stock, the number of shares issuable will be determined by dividing the amount outstanding under the Debenture by a conversion price equal to the volume-weighted average price of the Company’s common stock for the five trading days immediately preceding the date of the election, but never less than $1.18. The issuance of common shares in exchange for amounts outstanding under the Debenture is subject to receipt of prior approval by The NASDAQ Stock Market and the Toronto Stock Exchange.

The Debenture is secured by a lien on substantially all of the Company’s assets.

Basis of presentation and principles of consolidation

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and present the consolidated financial statements of the Company and its majority-owned subsidiaries as of December 31, 2018. In the preparation of the consolidated financial statements of the Company, intercompany transactions and balances have been eliminated.

Use of estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the useful life of property and equipment, the valuation of deferred tax assets and liabilities, including valuation allowance, amounts and timing of closure obligations, the assumptions used to calculate fair value of restricted stock units, options and warrants granted, stock-based compensation, beneficial conversion on preferred stock, capitalized mineral rights, asset valuations, timing of the performance criteria of restricted stock units and the fair value of common stock issued.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when acquired to be cash equivalents. The Company places its cash with high credit quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2018, the Company had bank balances exceeding the FDIC insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial institutions in which it holds deposits.

Going concern

These consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time. The Company has incurred a net loss of approximately $14.2 million for the year ended December 31, 2018, has used approximately $12.5 million of net cash in operations for the year ended December 31, 2018, has incurred a total cumulative deficit of approximately $184.9 million since its inception and requires capital for its contemplated business and exploration activities to take place.

As discussed more fully in Note 1, the Company has entered into a Merger Agreement with Americas Silver. The Merger Agreement provides for, and the Company subsequently entered into, a Debenture whereby Americas Silver will provide the Company with up to $4 million to fund its working capital requirements until the Merger is closed, subject to customary contingencies. If the Merger does not close the principal and interest outstanding under the Debenture would either be reimbursed with cash or the issuance of the Company’s common stock. In addition to the Debenture, obtaining additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to profitable operations are necessary for the Company to continue business. The ability to successfully resolve these factors raises substantial doubt about the Company’s ability to continue as a going concern as determined by management. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.

F-8

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Restricted cash – non current

Restricted cash consists of cash which is held as collateral under surface management surety bonds issued on the Company’s behalf. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows:

	December 31, 2018		December 31, 2017

Cash and cash equivalents	$	995,590	$	12,858,873
Restricted cash – non current		3,690,000		3,690,000
Total cash, cash equivalents and restricted cash	$	4,685,590	$	16,548,873

Fair value of financial instruments

The Company adopted Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their estimated fair market values based on the short-term maturity of these instruments.

The Company’s convertible notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2018.

Prepaid expenses and other current assets

Prepaid expenses and other current assets of $654,167 and $1,006,779 at December 31, 2018 and 2017, respectively, consist primarily of costs paid for future services which will occur within a year. Prepaid expenses principally include prepayments for consulting, public relations, and business advisory services, insurance premiums, drilling services, mining claim fees and mineral lease fees which are being amortized over the terms of their respective agreements.

F-9

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Mineral property acquisition and exploration costs

Costs of leasing, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred as it is still in the exploration stage. Given the completion on May 24, 2018 of a final feasibility study indicating a mine is economically viable, upon a final decision to commence operating mine development activities to bring a mine into production, the property would enter into the development stage and the Company would capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs are amortized using the units-of-production method over the estimated life of the proven and probable reserves. If in the future the Company has capitalized mineral properties, these properties will be periodically assessed for impairment. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.

ASC 930-805, “Extractive Activities-Mining: Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.

ASC 930-805-30-1 and 30-2 provide that, in fair valuing mineral assets, an acquirer should take into account both:

· The value beyond proven and probable reserves (“VBPP”) to the extent that a market participant would include VBPP in determining the fair value of the assets.

· The effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations of market participants.

Property and equipment

Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally one to twenty-five years.

Impairment of long-lived assets

The Company accounts for the impairment or disposal of long-lived assets according to ASC 360, “Property, Plant and Equipment”. The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of long-lived assets, including mineral rights, may not be recoverable. Long-lived assets in the exploration stage are monitored for impairment based on factors such as the Company’s continued right to explore the area, exploration reports, assays, technical reports, drill results and the Company’s continued plans to fund exploration programs on the property, and whether sufficient work has been performed to indicate that the carrying amount of the mineral property cost carried forward as an asset will not be fully recovered. The tests for long-lived assets in the exploration stage are monitored for impairment based on factors such as current market value of the long-lived assets and results of exploration, future asset utilization, business climate, mineral prices and future undiscounted cash flows expected to result from the use of the related assets.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The Company did not record any impairment of its long-lived assets at December 31, 2018 and 2017, respectively.

F-10

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Asset retirement obligations

Asset retirement obligations (“ARO”), consisting primarily of estimated mine reclamation and closure costs at the Company’s Relief Canyon property, are recognized in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. Asset retirement obligations are periodically adjusted to reflect changes in the estimated present value resulting from revisions to the estimated timing or amount of reclamation and closure costs. The Company reviews and evaluates its asset retirement obligations annually or more frequently at interim periods if deemed necessary.

Income taxes

The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than fifty percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.

Stock-based compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, “Compensation — Stock Compensation” (“ASC 718”), which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

The Company adopted ASU 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2016-09”), which makes several modifications to Topic 718. Upon adoption of ASU 2016-09, the Company recognizes the effect of forfeitures in compensation cost as they occur, rather than estimating forfeitures as of the award date. Any previously recognized compensation cost will be reversed in the period of forfeiture.

Pursuant to ASC Topic 505-50, “Equity Based Payments to Non-employees”, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

F-11

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related party transactions

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. There were no related party transactions for the years ended December 31, 2018 and 2017.

Foreign currency transactions

The Company accounts for foreign currency transactions in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”), specifically the guidance in subsection ASC 830-20, “Foreign Currency Transactions”. The U.S. dollar is the functional and reporting currency for the Company and its subsidiaries. Pursuant to ASC 830, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses upon settlement reported in foreign exchange gain (loss) in the computation of net income (loss).

Recent accounting pronouncements

The Company plans to adopt ASU 2016-02 using the modified retrospective transition approach with a cumulative-effect adjustment, which does not require the Company to adjust the comparative periods presented when transitioning to the new guidance on January 1, 2019. The Company has also elected to utilize the transition related practical expedients permitted by the new standard. By electing to utilize the practical expedients, the Company will not be required to reassess whether a contract is or contains a lease, will not need to separate lease and non-lease components for the majority of underlying asset classes, classify leases by operating or capital lease, may use hindsight in determining lease term, and will not reassess its land easements.

The Company has substantially completed its assessment regarding what the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. Based upon the contracts outstanding at December 31, 2018, the adoption of ASU 2016-02 will result in the recognition of additional ROU assets and lease liabilities relating to operating leases of approximately $122,000 The Company does not expect a material impact to the consolidated statements of operations or the consolidated statements of cash flows. The Company will provide additional qualitative and quantitative disclosures related to leasing arrangements beginning in the period of adoption.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” or ASU 2016-18. ASU 2016-18 is intended to clarify how entities present restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash and cash equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. When cash and cash equivalents and restricted cash are presented in more than one line-item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. This reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively. Early adoption was permitted, including adoption in an interim period. The Company early adopted ASU 2016-18 for the three-month period ended December 31, 2017 and its adoption did not have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates Step 2 from the goodwill impairment test. When an indication of impairment was identified after performing the first step of the goodwill impairment test, Step 2 required that an entity determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) using the same procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the amendments in ASU No. 2017-04, an entity would perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value. An entity would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. In addition, an entity must consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a SEC filer should adopt the amendments in ASU No. 2017-04 for its annual, or any interim, good will impairment tests in fiscal years beginning after December 15, 2019. The Company does not believe the guidance will have a material impact on its consolidated financial statements.

F-12

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation”. The update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9, unless all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The provisions of this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company’s adoption of this guidance on January 1, 2018 did not have a material impact on the Company’s consolidated results of operations, financial position and related disclosures.

In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260)”. The amendments in the update change the classification of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company’s adoption of this guidance on January 1, 2019 did not have a material impact on the Company’s consolidated results of operations, financial position and related disclosures.

In August 2017, the FASB issued ASU 2017-12 “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities”. ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The guidance is effective for the Company beginning after December 15, 2018, although early adoption is permitted. The Company’s adoption of this guidance on January 1, 2019 did not have a material impact on the Company’s consolidated results of operations, financial position and related disclosures.

In June 2018, the FASB issued ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. The guidance is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company’s adoption of this guidance on January 1, 2019 did not have a material impact on the Company’s consolidated results of operations, financial position and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company will be evaluating the impact this standard will have on the Company’s consolidated 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. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

F-13

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 3 — MINERAL PROPERTIES

The Company’s Relief Canyon property rights currently total approximately 29,000 acres and are comprised of approximately 1,137 owned unpatented mining claims, 120 owned millsite claims, 62 leased unpatented mining claims, 6,586 acres of leased private lands, 960 acres of subleased private lands, and 320 acres of owned private minerals. Most of the property on which the Relief Canyon deposit is located is subject to a 2% net smelter return production royalty, with a portion of that property subject to net smelter return production royalties totaling 4.5%. The rest of the property is subject, under varying circumstances, to net smelter return production royalties ranging from 2% to 5%.

Pershing Pass Property

The Pershing Pass property consists of 765 unpatented mining claims (746 owned and 19 leased) covering approximately 12,900 acres, a mining lease of private lands covering approximately 635 acres, and a mining sublease of private lands covering approximately 960 acres. Out of the total unpatented mining claims, 238 unpatented mining claims are subject to a 2% net smelter return royalty and 19 unpatented mining claims are leased with a purchase option.

The primary term of the mining lease of private lands is ten years ending in December 2022, which may be extended as long as mineral exploration, development or mining continue on the property. Production from the private lands covered by the lease is subject to a 2% net smelter return royalty on all metals produced other than gold, and to a royalty on gold indexed to the gold price, ranging from 2% at gold prices of less than $500 per ounce to 3.5% at gold prices over $1,500 per ounce. Prior to one year after commercial production begins, the Company can repurchase up to 3% of the royalty on gold production at the rate of $600,000 for each 1%.

In September 2013, the Company entered into a lease agreement and purchase option for 19 unpatented mining claims (approximately 400 acres) in the Pershing Pass Property. Production from the lease is subject to a 1% net smelter return royalty on precious metals and a 0.5% net smelter royalty on all other metals produced from the leased property. Prior to production, and starting in September 2016, the Company is required to pay a $10,000 annual advance minimum royalty payment until September 2023. The annual advance minimum royalty payment increases to $12,500 in September 2023, to $15,000 in September 2028 and to $20,000 in September 2033. The Company has the right to buy the leased claims at any time for $250,000.

In March 2017, the Company entered into a Mining Sublease with Newmont granting the Company the exclusive right to prospect, explore for, develop, and mine minerals on certain lands within the Pershing Pass area south of the Relief Canyon Mine. The subleased lands are subject to an underlying 2 % NSR royalty payable to the Owners and a 2% NSR royalty payable to Newmont under the Sublease. The Mining Sublease has an initial term of ten years and may be extended by the Company until December 3, 2034 and so long thereafter as any mining, development, or processing operations are being conducted continuously. The Mining Sublease calls for the Company to make minimum work expenditures for the first four years of the Mining Sublease, followed by annual advanced minimum royalty payments to Newmont to maintain the Mining Sublease in good standing. The Sublease may be terminated any time after providing 90-days written notice of termination. The $500,000 expenditure required to be made by the second anniversary (3/29/2019) is a firm commitment and must be satisfied irrespective of termination. If a required minimum work commitment, including the $500,000 firm commitment, is not timely satisfied as scheduled, the Company must pay Newmont the difference between the scheduled amount of required minimum work commitment and costs already incurred by the Company towards the required minimum work commitment. As of September 30, 2018, the most recent cost reporting date under the Mining Sublease, the Company can credit approximately $270,000 in exploration expenditures already incurred against the $1.5 million work commitment.

Coal Canyon Property

In December 2017, the Company entered into two mining leases at Coal Canyon, which is west of the Relief Canyon Mine. One such mining lease with Good Springs Exploration, LLC and Clancy Wendt (collectively “Lessor”) covers 43 unpatented mining claims adding 800 acres to the Company’s property holdings. The lease contains customary terms and conditions, with a primary term of ten years, which may be extended, annual advance royalty payments to Lessor starting at $20,000 per year, capping at $50,000, which payments are recoupable against a 3% net smelter return production royalty, which royalty can be bought down by one percent point of net smelter return for a payment of $1,000,000, and also includes a conditional purchase option for $350,000.

A second mining lease with New Nevada Resources, LLC and New Nevada Lands, LLC (collectively “New Nevada”) covers 1,899 acres of fee land. The lease contains customary terms and conditions, with a primary term of twenty years, which may be extended, with annual advance royalty payments to New Nevada starting at $10 per acre capping at $25 per acre, which payments are recoupable against a 3% net smelter return production royalty. This royalty can be reduced by one percent of net smelter return in exchange for a payment of $1 million, and also includes a conditional purchase option at a price of $500 per acre.

F-14

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 3 — MINERAL PROPERTIES (continued)

Newmont Properties

On April 5, 2012, the Company purchased from Victoria Gold Corp. and Victoria Resources (US) Inc. (collectively, “Victoria”) their interest in approximately 13,300 acres of mining claims and private lands adjacent to the Company’s original landholdings at the Relief Canyon Mine in Pershing County, Nevada.

Approximately 8,900 acres of the lands that the Company acquired from Victoria were a leasehold interest comprised of unpatented mining claims and private lands subject to a 2006 Mineral Lease and Sublease with Newmont USA Ltd. (“Newmont”), which the Company refers to as the Newmont Leased property. At that time, the Newmont Leased property consisted of 155 unpatented lode mining claims owned by Newmont comprising approximately 2,800 acres, approximately 4,900 acres of privately-owned fee minerals leased by Newmont from the owners, and 62 unpatented mining claims that were owned by Victoria within the Newmont Leased property and area of interest.

On January 14, 2015, the Company entered into an Asset Purchase Agreement with Newmont (the “Asset Purchase Agreement”) pursuant to which the Company acquired for $6.0 million, 74 unpatented mining claims totaling approximately 1,300 acres that the Company had previously leased from Newmont, and entered into a new mining lease directly with New Nevada Resources, LLC and New Nevada Lands, LLC for approximately 1,600 acres of fee, or private, land that the Company had previously subleased from Newmont.

As part of the January 2015 transactions completed pursuant to the Asset Purchase Agreement, a subsidiary of the Company entered into a Mining Lease (the “2015 Mining Lease”) with New Nevada Resources, LLC and New Nevada Lands, LLC (the “Owners”), covering certain fee lands (the “Leased Properties”) included in the Company’s Relief Canyon properties. The 2015 Mining Lease has a term of twenty years and for as long thereafter as any mining, development or processing operations are being conducted on a continuous basis. The 2015 Mining Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns production royalty on the Leased Properties payable to the Owners.

Newmont Leased Property

As part of the Asset Purchase Agreement transactions, Newmont and the Company entered into an amendment of the 2006 Minerals Lease and Sublease (the “Third Amendment”), pursuant to which the Company agreed to a $2.6 million work commitment on the properties remaining subject to the 2006 Minerals Lease and Sublease to be expended by the seventh anniversary of the effective date of the Third Amendment. Upon the eighth anniversary of the effective date of the Third Amendment, the Company shall pay an annual rental payment of $10.00 per acre if the Company does not incur $500,000 in qualified expenditures during the preceding year. Expenditures incurred in excess of the annual work commitment or rental payment obligation may be carried forward as credits against future annual work commitment obligations or rental payment obligations. As of December 15, 2017, the most recent cost reporting date under the Third Amendment, the Company can credit approximately $2.9 million in exploration expenditures already incurred against the remaining $2.3 million work commitment and future rental payment obligations.

Also as part of the transactions completed pursuant to the Asset Purchase Agreement, Newmont and the Owners entered into a new Mining Lease (the “2015 Newmont Lease”) covering about 2,770 acres of private lands included in the Company’s Relief Canyon properties (the “Subleased Properties”) and subleased by the Company from Newmont pursuant to the 2006 Minerals Lease and Sublease. The 2015 Newmont Lease has a term of twenty years and for as long thereafter as any mining, development or processing operations are being conducted on a continuous basis. The 2015 Newmont Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns production royalty on the Subleased Properties payable to the Owners. The Company continues to hold rights to the Subleased Properties pursuant to its 2006 Minerals Lease and Sublease with Newmont.

As discussed above, on March 29, 2017, the Company entered into a Mining Sublease with Newmont granting the Company the exclusive right to prospect, explore for, develop, and mine minerals on certain lands within the Pershing Pass area south of the Relief Canyon Mine. The Mining Sublease has an initial term of ten years and may be extended by the Company until December 3, 2034 and so long thereafter as any mining, development, or processing operations are being conducted continuously. The Mining Sublease calls for the Company to make minimum work expenditures for the first four years of the Mining Sublease, followed by annual advanced minimum royalty payments to Newmont to maintain the Mining Sublease in good standing. The Sublease may be terminated any time after providing 90-days written notice of termination. If the required minimum work commitment of $500,000 has not been satisfied prior to termination the Company must pay Newmont the difference between the $500,000 required minimum work commitment and costs already incurred by the Company towards the required minimum work commitment. As of September 30, 2018, the most recent cost reporting date under the Mining Sublease, the Company can credit approximately $270,000 in exploration expenditures already incurred against the $1.5 million work commitment.

F-15

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 3 — MINERAL PROPERTIES (continued)

On August 27, 2018, the Company exercised its right to purchase certain royalty interests owned by Newmont for $1,100,000. By exercise of its right of first offer the Company acquired all of the assets then held under the Third Amendment terminating the lease in its entirety, without further force or effect. By termination of the 2006 Lease Agreement, the agreement Area of Interest also terminated. Assets acquired under the right of first offer include (i) 81 unpatented lode claims, (ii) 320 acres of private minerals (subject to an underlying 2.125% NSR royalty payable to New Nevada Resources, LLC); (iii) assignment of a Mining Lease dated, effective December 31, 2014, between New Nevada Resources, LLC and New Nevada Lands, LLC (collectively “Owner”), covering approximately 2,458.88 acres of private lands subject to a 2.5% NSR royalty payable to Owner, and other customary terms and conditions under the Mineral Lease agreement; and (iv) termination of the 2006 Minerals Lease and Sublease in its entirety, without any further force or effect.

General

In February 2018, the Company increased its statewide surface management surety bonds by $200,000 with the United States Department of the Interior Bureau of Land Management (“BLM”) as required by the State of Nevada. No additional collateral was required. As of December 31, 2018, the Company had posted statewide surface management surety bonds in the total amount of approximately $12.5 million, which was approximately $80,000 in excess of the coverage requirement as of December 31, 2018, to reclaim land disturbed in its exploration and mining operations. The surface management surety bonds are provided through third-party insurance underwriters. The Company was required to deposit a total of $3,690,000, or approximately 30% of the total surety bonds, in collateral accounts. The funds deposited in the collateral accounts are classified as restricted cash – noncurrent on the Company’s balance sheet.

As of December 31, 2018, based on management’s review of the carrying value of mineral rights, management determined that there is no evidence that the cost of these acquired mineral rights will not be fully recovered and accordingly, the Company determined that no adjustment to the carrying value of mineral rights was required. As of the date of these consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and has incurred only acquisition and exploration costs.

Mineral properties consisted of the following:

	December 31, 2018		December 31, 2017

Relief Canyon Mine — Gold Acquisition	$	8,571,071	$	8,501,071
Relief Canyon Mine — Newmont Properties		14,809,441		13,709,441
Pershing Pass Property		593,400		593,400

	$	23,973,912	$	22,803,912

NOTE 4 — PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	Estimated Life		December 31, 2018			December 31, 2017

Furniture and fixtures		5 years	$	56,995		$	56,995
Office and computer equipment		1 - 5 years		457,289			434,563
Land		—		358,886			358,886
Building and improvements		5 - 25 years		844,678			823,131
Site costs		10 years		1,555,238			1,417,704
Crushing system		20 years		2,456,804			2,514,021
Process plant and equipment		10 years		3,622,874			3,530,460
Vehicles and mining equipment		5 - 10 years		605,824			605,824
				9,958,588			9,741,584
Less: accumulated depreciation				(7,351,733	)		(6,438,218	)

			$	2,606,855		$	3,303,366

F-16

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 4 — PROPERTY AND EQUIPMENT (continued)

For the years ended December 31, 2018 and 2017, depreciation expense amounted to $961,541 and $1,071,942, respectively. During May 2018, the Company exchanged a reclaim tunnel and other equipment with a net book value of $75,000 (cost of $123,026 and associated accumulated depreciation of $48,026) for engineering design services also valued at $75,000. As a result, the assets and related accumulated depreciation were written-off as of December 31, 2018. No gain or loss was recognized on the exchange.

NOTE 5 — CONVERTIBLE NOTES PAYABLE

At December 31, 2018 and 2017, convertible notes payable consisted of the following:

	December 31, 2018			December 31, 2017
Principal amount	$	1,977,205		$	-
Less: unamortized debt discount		(53,169	)		-
Convertible notes payable, net – current	$	1,924,036		$	-

Concurrent with the execution of the Merger Agreement, the Company and Americas Silver entered into a convertible notes payable (“Debenture”), effective October 1, 2018, that will provide for the Company to borrow up to $4,000,000 from Americas Silver, subject to certain customary conditions. The interest rate is 16% per year on the amount drawn, accrued and compounded monthly. The loan will mature on June 1, 2019, or September 1, 2019 if the Company has exercised an option to extend maturity. The Debenture will be secured by a lien on substantially all of the Company’s assets.

If the Merger Agreement is terminated, in most circumstances, the outstanding principal amount, plus any accrued and unpaid interest, would be due and payable in cash within 90 days following the date of termination (or 10 days if the Merger Agreement is terminated by the Company in order to accept a Superior Proposal or following a change of the board of directors’ recommendation to stockholders). However, if the Merger Agreement is terminated because (i) Americas Silver fails to obtain the approval of its shareholders, (ii) a law or government order prevents consummation of the Merger, or (iii) Americas Silver breaches the Merger Agreement, the Company will have the option to repay the borrowed amount in cash or in shares of Company common stock.

If repayment is accomplished by conversion into Company common stock, the number of shares issuable will be determined by dividing the amount outstanding under the Debenture by a conversion price equal to the volume-weighted average price of the Company’s common stock for the five trading days immediately preceding the date of the election, but never less than $1.18. The issuance of common shares in exchange for amounts outstanding under the Debenture is subject to receipt of prior approval by The NASDAQ Stock Market and the Toronto Stock Exchange.

As of December 31, 2018 the Company has drawn $1,977,205 against the Debenture. The Company paid original issuance costs of $85,000 in connection with this Debenture which is being amortized over the term of the note. During the year ended December 31, 2018, amortization of debt discounts related to this Debenture amounted to $31,831 which has been included in interest expense. The Company recorded interest expense related to this Debenture amounting to $47,529 during the year ended December 31, 2018 and accrued interest of $47,529 as of December 31, 2018 which was included in accrued expenses on the accompanying consolidated balance sheets.

The Company intends to use the proceeds from the Debenture to fund its near-term working capital requirements, including permit advancements, ongoing property maintenance and corporate requirements.

The Company evaluated the embedded conversion feature of the 16% convertible notes payable in accordance with ASC 470 and determined that there is no beneficial conversion feature as the conversion price is equal to the fair value of the Company’s common stock. Additionally, the Company evaluated whether or not these convertible notes payable contain embedded conversion features, which meet the definition of derivatives under ASC 815 and related interpretations. The Company determined that the terms of the notes do not include any provision which may cause the embedded conversion options to be accounted for as derivative liabilities.

F-17

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 6 — ASSET RETIREMENT OBLIGATIONS

In conjunction with the permit approval permitting the Company to resume mining in the existing open pits at the Relief Canyon Mine during the third quarter of 2014, the Company has recorded an asset retirement obligation based upon the reclamation plan submitted in connection with the permit. The following table summarizes activity in the Company’s ARO:

	December 31, 2018		December 31, 2017

Balance, beginning of year	$	963,303	$	895,085
Accretion expense		35,255		38,529
Reclamation obligations settled		-		-
Additions and changes in estimates		216,878		29,689
Balance, end of year	$	1,215,436	$	963,303

NOTE 7 — STOCKHOLDERS’ EQUITY

On June 17, 2015, the Board of Directors of the Company approved a reverse stock split of the Company’s Common Stock at a ratio of 1-for-18 (the “Reverse Stock Split”) which became effective on June 18, 2015. In connection with the Reverse Stock Split, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, as amended, with the Nevada Secretary of State to reduce the number of shares of Common Stock the Company is authorized to issue from 800,000,000 to 200,000,000. All share and per share values of the Company’s Common Stock for all periods presented in the accompanying consolidated financial statements are retroactively restated for the effect of the Reverse Stock Split in accordance with SAB Topic 4C.

Preferred Stock

The Company is authorized within the limitations and restrictions stated in the Amended and Restated Articles of Incorporation to provide by resolution or resolutions for the issuance of 50,000,000 shares of Preferred Stock, par value $0.0001 per share in such series and with such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions as the Company’s Board of Directors establishes.

Series A Convertible Preferred Stock

As of December 31, 2018 and 2017, 2,250,000 shares of Series A Preferred Stock, $0.0001 par value were authorized with none outstanding.

Series B Convertible Preferred Stock

As of December 31, 2018 and 2017, 8,000,000 shares of Series B Preferred Stock, $0.0001 par value were authorized with none outstanding.

Series C Convertible Preferred Stock

As of December 31, 2018 and 2017, 3,284,396 shares of Series C Preferred Stock, $0.0001 par value, were authorized with none outstanding.

9% Series D Cumulative Preferred Stock

As of December 31, 2018 and 2017, 7,500,000 shares of Series D Preferred Stock, $0.0001 par value, were authorized with none outstanding.

Series E Convertible Preferred Stock

As of December 31, 2018 and 2017, 15,151 shares of Series E Preferred Stock, $0.0001 par value, were authorized with 8,946 Series E Preferred shares outstanding.

F-18

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 7 — STOCKHOLDERS’ EQUITY (continued)

In connection with the December 19, 2017 Public Offering and Private Placement of shares of the Company’s Common Stock, the conversion price for the Series E Preferred Stock was reduced effective December 19, 2017 from $3.25 to $2.80 per share of Series E Preferred Stock. Following this adjustment, each share of Series E Preferred Stock was convertible into the number of shares of common stock obtained by dividing the Series E Original Issue Price, of $990.00, by the adjusted conversion price, resulting in each share of Series E Preferred Stock being convertible into approximately 353.571 shares of common stock. A total of 8,946 shares of Series E Preferred Stock remained outstanding at the time of adjustment, and as a result of the adjustment, were convertible into approximately 3,163,051 shares of common stock in the aggregate, compared to 2,725,089 shares of Common Stock prior to the adjustment. The adjusted conversion price generated additional value to the convertibility feature of the Series E Preferred Stock. Accordingly, the Company recorded a preferred deemed dividend of approximately $1.07 million for the additional value of the beneficial conversion feature in December 2017, the period of the adjustment.

On September 28, 2018, the Company amended the Certificate of Designation for its Series E Preferred Stock (the “Amended Series E Certificate of Designation”), effective immediately. The amendments (a) exempt the Merger from automatic conversion and cash payment provisions that would otherwise be applicable upon the consummation of the Merger, and (b) exempt the execution of the Debenture (but not any subsequent conversion of the Debenture into shares of the Company’s common stock) from provisions that would otherwise trigger an adjustment in the conversion price of the Series E Preferred Stock.

Common Stock

Sale of Common Stock

On December 11, 2017, the Company entered into an Underwriting Agreement by and among the Company and the underwriters named therein (the “Underwriters”), for whom Canaccord Genuity Corp., BMO Nesbitt Burns Inc., and Cantor Fitzgerald Canada Corporation are acting as representatives, relating to the issuance and sale (the “Public Offering”) of 2,430,000 shares of common stock of the Company and associated four-tenth common stock warrants to purchase an aggregate of 972,000 shares of common stock of the Company (each whole common share warrant, a “Warrant”) at a price of $2.80 per Offered Share and associated four-tenth Warrant, before underwriting discounts. Additionally, the Underwriters were granted a 30-day option to purchase up to an additional 364,500 shares of common stock at a purchase price of $2.468 per share and/or Warrants to purchase up to 145,800 shares of common stock at a purchase price of $0.136 per Warrant. The Public Offering closed on December 19, 2017 and included the full additional 364,500 shares of common stock and warrants to purchase 145,800 shares of common stock for a total of 2,794,500 shares of common stock and warrants to purchase 1,117,800 shares of common stock. The Company received gross proceeds of approximately $7.8 million, and net proceeds of approximately $6.5 million after commissions and legal and other fees and expenses.

On December 19, 2017, the Company issued an aggregate of 2,347,236 Units in a Private Placement (“Private Placement”), with each Unit comprised of one share of Common Stock and a 24-month warrant to purchase 0.40 of a share of Common Stock at an exercise price of $3.40, for a total of 2,347,236 shares of Common Stock and warrants to acquire an additional 938,891 shares of Common Stock. The gross proceeds for this issuance totaled approximately $6.8 million. The shares were issued pursuant to subscription agreements entered into between the Company and certain accredited investors, including Barry Honig who was a former director of the Company.

Restricted Stock Units

In February 2017, the Company granted an aggregate of 116,229 restricted stock units to employees and directors of the Company in connection with employee bonus compensation and annual equity awards to non-employee directors for fiscal year 2016. The fair market value on the date of grant was approximately $382,000. The restricted stock units granted to employees and directors vest 50% on the date of grant and the balance vest over a one-year period from the date of issuance. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a change in control.

In March 2017, the Company granted 50,000 restricted stock units to the CEO of the Company in connection with bonus compensation for fiscal year 2016. The fair market value on the date of grant was approximately $149,500. The restricted stock units granted to the CEO vested upon grant. The Common Stock underlying the restricted stock units will be issued upon on the earlier of a change in control or other acceleration or December 31, 2018.

The Company recognized stock based compensation of approximately $530,000 during fiscal year 2016 in connection with the fiscal year 2016 bonus compensation transactions above.

F-19

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 7 — STOCKHOLDERS’ EQUITY (continued)

In February 2017, the Company granted 25,000 restricted stock units to new employees of the Company. The fair market value on the date of grant was approximately $80,000. The restricted stock units granted to employees vest one-third on December 31, 2017, 2018 and 2019. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a change in control.

Between February 2017 and March 2017, the Company issued 5,591 shares of Common Stock upon the vesting of 5,591 restricted stock units to former employees. The Company cancelled 3,759 forfeited restricted stock units and retired an aggregate of 10,926 shares of restricted Common Stock due to forfeitures prior to their vesting.

In April 2017, the Company converted 15,995 vested restricted stock units into 15,995 shares of the Company’s Common Stock due to the passing of one of the members of the Company’s Board of Directors.

Between April 2017 and December 2017, the Company issued 2,351 shares of Common Stock and granted a total of 41,201 restricted stock units to two members of the Company’s Board of Directors as payment in lieu of cash for retainer and meeting fees earned totaling $73,250 for fiscal years 2015 and 2016 and $68,000 for the year ended December 31, 2017. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a change in control.

In October 2017, the Company granted 8,621 restricted stock units to a member of the Company’s Board of Directors. The fair market value on the date of grant was approximately $25,000. The restricted stock units granted to employees vest one-third on October 30, 2018, 2019 and 2020. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a change in control.

In January 2018, the Company granted 25,000 restricted stock units to the directors of the Company in connection with bonus compensation for fiscal year 2017. The fair market value on the date of grant was approximately $59,000. The restricted stock units granted to the directors of the Company vested upon grant. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's termination of service on the Company's Board of Directors or upon a change in control.

In February 2018, the Company accelerated the vesting of 18,518 restricted stock units granted to one of its board members who resigned effective February 23, 2018. After the acceleration, the Company converted 85,135 vested restricted stock units into 85,135 shares of the Company’s Common Stock due to the resignation of one of the members of the board of directors.

In April 2018, the Company granted 12,377 restricted stock units to a director of the Company for initial board retainer fees. The fair market value on the date of grant was approximately $25,000. The restricted stock units granted to the director vest one-third on April 29, 2019, 2020 and 2021. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a change in control.

Between April 2018 and June 2018, the Company granted a total of 17,497 restricted stock units to two members of the Company’s Board of Directors as payment in lieu of cash for retainer and meeting fees earned totaling $34,000 for the years ended December 31, 2018. All of these restricted stock units vested on the date of grant. For each vested restricted stock unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon such director’s termination of service on the Board of Directors, in connection with a change in control, or under certain other circumstances.

In August 2018, the Company converted 47,661 vested restricted stock units granted to one of its board members who resigned effective August 29, 2018 into 47,661 shares of the Company’s Common Stock due to such board member’s resignation.

As of December 31, 2017, the Company recognized a liability for employee and director bonus compensation related to restricted stock unit grants with a fair value of approximately $59,000 which was included in accounts payable and accrued expenses. Consequently, the Company recognized stock based compensation of approximately $59,000 during the year ended December 31, 2017 in connection with these transactions. As of December 31, 2018, the Company recorded approximately $73,035 in additional paid-in capital and a contemporaneous reduction of accounts payable and accrued expenses in connection with the issuance of vested restricted stock units related to fiscal year 2017 bonus compensations. As of December 31, 2018, there is no remaining unvested restricted stock units related to fiscal year 2017 bonus compensation.

F-20

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 7 — STOCKHOLDERS’ EQUITY (continued)

During the years ended December 31, 2018 and 2017, the Company recorded total stock-based compensation expense in connection with restricted stock and restricted stock unit awards of $565,402 and $1,110,111, respectively. At December 31, 2018, there was a total of $1,321,122 unrecognized compensation expense in connection with restricted stock and restricted stock unit awards.

A summary of the status of the restricted stock units and of changes in restricted stock units outstanding during the years ended December 31, 2018 and 2017, is as follows:

	Restricted Stock Units			Weighted Average Grant-Date Fair Value Per Share
Balance at December 31, 2016		845,765		$	5.68
Granted		241,051			3.19
Vested and converted		(21,586	)		3.55
Forfeited		(3,759	)		3.41
Balance at December 31, 2017		1,061,471			5.17
Granted		54,874			2.16
Vested and converted		(132,796	)		2.23
Forfeited		-			-
Balance at December 31, 2018		983,549		$	5.51

Common Stock Options

In January 2018, the Company issued 436,000 stock options in bonus compensation for certain employees. The options are exercisable at a price of $2.80 for 10 years.

A summary of the Company’s stock options as of December 31, 2018 and 2017 and changes during the period presented below:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Balance at December 31, 2016		1,794,453		$	7.21		5.20
Granted		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Cancelled		—			—		—
Balance at December 31, 2017		1,794,453			7.21		4.20
Granted		436,000			2.80		10.00
Exercised		—			—		—
Forfeited		(846,782	)		6.31		—
Cancelled		—			—		—
Balance outstanding at December 31, 2018		1,383,671		$	6.33		5.28
Options exercisable at December 31, 2018		966,671		$	7.85
Options expected to vest		417,000			2.80
Weighted average fair value of options granted during the year ended December 31, 2018				$	1.19

F-21

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 7 — STOCKHOLDERS’ EQUITY (continued)

As of December 31, 2017, the Company recognized a liability for employee bonus compensation related to stock options granted in January 2018 with a grant-date fair value of approximately $520,000, which was included in accounts payable and accrued expenses. The stock options granted to employees vest one-third on January 29, 2018, 2019 and 2020. The 436,000 options were valued on the grant date at approximately $1.19 per option or a total of approximately $520,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $2.36 per share (based on the sale of its common stock in a private placement at $2.80), volatility of 41%, expected term of 10 years, and a risk free interest rate of 2.70%. Consequently, the Company recognized stock based compensation of approximately $520,000 during the year ended December 31, 2017, in connection with these transactions. As of December 31, 2018, the Company recorded approximately $278,854 in additional paid in capital and a contemporaneous reduction of accounts payable and accrued expenses in connection with the issuance of vested restricted stock units related to fiscal year 2017 bonus compensations. Additionally, the Company reduced stock based compensation of $22,681 in connection with the expiration of stock options due to an employee termination and a contemporaneous reduction of accounts payable and accrued expenses. As of December 31, 2018, the remaining balance of unvested stock options related to fiscal year 2017 bonus compensations amounted to approximately $219,000.

Common Stock Warrants

A summary of the Company’s outstanding stock warrants as of December 31, 2018 and 2017 and changes during the years ended are presented below:

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Balance at December 31, 2016		4,311,166			6.16		0.98
Granted		2,156,691			3.40		2.00
Cancelled		(2,033,590	)		7.68		—
Forfeited		—			—		—
Exercised		—			—		—
Balance at December 31, 2017		4,434,267		$	4.12		1.29
Granted		—			—		—
Cancelled		(2,255,353	)		4.77		—
Forfeited		—			—		—
Exercised		—			—		—
Balance at December 31, 2018		2,178,914		$	3.45		0.95
Warrants exercisable at December 31, 2018		2,178,914		$	3.45		0.95
Weighted average fair value of warrants granted during the year ended December 31, 2018				$	—

F-22

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 8 — NET LOSS PER COMMON SHARE

Net loss per common share is calculated in accordance with ASC Topic 260, “Earnings Per Share”. Basic loss per share is computed by dividing net loss available to common stockholder, adjusted for preferred dividends, by the weighted average number of shares of Common Stock outstanding during the period. The computation of diluted net loss per share does not include anti-dilutive Common Stock equivalents in the weighted average shares outstanding. The following table sets forth the computation of basic and diluted loss per share:

	For the Year ended December 31, 2018			For the Year ended December 31, 2017
Numerator:
Net loss available to common stockholders	$	(14,198,355	)	$	(14,163,125	)
Denominator:
Denominator for basic and diluted loss per share (weighted-average shares)		33,632,857			28,567,344

Net loss per common share, basic and diluted	$	(0.42	)	$	(0.50	)

The following were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s net loss. In periods where the Company has a net loss, all dilutive securities are excluded.

	December 31, 2018		December 31, 2017
Common stock equivalents:
Stock options		1,383,671		1,794,453
Stock warrants		2,178,914		4,434,267
Restricted stock units		983,549		1,061,471
Convertible preferred stock		3,163,051		3,163,051
Total		7,709,185		10,453,242

As more fully discussed in Note 1, the Company entered into a Debenture with Americas Silver to provide a loan of up to $4 million to fund the Company’s working capital needs up to the closing of the Merger, subject to certain customary conditions. In certain circumstances the repayment of the Debenture will be made via the issuance of shares of Company common stock. If shares are issued to Americas Silver to pay-off the Debenture additional shares would be issued which could potentially impact net loss per common share.

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its corporate facility and certain office equipment under operating leases with expiration dates through 2021. In April 2015, the Company executed a new operating lease agreement for its corporate facility in Lakewood, Colorado. The lease is for a period of 39 months commencing in May 2015 and expiring in July 2018. During the second quarter of 2018, the Company executed an amendment to the office lease agreement extending the lease period an additional 39 months through October 2021. The Company recognized total deferred rent of $11,032 in connection with this lease agreement as of December 31, 2018. Rent expense was $42,297 and $51,224 for the years ended December 31, 2018 and 2017, respectively.

Future minimum rental payments required under operating leases are as follows:

2019	$	56,099
2020		57,194
2021		42,888
	$	156,181

F-23

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 9 — COMMITMENTS AND CONTINGENCIES (continued)

Mining Leases

The Company leases certain mineral properties and water rights included in its Relief Canyon Properties. The future minimum lease payments under these mining leases are as follows:

2019	$	98,491
2020		137,485
2021		137,485
2022		142,485
2023		124,985
Thereafter		812,305
	$	1,453,236

If the Merger closes as contemplated, certain key employees of the Company will receive aggregate payments totaling approximately $2.8 million, through employment or severance compensation agreements. Mr. Alfers, Chief Executive Officer, will receive $1.7 million and Mr. Alexander, Vice President Finance and Controller, will receive approximately $450,000. Non-executive key employees will receive the remaining portion of the aggregate $2.8 million. Additionally, if the Merger close as contemplated, Canaccord, the Company’s financial advisor, will receive a minimum success fee of $750,000.

The Company has substantially completed its assessment regarding what the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. Based upon the contracts outstanding at December 31, 2018, the adoption of ASU 2016-02 will result in the recognition of additional ROU assets and lease liabilities relating to operating leases of approximately $122,000. The Company does not expect a material impact to the consolidated statements of operations or the consolidated statements of cash flows. The Company will provide additional qualitative and quantitative disclosures related to leasing arrangements beginning in the period of adoption.

NOTE 10 — INCOME TAXES

The Company accounts for income taxes under ASC Topic 740: Income Taxes which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The Company has a net operating loss carryforward for tax purposes totaling approximately $88.6 million at December 31, 2018, expiring through the year 2038. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards after certain ownership shifts.

F-24

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 10 — INCOME TAXES (continued)

The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the year ended December 31, 2018 and 2017:

	December 31, 2018			December 31, 2017
Tax benefit computed at “expected” statutory rate	$	(2,981,655	)	$	(4,452,130	)
State income taxes, net of benefit		—			—
Permanent differences:
Stock based compensation and consulting		76,430			199,654
Prior year true-ups		23,024			7,888
Other		7,156			14,086,726
Increase (decrease) in valuation allowance		2,875,045			(9,842,138	)
Net income tax benefit	$	—		$	—

The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the year ended December 31, 2018 and 2017:

	December 31, 2018			December 31, 2017
Computed “expected” tax expense (benefit)		(21.0	)%		(34.0	)%
State income taxes		0	%		0	%
Permanent differences		0.73	%		1.58	%
Change in Tax Rates		0	%		107.58	%
Change in valuation allowance		20.27	%		(75.16	)%
Effective tax rate		0.0	%		0.0	%

On December 22, 2017 the United States (“U.S.”) Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws effective January 1, 2018 including but not limited to, (1) reduction of U.S. federal corporate tax rate to 21 percent; (2) the elimination of the corporate alternative minimum tax (AMT) and refunding of existing AMT credit carryforwards ; (3) limitations on deductible interest expense; (4) the repeal of the of the domestic production activity deduction (DPAD); and (5) limitations on net operating losses (NOL’s) generated after December 31, 2018 to 80 percent of taxable income. The NOL’s generated in 2018 and beyond are to be carried forward indefinitely with no carryback.

The Company is subject to the provisions of ASC 740-10 which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. The carrying value of our U.S. deferred taxes is determined by the enacted U.S. corporate income tax rate. Consequently, the reduction in the U.S. corporate income tax rate impacts the carrying value of our deferred tax assets. Under the new corporate income tax rate of 21%, the net deferred tax asset position will decrease as will the related valuation allowance.

The Company has not completed its assessment for the income tax effects of the Tax Act but has recorded reasonable estimates of the effects. Further analysis could potentially affect the measurement of deferred tax balances or potentially give rise to new deferred tax amounts.

F-25

PERSHING GOLD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(in United States Dollars)

NOTE 10 — INCOME TAXES (continued)

The Company has a deferred tax asset which is summarized as follows at December 31, 2018 and 2017:

Deferred tax assets:

	December 31, 2018			December 31, 2017
Net operating loss carryover	$	18,609,630		$	15,896,934
Stock based compensation		2,768,448			2,782,257
Depreciable and depletable assets		21,216			(16,203	)
Mining explorations		3,273,923			3,144,263
Capital loss carryforward		915,886			915,886
Other		41,423			32,346
Less: valuation allowance		(25,630,526	)		(22,755,483	)
Net deferred tax asset	$	—		$	—

After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2018, due to the uncertainty of realizing the deferred income tax assets. The valuation allowance was increased by approximately $2.9 million.

NOTE 11 — SUBSEQUENT EVENTS

F-26