NOTES PAYABLE IN GOLD

6 Months Ended

Jun. 30, 2023

NOTES PAYABLE IN GOLD

During 2013, the Company issued notes payable in gold totaling $820,000, less a discount of $205,000, for net proceeds of $615,000. Under the terms of the notes, the Company agreed to deliver gold to the holders at the lesser of $1,350 per ounce of fine gold or a 25% discount to market price as calculated on the contract date and specify delivery of gold in November 2014. The notes bear interest at a rate of 10% per annum and penalty interest of 10% per annum on any due and unpaid interest.

After several amendments to the terms of the note agreements, through the date of the issuance of these financial statements, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. At June 30, 2023 and December 31, 2022, 266.788 ounces of fine gold was due and deliverable to the holder of the notes.

The Company estimates the fair value of the notes based on the market approach with Level 2 inputs of gold delivery contracts based upon previous contractual delivery dates, using the market price of gold on June 30, 2023 of approximately $1,912 per ounce as quoted on the London PM Fix market or $510,166 in total. The valuation resulted in an increase in gold notes payable of $26,652 during the six months ended June 30, 2023. During the three months ended June 30, 2023 and 2022, this resulted in a gain on change in fair value of notes payable in gold of $17,995 and $33,389, respectively on the condensed consolidated statement of operations. During the six months ended June 30, 2023 and 2022, this resulted in a loss on change in fair value of notes payable in gold of $26,652 and $2,975, respectively on the condensed consolidated statement of operations.

At December 31, 2022, the fair value was calculated using the market approach with Level 2 inputs of gold delivery contracts based upon previous contractual delivery dates. At December 31, 2022, the Company had outstanding total notes payable in gold of $483,514.

Interest of $12,560 and $24,768 was expensed during the three and six months ended June 30, 2023, respectively, and $164,407 is accrued at June 30, 2023 and is included in interest payable. Interest of $11,377 and $22,358 was expensed during the three and six months ended June 30, 2022, and $139,639 is accrued at December 31, 2022 and is included in interest payable.

GOLDRICH MINING CO 10-Q