ITEM 1. BUSINESS
Business Development and Summary
We were incorporated in Delaware on May 11, 2011. During the second quarter of our fiscal 2016 we decided to terminate our Share Purchase Agreement dated for reference April 6, 2015 to acquire all issued and outstanding shares of Boomchat Inc. and as such started evaluating other alternative business opportunities within mining industry. In August 2016 we engaged Gold Exploration Management Inc. a private Nevada corporation (“GEM”) controlled by David A. Bending, M.Sc., P. Geo., providing mineral exploration project management services, to assist us with evaluation of several potential projects in Clayton Valley known for its potential to host lithium deposits.
On October 4, 2016, we entered into an asset purchase agreement (the “Agreement”) with GEM to acquire a title to lithium mineral claims situated in the states of Nevada and California. As a result of our entry into the Agreement, we have ceased to be both a shell company and an issuer described in paragraph (i)(1)(i) of Rule 144 of the Securities Act.
Our business plan is to assemble a portfolio of mineral properties and to engage in the exploration and development of these properties.
Asset Purchase Agreement
On October 4, 2016, we entered into the Asset Purchase Agreement with GEM. Pursuant to the Agreement, GEM agreed to sell to us its title to 220 twenty-acre Crystal Basin Claims, 203 twenty-acre claim units entitled the Scotty’s Southeast Claims, 400 twenty-acre Cholla Claims, and 200 twenty-acre North Limb Claims (collectively the “Claims” or “Portfolio”). As consideration for the sale of the Claims, we issued thirty million (30,000,000) restricted shares of our common stock to GEM. Furthermore, we agreed to appoint David A. Bending to the Board of Directors.
On December 20, 2016, we amended the Agreement to reflect the change in the Portfolio we negotiated with GEM. Pursuant to the Agreement, as amended, the number of claims had changed as follows: the Crystal Basin Claims increased to 245 claims from the original 220 claims, the Scotty’s Southeast Claims increased form the original 203 claims to 312 claims, the Cholla Claims increased from the original 400 claims to 424 claims , and the North Limb Claims were decreased from the original 200 claims to 160 claims. North Limb claims were also renamed as North Lobe claims. In addition we added 224 twenty-acre generative claims that are located in the area of our interest, however, which have not been assigned to any specific group of claims.
As of the date of the filing of this Annual Report on Form 10-K, our Claims consist of 306 fully registered and renewed claim units totalling 6,120 acres and 1,059 claim units totalling 20,540 acres that have been located, however, for which required fees have not been paid. To finalize the registration of the located units we will be required to pay the filing fees within 90 days from the date they were located or re-located.
As part of our Agreement, as amended, we agreed to assume all financial liabilities of the Claims including registration fees and taxes payable to federal, state, and county government agencies.
The mineral titles are subject to payment of annual maintenance fees as of August 31, 2017, and the Company is fully prepared to meet these requirements as warranted by the results of the ongoing exploration work. No minimum field or assessment expenditures are required by either the US Bureau of Land Management (“BLM”) or the Agreement. Exploration work is planned purely on the basis of the financial capacity and objectives of the Company, save and except the annual maintenance fees but Horizon plans an efficient and focused effort to rank and advance the targets to the discovery stage or decisions to negotiate farm out transactions or termination.
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Our business plan is to assemble a portfolio of mineral properties with lithium potential and to engage in the exploration and development of these properties. We are currently focusing our resources on the exploration of a section of the Scotty’s Southeast Claims (the “SFE Property”). See “SFE Property” below. The remaining portion of the Scotty’s Southeast Claims, and the Crystal Basin Claims, Cholla Claims and North Lobe Claims (formerly referred to as “North Limb” claims) remain properties of interest to the Company but we do not have any immediate exploration plans on these properties. See “Properties of Interest” below. We are also actively reviewing other lithium potential mineral properties for future acquisition.
SFE PROPERTY
Property Description and Location
![[HZNM_10K002.GIF]](http://content.edgar-online.com/edgar_conv_img/2017/03/31/0001393905-17-000084_HZNM_10K002.GIF)
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The SFE Property is located in southern Nevada, approximately 29 kms (18 miles) northwest of Beatty, Nevada. The Property centroid is UTM 501,449mE, 4,105,700mN (UTM WGS84, zone 11N) or Longitude 116.984° by Latitude 37.09761°. The claim block comprising the SFE Property lies within portions of the northwest quadrant of the Springdale SW, and the northeast quadrant of Bonnie Claire SE 7.5’ (1:24,000 scale) US Geological Survey topographic base maps. The SFE Property is located approximately 11 kms (7 miles) north of the northern boundary of Death Valley National Monument.
The mineral claims comprising the SFE Property include 21 association placer claims accruing 2,229 acres covering portions of sections 36, T9S, R44E; section 31, T9S, R45E; sections 1, 12, T10S, R44E; and sections 5, 6, 7, 8, T10S, R45E of the Mount Diablo Base and Meridian.
As of the date of this Annual Report on Form 10-K, of the 21 association placer claims, 16 claims have been located in the field and registered with full fees paid to Nye County and the BLM and renewed for the 2017 assessment year as valid, adjudicated, and active claims. The claims cover either 80 acres (4 - 20 acre units) or 160 acres (8 - 20 acre units). An additional five association placer claims have been located in the field with fees paid to Nye County. The required BLM fees have not yet been paid for these five claims, as such, the claims cannot be considered to be fully valid.
In addition to the 21 located association placer claims described above, an additional 20 association placer claims (160 acres each, 8 - 20 acre units), were located in the field on December 18, 2016. These claims have not yet been filed with Nye County or BLM, and fees required for full validation have not yet been paid.
The BLM administers the surface and mineral estate of the SFE Property under the Federal Land Policy and Management Act (“FLPMA”) of 1976. All association placer claims comprising the SFE Property have to be filed and registered with both the BLM and the Nevada county where they are located, in this case Recorder’s Office in Nye County, and in Las Vegas office of the BLM. Mineral deposits subject to placer claims include all deposits not subject to lode claims (e.g. metallic minerals/metals incorporated in bedrock). By US Congressional acts and judicial interpretations, many nonmetallic bedded or layered deposits, such as gypsum and high calcium limestone, are also considered placer deposits. Eight qualified persons or companies can locate a 160-acre placer claim. An association placer claim must be in one contiguous parcel lying side by side. By recording a location notice with the BLM, the locators are representing to the United States government that they meet the qualifications for locating an association placer claim and that they are not using the names of other persons as nominee locators to locate more than 20 acres per claim for their own benefit.
BLM unpatented claim holding fees are currently $155/lode claim and $155/20 acres placer claim up to 160 acres for the annual maintenance. Nye County claim fees are presently $40.50/claim for initial filing, with a $7.00 map fee and annual maintenance fees are $10.50/claim. The association placer claims comprising the SFE Property will remain in effect for as long as the claim holding fees are paid in a timely manner to both the BLM and Nye County.
Our interest in the association placer claims comprising the SFE Property as described in this Annual Report are held in irrevocable trust by GEM based on the terms of the Agreement, as amended. No formal transfer of the title of the claims comprising the SFE Property from GEM to Horizon has occurred. 16 of the 21 association placer mining claims comprising the SFE Property are valid and in good standing, with all BLM and Nye County fees paid for the assessment year ending on August 31, 2017, and October 31, 2017, respectively.
Location, Access, and Physiography
The SFE Property is reached by traveling north 56 kms (35 miles) from Beatty, Nevada on State Highway 95 to Scotty’s Junction, then 10.5 km west on County Road 267 to the turnoff for the historic site of Bonnie Claire. Here a dirt road (at UTM coordinates 488945mE - 4120085mN, zone 11S, WGS 84) is travelled south 17 kms (10.75 miles) to the southwest corner of the Horizon claim block. Total travel time from Beatty to the SFE Property is about one hour and a quarter.
Supplies, gas stations, restaurants, hotels, and other services are available in Beatty. More extensive supplies, hotels, restaurants, services, government offices, etc. and non-technical labour suitable for advanced exploration are available in Pahrump located 175 kms (109 miles) south of Scotty’s Junction.
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The SFE Property is located within the south end of the topographic basin referred to as Sarcobatus Flat. Situated within the Great Basin Physiographic Province, north-northwest trending Sarcobatus Flat is approximately 30 km (19 miles) long by 20 kms (12 miles) with a drainage basin encompassing 2,070 km2 (800 miles2) (Iconic, 2016). The north end (“north basin”) of Sarcobatus Flat is approximately linear while the south end (“south basin”) where the SFE Property is located is much more asymmetric. Salt, borate, and other evaporites are being actively deposited in the north basin. The north basin is not completely closed, suggesting surficial dilution of evaporite units may be occuring. The northwest trending Amargosa Range flanks the western side of Sarcobatus Flat, the Bullfrog Hills, the south end, and the western flank of Pahute Mesa the eastern side. The SFE Property is characterized by flat to very gently sloping topography, mostly consisting of alluvium and colluvium (“desert pavement”) deposited by sheet wash. Elevations do not vary greatly, ranging from the west side at approximately 1,287 m (4,225 feet) to the east side of the Property at 1,242 m (4,075 feet). The south basin becomes completely closed near the east margin of the Property.
The northern portion of the Mohave Desert extends into this part of Nevada. Sparse vegetation mostly consists of rabbit brush, and widespread small Mohave yucca trees. Soil is poorly developed. The depth to water is unknown but the north end of Sarcobatus Flat has occasional shallow standing water following moderate to heavy rainfall.
As reported in the Beatty weather station, the average annual high temperature is 74.1°F (23.4°C) and the average low temperature is 43°F (6.1°C) with an overall year-round average of 58.5°F (14.7°C). Annual rainfall averages about 6.0 inches (1.53 cm) (www.usclimatedata.com). Rainfall can occur year-round but the wettest months are the December through March period. Work activity is possible year-round, but transit across clay-rich surfaces can be difficult to impossible after periods of rainfall.
History
The area known as Bonnie Claire, Scotty’s Junction or Sarcobatus Flats has been the site of metal and industrial minerals development since Bonnie Claire was founded in 1906. A small camp was developed in the 1880’s when a stamp mill was built at a site called Thorpe’s Wells, north of the current SFE Property area. The mill handled ore from three mines near Gold Mountain, near the current site of Gold Point, about 25 kms (15 miles) northwest. In 1906 the Bullfrog - Goldfield Railway reached the site of Thorp’s Wells. Metal mining and processing activity continued until 1928. No industrial borax or salt production is documented from the area. Regional mining activity has been dominated by the significant precious metals mines in the Beatty District, 35 kms (22 miles) south of the Property, and the world-class Goldfield and Tonopah districts, 45 kms (28 miles) and 75 kms (46 miles) north, respectively. Some lightweight aggregates are produced from mafic cinder cones along the same trend.
Lithium has been produced at Silver Peak since 1966 and this deposit has become the largest source for light alkali metal. In addition to Silver Peak Marsh, some playas, both closed and open basins, in southwestern Nevada were explored in the 1960’s by companies interested in lithium.
Claim staking and exploration activity reflecting the lithium exploration activity of 2011 to 2012 occurred but no published information is available concerning this work. Borax, sodium sulphate and sodium carbonate were actively developed in other salinas in the region, notably Columbus Marsh, Teels Marsh, Clayton Valley and Rhodes Marsh. Borax mining began with the discovery of borate deposits in 1872 in Columbus Marsh and Teels Marsh. Borax mining in Nye County was superseded by the development of larger deposits in California in 1892. Significant modern lithium exploration resumed in September 2015 with commencement of active staking and evaluation work which continues to this time. It is unknown if any of this recent staking activity occurred within the SFE Property boundaries; no evidence was observed during the field visit of February 2, 2017.
Geology
The Property lies within a Tertiary and Quaternary pull-apart basin within the Basin and Range Province along the Walker Lane Structural Trend. The rocks in the area range in age from Paleozoic clastic sedimentary rocks to Quaternary basaltic volcanic rocks with basins filled with Quaternary evaporites, clay and tuff beds, and sandy horizons. While as the older clastic sedimentary rocks are not of special interest to the lithium target objective, except as permeability boundaries along the west flank of the basin, the eastern flank of the structurally bounded basin is dominated by the Miocene Horse Springs Formation and Thumb Formation (and their equivalents) which are known to host anomalous lithium concentrations. The southeastern terminus of the south basin is flanked by the Tertiary felsic center at Beatty, another source of lithium.
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The south basin where the Property is located is covered by an unknown thickness of gravel and alluvium, deposited by sheet wash deposition. No salt or other evaporites are exposed within the Property boundaries. The extent of possible lithium bearing strata and brines into the south basin is unconfirmed at present. However, the structural basin does extend to the south indicated by topography and interpreted structural boundaries. This interpretation is also supported by regional isostatic gravity data published by the US Geological Survey (USGS). This implies that the south basin is at least permissive for possible lithium enrichment within sediments concealed beneath the alluvial veneer.
Mineralization
The primary deposit type sought in the Property is brine horizons in closed, structurally bounded sub-basins within asymmetric deep extensional basins in the Mojave Desert area of Nevada. Unlike some deposits in Chile, the target objective is brine in porous and permeable strata below the surface, and not surficial waters. The basins can be as deep as 2 kms (1.2 miles) and the permeable brine saturated reservoirs are mapped with seismic and CSAMT surveys. A secondary target objective is represented by lithium bearing clays and in particular hectorite, but the economics of brine production are more attractive. The brines can be concentrated by evaporation ponds but are also potentially amenable to other concentration methods such as ion exchange, resins, and semipermeable membranes. These technologies are not yet proven. The focus of most work is defining brines amenable to pre-concentration and production of lithium carbonate. Lithium carbonate and lithium phosphate have been produced as a byproduct of commercial borates, potash, sodium sulphate, and soda ash (sodium bicarbonate) at Searles Lake, California. Lithium has been produced as part of clay production in Hector, California and hectorite deposits are the subject of active evaluation and development programs in Kings Valley, Nevada and various locations in Sonora, Mexico.
The chemistry and alkali ratios of the brines are important for potential recovery methods. The literature emphasizes Li/Cl ratios and Mg/Li. Alkali ratios and water chemistry in the basinal brines differ significantly from surface sampling of clays or mixed surficial and basinal waters and other sediments. The presence of anomalous lithium values in playa sediments, defined as higher than 300 ppm, is a good initial indication of potential but only drilling and systematic sampling of the brines can confirm the economic potential of a property. It is significant that the initial sampling of the salina at Clayton Valley returned a mean value of only 147 ppm Li with a peak value of 200 ppm. Shallow clay and water/brine samples may be prone to leaching and dilution by meteoric waters as well as dilution by windblown sand and fine lithic particles. Surface sample results vary with time, particularly in shallow water samples. This may be related to seasonal flux of surface waters from rain and drainage from the enclosing basin.
Lithium source rocks are a fundamental element of target selection. Published analyses of the fine fraction in the upper member of the Miocene Esmeralda Formation, a tuffaceous lake bed and ash sequence, yielded values as high as 4,000 ppm suggesting a natural source rock for the lithium bearing brines. Further south, the very extensive Horse Creek and Thumb Mountain Formations, in the Muddy Mountains and in extensive areas within the Nevada military test site hosts lithium concentrations in the range of 100 to 3,500 ppm and represent other attractive source rocks. In northern Nevada, the McDermitt Caldera is another well-documented lithium enriched volcanic center with extensive areas of altered moat sediments with lithium concentrations in the range of 5,000 to 6,500 ppm. Permissive lithium source environments are not limited to the central Walker Lane Area.
The USGS followed a sequential protocol which involved surface sampling of clays and salts on the salina surface, shallow test pit or auger sampling (one to three meters) and deeper Mud Rotary drill holes which were limited by access on some wet playas. Conventional sequenced excavation would use the surface and shallow sampling to validate a target basin as prospective followed by sequential geophysics. Airborne gravity, EM (Electro-Magnetic) and magnetic surveys help to define the basin at the lowest possible cost. Airborne or ground tools to map resistivity and conductive zones (presumed to be brines) are followed by and supported by selective seismic surveys, which are best performed with a truck mounted mobile impact device (‘thumper’) to provide more details for basin geometry and map porous and/or impermeable horizons which become the definitive drilling targets. In Nevada, permitting for drilling represents a four to six month process so the optimal plan is to complete the other systematic work to properly plan and permit the drilling.
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Lithium brine deposits are trapped volumes of saline groundwater enriched in dissolved lithium. The target brines range from 100 to 1,400 parts per million in structurally bounded, closed basins which generally form in arid evaporitic environments in Tertiary to Quaternary terranes. Although lithium concentrations of potential interest occur in some oilfields, the surface evaporative concentration required to enrich the brines for economic recovery requires an arid environment. This precludes recovery from oilfield brines along the Gulf Coast of the United States and Mexico until viable ion exchange or other selective extraction technologies can be perfected. The chemistry of the brines is also critical to the economics of concentration, and high proportions of magnesium limit recoveries by evaporation. It is possible that advancing membrane or ion exchange mechanisms can serve to resolve this problem and mitigate the need for large evaporation ponds.
Water rights are a fundamental component of securing targets for development because the saline groundwater is pumped up for evaporation. This is a profound economic hurdle for the active explorers in the area and is a reminder that as any project gains credibility application for the water rights becomes an urgent priority.
Lithium brines occur in some peripheral portions of the Great Salt Lake Basin and in Sevier Lake in Utah along the eastern margin of the Great Basin. The Great Salt Lake is the largest surface salt lake in the Western Hemisphere. Lithium concentrations of substance are reported in the northern arms of the Great Salt Lake in Utah, subsurface reservoirs of the Paradox Basin in Utah and the Rock Springs Dome in Wyoming. Both of these phenomena are associated with Mesozoic and Tertiary evaporitic continental basins. Admixture of marine waters may generate evaporitic sodium chloride, gypsum/anhydrite and potassium chloride deposits but is unfavourable for development of potentially economic lithium concentrations. These areas have been subject to commercial salt recovery operations and Sevier Lake is currently under development for both potassium and lithium brines.
Key characteristics of lithium deposits are summarized below.
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Lithium resource potential is limited by an arid climate and a closed, tectonically active basin. This is enhanced by elevated heat flow from young volcanos, geothermal cells or hot springs due in part to the enhanced solubility of lithium in hot fluids relative to cold groundwater.
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Some but not all sodium chloride bearing brine reservoirs are associated with lithium deposits. Many show no such association and the alkali ratios including the association with boron, bromine, magnesium and potassium are all diagnostic factors. Boron shows an historical correlation with lithium bearing basins in the Mojave Desert in California and Nevada, but all boron enriched brines are not necessarily viable lithium targets. High magnesium ratios complicate brine processing for lithium recovery.
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Tertiary and Quaternary tectonics leading to development of deep closed traps are fundamental to the formation and preservation of lithium brine deposits. Basin geometry and aquifers are mapped by gravity surveys, resistivity surveys, and detailed seismic profiles. Some Tertiary volcano-sedimentary sequences host strongly anomalous lithium concentrations but may be more important as source environments than as economic targets.
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Felsic ash and tuff deposits, large nested felsic caldera complexes, granitoid basement complexes and the immature sediments which are derived from these materials are all potential sources of lithium if climate and the physiography needed for trapping are present.
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Some Tertiary lacustrine and clastic sequences host elevated levels of lithium and borates. The USGS has investigated the Horse Springs Formation in Southern Nevada as a potential lithium target environment but it is equally important as a source rock for lithium in basins from Clark County to the areas in Esmeralda and Nye County surrounding the Military Test Site area, Sarcobatus Flats (Scotty’s Junction) and the Amargosa Valley.
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Lithium brines develop and are retained in closed basins of substantial depth. If the basins have sufficient depth it is possible that the presence of shallow outflow horizons will not preclude the presence of viable targets in an otherwise permissive basin.
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If the long-term rate of precipitation exceeds evaporation the basin will be flushed into surrounding drainages and the lithium reservoir degenerates.
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Lithium brines develop in the arid longitudinal belts on either side of the equator with the optimal zones between 19° and 37° degrees north or south. This may be enhanced by rain shadow effects as are readily observed in the Mojave Desert portions of the Great Basin in the United States and the Sonora Desert of Mexico.
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The target brines are trapped in subsurface aquifers and are not present at all depths. In many target environments shallow surficial waters are diluted by admixture of meteoric waters and do not represent the target potential of an otherwise permissive basin. Deeper testing, including CSAMT surveys and drilling, may be the only way to determine if a fertile basin hosts an economic brine resource below the zone of meteoric water mixing. This may be a trapped, fossil aquifer or otherwise be separated from meteoric mixing by impermeable strata and cross structures.
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Another favorable indicator is the presence of hectorite (Na0.3(Mg,Li)3Si4O10(OH)2), a clay mineral which selectively absorbs lithium and holds its lattice, and may be utilized to map permissive basins and fluid pathways. Lithium-bearing hectorite is documented in the Clayton Valley, Teels Marsh, Fish Lake Valley, Columbus Marsh, Scotty’s Salina and Scotty’s Flats, the Amargosa Flats, the Stewart Valley Salina, the lithium bearing Miocene Horse Springs Formation in Clark County, and Northwestern Nevada including the McDermitt Caldera and the Kings Valley deposit. In Kings Valley and Bacanora, Mexico hectorite is the primary ore mineral. It was originally discovered and mined in Hector, California, its type locality.
Current Exploration Activities
No exploration has yet been conducted on the SFE Property. No drilling has been conducted on the SFE Property and there is no evidence of historical drilling within the Property boundaries.
Interpretations and Conclusions
The SFE Property is an early stage but well-defined opportunity for discovery of brines with significant concentrations of lithium and other elements amenable to evaporitic concentrations from continental brines.
These general characteristics include:
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Arid climate;
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Closed basin;
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Tectonically driven subsidence;
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Associated volcanic or geothermal activity;
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Suitable lithium source rocks; and
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Sufficient time to allow for brine concentration.
No salt or other evaporates are exposed within the SFE Property boundaries. The extent of possible lithium bearing strata and brines into the south basin is unconfirmed at present. However, the structural basin does extend to the south indicated by topography and interpreted structural boundaries. This interpretation is also supported by regional isostatic gravity data published by the USGS. This implies that the south basin is at least permissive for possible lithium enrichment within sediments concealed beneath the alluvial veneer.
Planned Exploration Work
As part of the 43-101 technical report the Company commissioned from R. A. Lunceford, MSc., CPG dated for reference February 17, 2017, Mr. Lunceford recommended to conduct a two-phased exploratory program on the SFE Property to further evaluate lithium sediment or brine potential within the SFE Property.
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Phase I
Gravity, magnetic and CSAMT surveys to map basin geometry and conductive brine bearing aquifers are recommended. Thumper seismic surveys should be completed to refine aquifer stratigraphy and select priority fluid traps for drill testing. This combination of surveys is the most cost effective and environmentally appropriate for the sequenced evaluation of the SFE Property.
The Phase I budget is detailed below.
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Item / Description
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USD$
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Geologic planning, supervision, reporting
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12,000
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Vehicle mileage
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5,000
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Lodging and meals
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5,000
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ATV rental with trailer
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3,000
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Seismic survey 3 line miles @ $12,000/mile
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36,000
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Gravity survey
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25,000
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CSAMT survey
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60,000
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Geophysical modelling/interpretation
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5,000
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Hydrological modelling and recommendations for drill holes
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15,000
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Subtotal
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166,000
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10% Contingency
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17,000
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Total Phase I Budget
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183,000
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Following geophysical modelling and evaluation, a Phase II budget is recommended only if results from the Phase I program warrant further drill testing.
Phase II
Permitting for seismic lines will (probably) be needed. Location of possible drill holes will be reliant on a thorough analysis of the available geophysical data generated during the Phase I program. Based on drill holes completed in the north basin by Iconic Minerals Ltd. it is likely that proposed hole depths will be on the order of 475 to 625 m (1550 ft. to 2050 ft.)
Hydrogeological testing including packer tests, water sampling, downhole geophysics including EM methods, and permeability tests to commence evaluation of the target brine horizons. The holes should be left cased and open to allow re-entry and further hydrological work. The drilling methods used and the details of water sampling and hydrogeological studies will vary widely depending on the depth to the target brine reservoirs and the projected budgets are therefore not defined at this stage of work.
PROPERTIES OF INTEREST
The balance of the Claims that are not included in the SFE Property are properties of interest of the Company and no exploration on these properties is anticipated in the near future.
The Claims all lie within Tertiary and Quaternary pull-apart basins within the basin and range provinces of the Western United States. The rocks in the area range in age from Paleozoic clastic sedimentary rocks to quaternary basaltic volcanic rocks and basins filled with quaternary evaporates, clay and tuff horizons, and sandy horizons. While as the older clastic sedimentary rocks are not of special interest to the lithium target objective except as permeability boundaries, the basins are all related to lithium bearing felsic volcanic or lithium bearing granitic source rocks. These source rocks range in age from Proterozoic (in the Mojave Desert in California) to felsic tuffs of Eocene and Paleocene age. Some source rocks are in deformed Eocene basinal sequences. The Muddy Mountains host no closed basins to trap brines but the larger basins in the test site area offer far more volume for source rocks. The Claims are generally at an early stage but well defined opportunities for discovery of brines with significant concentrations of lithium and other elements amenable to evaporitic concentrations from continental brines.
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The Claims are all located in a geopolitical environment permissive to commercial development. Access and infrastructure are ideal for a cost effective program of target definition and development using well defined geological, geochemical and geophysical tools and rapid advancement to the drilling stage.
Crystal Basin Claims
The Crystal Basin Claims consist of 245 twenty-acre unpatented mining claims located in Southern Nye County. 154 of the 245 original claims have been filed and renewed with the BLM and will expire on September 1, 2017, if we do not renew the claims. The Crystal Basin Claims are held in irrevocable trust by GEM based on the terms of the Agreement, as amended, with 91 claims pending filing. They are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The Crystal Basin lies in southern Nye County at the SE corner of the Amargosa Valley in a structurally defined secondary closed basin between 2 and 10 km (1.24 to 6.21 miles) SW of Nevada highway 95, 70 km (43.50 miles) northeast of the City of Las Vegas and 25 km (15.53 miles) northwest of the unincorporated community of Pahrump, Nevada. The claims are traversed by roads developed for the adjoining complex of clay mining operations, power lines and a history of surface disturbance and prospecting. The clay deposits overlie the basinal sediments of interest and the surface is dominated by very young felsic ash deposits which have been altered to the commercially significant saponite, montmorillonite and zeolite deposits that have generated a local mining culture and infrastructure. The village of Crystal offers low cost lodging within 3.21 km (2 miles) of the subject property in this area. The elevation of the area is 609.6 to 640 meters (2000 to 2100 feet) above mean sea level, and the climate is typical of the Amargosa/ Mojave Desert with hot summers and cool dry winters. Annual rainfall is about 5 cm (1.97 inches ) per year.
No exploration has been carried out by the Company on the Crystal Basin Claims to date and the Company has no immediate exploration plans.
Scotty’s Southeast Claims
The Scotty’s Southeast Claims consisted of 312 twenty-acre unpatented mining claims located in Central Nye County. The only retained interest the Company has in these claims are referred to as the SFE Property. See “
SFE Property
”. The Scotty’s Southeast Claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The Scotty’s Southeast Claims were located September 14 to 18, 2016 in south Central Nye County 24 KM (15 miles) south of Scotty’s Junction Airport, two to four miles southwest of US Highway 95. The claims lie in south central Nye County, 16 to 32 km (10 to 20 miles) north of the mining community of Beatty, Nevada, 129 km (80 miles) south of Goldfield, 5 to 13 km (3 to 8 miles) west of Nevada Highway 95, and 249 km (155 miles) north of Las Vegas. The elevation of the area is 609.6 to 640 meters (2000 to 2100 feet) above mean sea level, and the climate is typical of the Amargosa/ Mojave Desert with hot summers and cool dry winters. Annual rainfall is about 5 cm (1.97 inches ) per year.
The location and climate of these Claim areas permit exploration work at all times of the year, subject to very rare periods in which transient rainfall renders the salina or mudflat surface soft but still accessible to ATV and four wheel drive conventional vehicles.
With the exception of SFE Property, no exploration has been carried out by the Company on the Scotty’s Southeast Claims to date and the Company has no immediate exploration plans.
Cholla Claims
The Cholla Claims consist of 424 unpatented twenty-acre claims located in eastern San Bernardino County between Barstow and Needles, California, which were located in September and October and relocated in the period December 2 to December 5 and further relocated on March 20, 2017. As of the date of the filing of this Annual Report on Form 10-K Cholla Claims are yet to be filed with the BLM or San Bernardino County. We have until June 18, 2017, to file our Cholla Claims with San Bernardino County, and until June 16, 2017, to file the Cholla Claims with BLM at which time filings fees will be required to be paid. The funds to file these claims have not been available during this phase of work but the documentation is ready to be filed.
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The Cholla Claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The Cholla Claims consist of 53 association placer claim blocks, representing the equivalent of 424 claim units totaling 7,840 acres, in San Bernardino County, 3.2 to 9.7 km (two to six miles) south of the historic route 66, approximately midway between the communities of Barstow and Needles in the Mojave Desert in California. They are located in four discrete parcels called the Northwest, West, East and Turtle trend Blocks. Although the geological data available suggest that the prospective environment is far more extensive than the current land position most of the area selected for consolidation in early 2016 was alienated from mineral development by the new Mojave Trails National Monument. The claims which were relocated and retained for evaluation after systematic study of the area lie in the Bristol Basin east and northeast of the Bristol Lake Salt Flats.
No exploration has been carried out by the Company on the Cholla Claims to date and the Company has no immediate exploration plans.
North Lobe Claims
The North Lobe Claims originally called North Limb Claims consist of 160 unpatented twenty-acre claims located in northeastern Nevada in Elko County along the border with Utah, approximately 16 to 24 km (10 to 15 miles) north of Wendover, Nevada. The original package of 200 claims was reduced to 160 claim units, and lies 8 to 19 km (5 to 12 miles) north of U.S. Interstate Highway 80 and is accessible along unpaved roads and four-wheel-drive trails. As of the date of this filing we have yet to file these claims with Elko County and the BLM. In order to keep our interest in these claims we have to file them with both Elko County and BLM by mid June 2017.
The North Lobe Claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
They North Lobe Claims cover the eastern portion of a salt flat which is part of the Great Salt Lake north of Bonneville Salt Flats, an area in which drillhole data released by a joint publication of the USGS and the Nevada Bureau of Mines and Geology documented strongly anomalous lithium concentrations in brines.
The North Lobe Claims are similar in climate and topography to the other properties but lie at an elevation of 1,250 meters (4,100 feet) above mean sea level. Mean annual rainfall is 4.5 cm (1.77 inches) and mean daily temperatures range from 46.1°C (115°F ) during July to -15°C ( 5°F) during December and January. Access to the area is generally good via Interstate Highway 80 which traverses the Great Salt Lake to the local population center of Wendover, at the frontier between Utah (Toole County) and Nevada (Elko County). Access to the salt and mud flats which cover the target areas is generally very good via local roads and trails, with the exception that after periods of rain or snowmelt the surface can become soft and surface travel uncertain. This is a factor primarily between February and May of each year.
No exploration has been carried out by the Company on the North Lobe Claims to date and the Company has no immediate exploration plans.
Generative Claims
In addition to the above Claims, during month of December 2016 we have located an additional 28 association placer claim blocks consisting of 224 claim units totalling 4,480 acres. These generative claims are located in Toole County, Utah and are in close proximity to our North Lobe Claims within the Great Salt Lake area. As of the date of the filing of this Annual Report on Form 10-K, these claims have not been assigned to any specific group of claims.
As of the date of this filing we have yet to file these claims with Toole County and the BLM. In order to keep our interest in these claims we have to file them with both Toole County and BLM by mid June 2017.
The above generative claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
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Compliance with Government Regulations
Exploration and development activities are all subject to stringent national, state and local regulations. All permits for exploration and testing must be obtained through the local BLM offices of the Department of Interior in the States of Nevada, California and Utah. The granting of permits requires detailed applications and filing of a bond to cover the reclamation of areas of exploration. From time to time, an archaeological clearance may need to be obtained before proceeding with any exploration programs. We plan to secure all necessary permits for any future exploration.
We have to apply for and receive permits from the BLM to conduct drilling activities on BLM administered lands. Mining operations are regulated by the Mine and Safety Health Administration (“MSHA”). MSHA inspectors periodically visit projects to monitor health and safety for the workers and to inspect equipment and installations for code requirements. Workers must have completed MSHA safety training and must take refresher courses annually when working on a project. A safety officer for the project should be on site.
Other regulatory requirements monitor the following:
(i)
Explosives and explosives handling.
(ii)
Use and occupancy of site structures associated with mining.
(iii)
Hazardous materials and waste disposal.
(iv)
State Historic site preservation.
(v)
Archaeological and paleontological finds associated with mining.
We believe that we are in compliance with all laws and plan to continue to comply with the laws in the future. We believe that compliance with the laws will not adversely affect our business operations. There is, however, no assurance that any change in government regulation in the future will not adversely affect our business operations.
Each year we must pay a maintenance fee of $140 per claim to the Nevada State Office of the Bureau of Land Management, and on September 1 of each year, we must file an affidavit and Notice of Intent to Hold the claims in Mineral County.
Compliance with Environmental Regulation
We will have to sustain the cost of reclamation and environmental remediation for all exploration work undertaken. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Other potential pollution or damage must be cleaned up and renewed along standard guidelines outlined in the usual permits. Reclamation is the process of bringing the land back to its natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused. The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the recommended work program. Because there is presently no information on the size, tenor, or quality of any resource or reserve at this time, it is impossible to assess the impact of any capital expenditures on earnings, our competitive position or us in the event that a potentially economic deposit is discovered.
Prior to undertaking mineral exploration activities, we must make application for a permit, if we anticipate disturbing land. A permit is issued after review of a complete and satisfactory application. We do not anticipate any difficulties in obtaining a permit, if needed. If we enter the production phase, the cost of complying with permit and regulatory environment laws will be greater because the impact on the project area is greater. Permits and regulations will control all aspects of the production program if the project continues to that stage. Examples of regulatory requirements include:
(i)
Water discharge will have to meet drinking water standards;
(ii)
Dust generation will have to be minimal or otherwise re-mediated;
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(iii)
Dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation;
(iv)
An assessment of all material to be left on the surface will need to be environmentally benign;
(v)
Ground water will have to be monitored for any potential contaminants;
(vi)
The socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be re-mediated; and
(vii)
There will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species.
Competition
We are an exploration stage company. We compete with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom we compete have greater financial and technical resources than we do. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.
Raw materials
The raw materials for our exploration programs include camp equipment, hand exploration tools, sample bags, first aid supplies, groceries and propane. All of these types of materials are readily available from a variety of local suppliers.
Dependence on major customers
As a junior exploration company, we have no customers.
Employees
As of the date of this Annual Report we do not have any employees. Management expects to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees at this time. We are planning to contract for the services of geologists, prospectors and exploration crew as we require them to conduct our exploration programs.
Research and Development Expenditures
We have not incurred any research expenditures since our incorporation.
Patents and Trademarks
We do not own, either legally or beneficially, any patent or trademark.
