Correspondence 0001062993-24-016527 from Loncor Gold Inc. (LONCF) (CIK 0001472619)
Loncor Gold Inc. (LONCF) (CIK 0001472619)
Date: Sept. 12, 2024 · CIK: 0001472619 · Accession: 0001062993-24-016527
AI Filing Summary & Sentiment
File numbers found in text: 001-35124
Letter
VIA EDGAR U.S. Securities and Exchange Commission 100 F Street, NE Washington, D.C., 20549 Attention: Division of Corporation Finance - Office of Energy & Transportation
Dear Sirs/Mesdames:
Re: Loncor Gold Inc.
Form 20-F for the Fiscal Year Ended December 31, 2023 (the "Form 20-F") Filed April 30, 2024 - SEC File No. 001-35124
We act as counsel to Loncor Gold Inc. (the "Company"), which forwarded to us your letter to the Company dated August 28, 2024 (the "SEC Letter"). Below are the Company's responses to the comments in the SEC Letter, utilizing the numbering and headings contained therein. The said SEC comments are set out below in italics for ease of reference.
Form 20-F for the Fiscal Year Ended December 31, 2023
D. Property, Plants and Equipment, page 25
1. We note that you disclose an exploration target on page 20 of your filing. An exploration target must appear in a separate section of the filing and include all the information required under Item 1302(c) of Regulation S-K. Please revise.
Company Response:
Please see Schedule "A" attached hereto under "Company Response to Comment Number 1" with respect to the proposed revisions to the exploration target disclosure on pages 20 and 21 of the Form 20-F (the revisions are highlighted in red).
2. Please revise your summary resource table on page 26 of your filing to include the price and the point of reference used when estimating resources, as required by Item 1303(b)(3) of Regulation S-K.
Company Response:
Please see Schedule "A" attached hereto under "Company Response to Comment Number 2" with respect to the proposed revised summary resource table on page 26 of the Form 20-F.
Dickinson Wright LLP
Page 2
3. We note that your inferred resource for the Imbo Project includes estimates for the Kitenge and Manzako deposits, which have not been updated in your Technical Report Summary on the Mineral Resources of the IMBO Project in the Democratic Republic of the Congo S-K 1300 Report, effective November 17, 2021. Based on your technical report it appears that the resources for the Kitenge and Manzako deposits are based on a 2014 technical report that uses different cut-off grade assumptions and assumes an underground mining scenario, whereas the Adumbi deposit assumes open-pit mining. Please revise to remove all mineral resources that are not current, consistent with the requirements under Items 1303(b)(3)(vii) and 1304(f)(2) of Regulation S-K.
Company Response:
The Form 20-F will be revised to remove the references to the mineral resources for the Kitenge and Manzako deposits.
4. Please revise your disclosure to remove mineral resources that are no longer current and mineral resources that are located on adjacent properties. For example we note that you disclose mineral resources on page 31 from a 2014 resource report and page 40 from a 2012 report, and that you disclose a resource estimate of a neighboring property on page 36.
Company Response:
As noted in the response to comment number 3 above, the Form 20-F will be revised to remove the references to the mineral resources for the Kitenge and Manzako deposits. As well, the reference to the 2012 mineral resource on page 40 of the Form 20-F will be removed. The Kibali mineral reserves and mineral resources on page 36 of the Form 20-F will also be removed.
5. In a separate section please revise to include the information required by Item 1305 of Regulation S-K with respect to your internal controls related to exploration and mineral resource and reserve estimation applicable to all properties.
Company Response:
The internal controls information required by Item 1305 of Regulation S-K related to exploration and mineral resource estimation is included in sections 11 and 12 of the technical report summary, which is incorporated by reference into the Form 20-F.
Item 19. Exhibits
15.4 Technical Report Summary on the Mineral Resources of the Imbo Project, page 85
6. We note that your qualified person has included language at the beginning of the technical report under the "Cautionary Notes" that appears to disclaim certain information in the technical report. For example your qualified person states the mineral resources referred to in this report are estimates and no assurances can be given that the indicated levels of gold will be produced. In order to comply with Item 1302(a)(1) of Regulation S-K disclosure of exploration results, mineral resources, and mineral reserves must be based on and accurately reflect information and supporting documentation prepared by a qualified person. Information should be reviewed and accepted by the qualified person and disclaimers are not permitted notwithstanding the specific exceptions in which a qualified person may rely. Please revise.
Dickinson Wright LLP
Page 3
Company Response:
The Company believes that the above comment relates to the following paragraph on pages 2 and 3 of the technical report summary:
"The mineral resource figures referred to in this report are estimates and no assurances can be given that the indicated levels of gold will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While it is believed that the mineral resource estimates included in this report are well established, by their nature mineral resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company."
The Company views this cautionary language as typical cautionary information for the reader, and believes it does not disclaim the actual mineral resource estimates. The mineral resource information has been reviewed and accepted by the qualified person. It is however prudent and accurate to highlight for the reader that the mineral resource figures are estimates and that no assurances can be given that the indicated levels of gold will be produced. The language does go on to say that the mineral resource estimates included in the report are well established. The Company therefore believes that the cautionary language provides enhanced disclosure for the reader. To address the concern about disclaiming certain information, the Company proposes to remove the last sentence of the above highlighted paragraph.
7. We note the disclosure on pages 41 and 271 of the technical report summary states that the resources for the Kitenge and Manzako deposits are based on a 2014 technical report, and that these mineral resources have not been updated in the current technical report summary. Please revise to remove these resources until they are supported by a current technical report summary.
Company Response:
The technical report summary will be revised to remove the references to the mineral resources for the Kitenge and Manzako deposits.
Dickinson Wright LLP
Page 4
8. Please revise each mineral resource table to include the specific point of reference as required by Item 601(b)(96)(iii)(B)(11)(i) of Regulation S-K.
Company Response:
Each mineral resource table will be revised to include the following in a note to the table: "Mineral resources are measured in-situ."
9. All mineral resources should be current and located on properties under your control, consistent with Instruction 1 to paragraph (b)(96)(iii)(B)(11) of Regulation S-K. Please revise to remove historical mineral resource estimates and mineral resources on adjacent properties.
Company Response:
The technical report summary will be revised to (a) remove the references to the mineral resources for the Kitenge and Manzako deposits, (b) remove the references to the mineral resources from the 2014 report, and (c) remove the references of the Kibali mineral resources and reserves.
10. Please revise to include the information required under Item 601(b)(iii)(B)(11)(v) and (vii) or Regulation S-K.
Company Response:
The qualified person has confirmed that, having regard to the materiality requirement of this item, there are no sources of material uncertainty in the estimates of the mineral resources other than as discussed in the "Interpretation and Conclusions" section of the report.
The technical report summary will be revised to add the following in the "Interpretation and Conclusions" section of the report: "The qualified persons are of the opinion that all issues relating to all relevant technical and economic factors likely to influence the prospect of economic extraction can be resolved with further work."
Item 18. Financial Statements
Report of Independent Registered Public Accounting Firm, page F-4
11. We note that in addressing matters of going concern, the audit opinion states "the existence of material uncertainties that may cast significant doubt about the Company's ability to continue as a going concern." Please make arrangements with your auditor to revise their report to clearly state that there is substantial doubt about your ability to continue as a going concern, if true. Refer to PCAOB Auditing Standard 2415. Please also make conforming changes to your risk factor disclosures at page 4.
Dickinson Wright LLP
Page 5
Company Response:
Note 2 of the financial statements is specifically referenced in the auditor's report, which Note informs the reader about the going concern matter. The wording of the auditor's report is accurate in that, depending upon certain uncertainties, there may be significant doubt about the Company's ability to continue as a going (rather than there is, with certainty, significant doubt). Under paragraph 12 of Auditing Standard 2415, the auditor's conclusion about the entity's ability to continue as a going concern should be expressed through the use of the phrase "substantial doubt about the entity's ability to continue as a going concern" (or similar wording that includes the terms substantial doubt and going concern). This wording (or similar wording in the case of the use of "significant" versus "substantial") is included in the auditor's report such that the wording complies with Auditing Standard 2415.
As an alternative approach to responding to comment number 11, and to avoid the additional process and costs involved in having the auditor issue a new report, the Company suggests that the wording in comment number 11 be included in the auditor's report in respect of the fiscal 2024 audit (and the conforming change be made to the risk factor disclosure on page 4 of the fiscal 2024 Form 20-F).
Item 18. Financial Statements
Note 2.h. Exploration and Evaluation Assets, page F-17
12. You state in your accounting policy that all direct costs related to exploration and evaluation of mineral properties, net of incidental revenues and recoveries, are capitalized under exploration and evaluation assets. Please explain how your policy is consistent with the guidance in Property, Plant and Equipment - Proceeds before Intended Use, Amendments to IAS 16, which became effective for annual reporting periods beginning on or after January 1, 2022.
Company Response:
The Company is currently in the exploration and evaluation ("E&E") phase, and therefore the standard Property, Plant and Equipment - Proceeds before Intended Use, Amendments to IAS 16, does not apply to the Company. Specifically, as per paragraph 3(c) of IAS 16:
"3. This Standard does not apply to:
(c) the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources)."
The Company's accounting policy is fully aligned with the requirements set forth in IFRS 6 Exploration for and Evaluation of Mineral Resources. Under IFRS 6, exploration and evaluation assets may be measured either by the cost model or the revaluation model as detailed in IAS 16 and IAS 38, following initial recognition [IFRS 6, para 12]. While IFRS 6 does not specifically prescribe how E&E costs should be measured, it is standard practice for such costs to be capitalized as assets, provided that there is a reasonable expectation that the expenditures will generate future economic benefits. If it is subsequently determined that these expenditures will not yield such benefits, they are written off accordingly. To evaluate whether expenditures meet the criteria for capitalization, the Company utilizes a variety of information sources. The information that is used to determine the probability of future benefits depends on the extent of exploration and evaluation that has been performed. This accounting approach is widely used by junior mining companies that are still in the exploratory stage without any major producing assets. In such cases, where exploration and evaluation expenditures are ongoing and the outcome is still uncertain, capitalizing these costs is consistent with industry norms and IFRS guidance. Once the technical feasibility and commercial viability of extracting mineral resources are demonstrable, IFRS 6 requires that E&E assets shall no longer be classified as such and need to be tested for impairment under IAS 36, reclassified in the statement of financial position and accounted for under IAS 16 or IAS 38.
Dickinson Wright LLP
Page 6
Item 18. Financial Statements
Note 9. Exploration and Evaluation Assets, page F-25
13. We note that in connection with your leasing agreement with Ding Sheng, you recorded the Company's attributable revenue of $2.2 million as a reduction to exploration and evaluation assets and reflected the amount as cash flow from investing activities in the consolidated statements of cash flows. Please explain how this treatment complies with the guidance in IFRS 16 Leases, IFRS 15 Revenue from Contracts with Customers, and Property, Plant and Equipment - Proceeds before Intended Use, Amendments to IAS 16, as applicable.
Company Response:
The standards cited in comment number 13 above are not applicable to the Company for the following reasons:
(a) Paragraph 3 (a) of IFRS 16 - Leases, excludes leases to explore for or use mineral, oil, natural gas and similar non-regenerative resources. Since the Company's leasing agreement is directly related to exploration activities, it falls outside the scope of IFRS 16.
(b) The amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use, do not apply to costs the entity incurs in the E&E phase. The Company, being in the E&E phase, follows the accounting principles prescribed by IFRS 6, as explained in the Company's response to comment number 12 above.
(c) Paragraph 6 of IFRS 15 Revenues from Contracts with Customers, clarifies that the standard applies only if the counterparty to the contract is a customer. A customer is defined as a party that has contracted with the entity to obtain goods or services that are an output of the entity's ordinary activity in exchange for consideration. Since the Company is currentl
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CORRESP
1
filename1.htm
Loncor Gold Inc.: CORRESP - Filed by newsfilecorp.com
199 Bay Street, Suite 2200
P.O. Box 447, Commerce Court Postal Station
Toronto, ON Canada M5L 1G4
Telephone: (416) 777-0101
Facsimile: (416) 865-1398
http://www.dickinsonwright.com
Geoffrey G. Farr
GFarr@dickinsonwright.com
(416) 777-4005
September 12, 2024
VIA EDGAR
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C., 20549
Attention: Division of Corporation Finance - Office of Energy & Transportation
Dear Sirs/Mesdames:
Re: Loncor Gold Inc.
Form 20-F for the Fiscal Year Ended December 31, 2023 (the "Form 20-F") Filed April 30, 2024 - SEC File No. 001-35124
We act as counsel to Loncor Gold Inc. (the "Company"), which forwarded to us your letter to the Company dated August 28, 2024 (the "SEC Letter"). Below are the Company's responses to the comments in the SEC Letter, utilizing the numbering and headings contained therein. The said SEC comments are set out below in italics for ease of reference.
Form 20-F for the Fiscal Year Ended December 31, 2023
D. Property, Plants and Equipment, page 25
1. We note that you disclose an exploration target on page 20 of your filing. An exploration target must appear in a separate section of the filing and include all the information required under Item 1302(c) of Regulation S-K. Please revise.
Company Response:
Please see Schedule "A" attached hereto under "Company Response to Comment Number 1" with respect to the proposed revisions to the exploration target disclosure on pages 20 and 21 of the Form 20-F (the revisions are highlighted in red).
2. Please revise your summary resource table on page 26 of your filing to include the price and the point of reference used when estimating resources, as required by Item 1303(b)(3) of Regulation S-K.
Company Response:
Please see Schedule "A" attached hereto under "Company Response to Comment Number 2" with respect to the proposed revised summary resource table on page 26 of the Form 20-F.
Dickinson Wright LLP
Page 2
3. We note that your inferred resource for the Imbo Project includes estimates for the Kitenge and Manzako deposits, which have not been updated in your Technical Report Summary on the Mineral Resources of the IMBO Project in the Democratic Republic of the Congo S-K 1300 Report, effective November 17, 2021. Based on your technical report it appears that the resources for the Kitenge and Manzako deposits are based on a 2014 technical report that uses different cut-off grade assumptions and assumes an underground mining scenario, whereas the Adumbi deposit assumes open-pit mining. Please revise to remove all mineral resources that are not current, consistent with the requirements under Items 1303(b)(3)(vii) and 1304(f)(2) of Regulation S-K.
Company Response:
The Form 20-F will be revised to remove the references to the mineral resources for the Kitenge and Manzako deposits.
4. Please revise your disclosure to remove mineral resources that are no longer current and mineral resources that are located on adjacent properties. For example we note that you disclose mineral resources on page 31 from a 2014 resource report and page 40 from a 2012 report, and that you disclose a resource estimate of a neighboring property on page 36.
Company Response:
As noted in the response to comment number 3 above, the Form 20-F will be revised to remove the references to the mineral resources for the Kitenge and Manzako deposits. As well, the reference to the 2012 mineral resource on page 40 of the Form 20-F will be removed. The Kibali mineral reserves and mineral resources on page 36 of the Form 20-F will also be removed.
5. In a separate section please revise to include the information required by Item 1305 of Regulation S-K with respect to your internal controls related to exploration and mineral resource and reserve estimation applicable to all properties.
Company Response:
The internal controls information required by Item 1305 of Regulation S-K related to exploration and mineral resource estimation is included in sections 11 and 12 of the technical report summary, which is incorporated by reference into the Form 20-F.
Item 19. Exhibits
15.4 Technical Report Summary on the Mineral Resources of the Imbo Project, page 85
6. We note that your qualified person has included language at the beginning of the technical report under the "Cautionary Notes" that appears to disclaim certain information in the technical report. For example your qualified person states the mineral resources referred to in this report are estimates and no assurances can be given that the indicated levels of gold will be produced. In order to comply with Item 1302(a)(1) of Regulation S-K disclosure of exploration results, mineral resources, and mineral reserves must be based on and accurately reflect information and supporting documentation prepared by a qualified person. Information should be reviewed and accepted by the qualified person and disclaimers are not permitted notwithstanding the specific exceptions in which a qualified person may rely. Please revise.
Dickinson Wright LLP
Page 3
Company Response:
The Company believes that the above comment relates to the following paragraph on pages 2 and 3 of the technical report summary:
"The mineral resource figures referred to in this report are estimates and no assurances can be given that the indicated levels of gold will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While it is believed that the mineral resource estimates included in this report are well established, by their nature mineral resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company."
The Company views this cautionary language as typical cautionary information for the reader, and believes it does not disclaim the actual mineral resource estimates. The mineral resource information has been reviewed and accepted by the qualified person. It is however prudent and accurate to highlight for the reader that the mineral resource figures are estimates and that no assurances can be given that the indicated levels of gold will be produced. The language does go on to say that the mineral resource estimates included in the report are well established. The Company therefore believes that the cautionary language provides enhanced disclosure for the reader. To address the concern about disclaiming certain information, the Company proposes to remove the last sentence of the above highlighted paragraph.
7. We note the disclosure on pages 41 and 271 of the technical report summary states that the resources for the Kitenge and Manzako deposits are based on a 2014 technical report, and that these mineral resources have not been updated in the current technical report summary. Please revise to remove these resources until they are supported by a current technical report summary.
Company Response:
The technical report summary will be revised to remove the references to the mineral resources for the Kitenge and Manzako deposits.
Dickinson Wright LLP
Page 4
8. Please revise each mineral resource table to include the specific point of reference as required by Item 601(b)(96)(iii)(B)(11)(i) of Regulation S-K.
Company Response:
Each mineral resource table will be revised to include the following in a note to the table: "Mineral resources are measured in-situ."
9. All mineral resources should be current and located on properties under your control, consistent with Instruction 1 to paragraph (b)(96)(iii)(B)(11) of Regulation S-K. Please revise to remove historical mineral resource estimates and mineral resources on adjacent properties.
Company Response:
The technical report summary will be revised to (a) remove the references to the mineral resources for the Kitenge and Manzako deposits, (b) remove the references to the mineral resources from the 2014 report, and (c) remove the references of the Kibali mineral resources and reserves.
10. Please revise to include the information required under Item 601(b)(iii)(B)(11)(v) and (vii) or Regulation S-K.
Company Response:
The qualified person has confirmed that, having regard to the materiality requirement of this item, there are no sources of material uncertainty in the estimates of the mineral resources other than as discussed in the "Interpretation and Conclusions" section of the report.
The technical report summary will be revised to add the following in the "Interpretation and Conclusions" section of the report: "The qualified persons are of the opinion that all issues relating to all relevant technical and economic factors likely to influence the prospect of economic extraction can be resolved with further work."
Item 18. Financial Statements
Report of Independent Registered Public Accounting Firm, page F-4
11. We note that in addressing matters of going concern, the audit opinion states "the existence of material uncertainties that may cast significant doubt about the Company's ability to continue as a going concern." Please make arrangements with your auditor to revise their report to clearly state that there is substantial doubt about your ability to continue as a going concern, if true. Refer to PCAOB Auditing Standard 2415. Please also make conforming changes to your risk factor disclosures at page 4.
Dickinson Wright LLP
Page 5
Company Response:
Note 2 of the financial statements is specifically referenced in the auditor's report, which Note informs the reader about the going concern matter. The wording of the auditor's report is accurate in that, depending upon certain uncertainties, there may be significant doubt about the Company's ability to continue as a going (rather than there is, with certainty, significant doubt). Under paragraph 12 of Auditing Standard 2415, the auditor's conclusion about the entity's ability to continue as a going concern should be expressed through the use of the phrase "substantial doubt about the entity's ability to continue as a going concern" (or similar wording that includes the terms substantial doubt and going concern). This wording (or similar wording in the case of the use of "significant" versus "substantial") is included in the auditor's report such that the wording complies with Auditing Standard 2415.
As an alternative approach to responding to comment number 11, and to avoid the additional process and costs involved in having the auditor issue a new report, the Company suggests that the wording in comment number 11 be included in the auditor's report in respect of the fiscal 2024 audit (and the conforming change be made to the risk factor disclosure on page 4 of the fiscal 2024 Form 20-F).
Item 18. Financial Statements
Note 2.h. Exploration and Evaluation Assets, page F-17
12. You state in your accounting policy that all direct costs related to exploration and evaluation of mineral properties, net of incidental revenues and recoveries, are capitalized under exploration and evaluation assets. Please explain how your policy is consistent with the guidance in Property, Plant and Equipment - Proceeds before Intended Use, Amendments to IAS 16, which became effective for annual reporting periods beginning on or after January 1, 2022.
Company Response:
The Company is currently in the exploration and evaluation ("E&E") phase, and therefore the standard Property, Plant and Equipment - Proceeds before Intended Use, Amendments to IAS 16, does not apply to the Company. Specifically, as per paragraph 3(c) of IAS 16:
"3. This Standard does not apply to:
(c) the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources)."
The Company's accounting policy is fully aligned with the requirements set forth in IFRS 6 Exploration for and Evaluation of Mineral Resources. Under IFRS 6, exploration and evaluation assets may be measured either by the cost model or the revaluation model as detailed in IAS 16 and IAS 38, following initial recognition [IFRS 6, para 12]. While IFRS 6 does not specifically prescribe how E&E costs should be measured, it is standard practice for such costs to be capitalized as assets, provided that there is a reasonable expectation that the expenditures will generate future economic benefits. If it is subsequently determined that these expenditures will not yield such benefits, they are written off accordingly. To evaluate whether expenditures meet the criteria for capitalization, the Company utilizes a variety of information sources. The information that is used to determine the probability of future benefits depends on the extent of exploration and evaluation that has been performed. This accounting approach is widely used by junior mining companies that are still in the exploratory stage without any major producing assets. In such cases, where exploration and evaluation expenditures are ongoing and the outcome is still uncertain, capitalizing these costs is consistent with industry norms and IFRS guidance. Once the technical feasibility and commercial viability of extracting mineral resources are demonstrable, IFRS 6 requires that E&E assets shall no longer be classified as such and need to be tested for impairment under IAS 36, reclassified in the statement of financial position and accounted for under IAS 16 or IAS 38.
Dickinson Wright LLP
Page 6
Item 18. Financial Statements
Note 9. Exploration and Evaluation Assets, page F-25
13. We note that in connection with your leasing agreement with Ding Sheng, you recorded the Company's attributable revenue of $2.2 million as a reduction to exploration and evaluation assets and reflected the amount as cash flow from investing activities in the consolidated statements of cash flows. Please explain how this treatment complies with the guidance in IFRS 16 Leases, IFRS 15 Revenue from Contracts with Customers, and Property, Plant and Equipment - Proceeds before Intended Use, Amendments to IAS 16, as applicable.
Company Response:
The standards cited in comment number 13 above are not applicable to the Company for the following reasons:
(a) Paragraph 3 (a) of IFRS 16 - Leases, excludes leases to explore for or use mineral, oil, natural gas and similar non-regenerative resources. Since the Company's leasing agreement is directly related to exploration activities, it falls outside the scope of IFRS 16.
(b) The amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use, do not apply to costs the entity incurs in the E&E phase. The Company, being in the E&E phase, follows the accounting principles prescribed by IFRS 6, as explained in the Company's response to comment number 12 above.
(c) Paragraph 6 of IFRS 15 Revenues from Contracts with Customers, clarifies that the standard applies only if the counterparty to the contract is a customer. A customer is defined as a party that has contracted with the entity to obtain goods or services that are an output of the entity's ordinary activity in exchange for consideration. Since the Company is currentl