ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. In some cases, you
can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,
“potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the
section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:
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risks and uncertainties relating to the interpretation of sampling results, the geology, grade and continuity of mineral deposits;
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risks and uncertainties that results of initial sampling and mapping will not be consistent with our expectations;
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mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;
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the potential for delays in exploration activities;
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risks related to the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses;
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risks related to commodity price fluctuations;
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the uncertainty of profitability based upon our limited history;
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risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration project;
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risks related to environmental regulation and liability;
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risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
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risks related to tax assessments;
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political and regulatory risks associated with mining development and exploration; and
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other risks and uncertainties related to our mineral property and business strategy.
This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.
Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other
circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable
law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “Lake Victoria” mean Lake Victoria Mining Company, Inc., and our wholly owned subsidiaries Kilimanjaro
Mining Company, Inc. and Lake Victoria Resources (T) Limited, Chrysos 197 Company Tanzania Ltd. and Jin 179 Company Tanzania Ltd., unless otherwise indicated.
Recent Corporate Developments
Since the commencement of the nine month period ended December 31, 2012, we experienced the following significant corporate developments:
|
1.
|
On January 9, 2013, the Company entered into a contracting agreement with Camlaren Mine Development (“Camlaren”) to manage our mining projects. The agreement is valid for two years and may be renewed for another four
years. Camlaren recently completed an initial visit and an on-site review of the Kinyambwiga property in northern Tanzania.
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2.
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In September 2012, the Company offered a total of up to 120 royalty units to raise a gross amount of $3,000,000 for a small scale mining operation on the Kinyambwiga property. Each unit will entitle investors to receive
½ of 1 percent (1%) of the net proceeds of production from the small scale mining operation at Kinyambwiga. Up to 60% of the net proceeds of gold production are offered to investors. As of December 31, 2012 the Company received subscription
payments of $875,000 for 35 units.
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3.
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At Kahama South, we commenced a ground magnetic survey and a geologic mapping program of the 245 square kilometer project.
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4.
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In July 2012, the Company received results from the recent core drilling program at the Kiabakari East project in northeastern Tanzania. The four core hole drill program, completed in June 2012, totaled 648.72 meters and was the
Company’s first drilling on this project. Final drill hole locations were determined by detailed geologic mapping, geophysical surveying and trench sampling. Drilling was focused on BIF Hill where previous trenching activity returned
significant gold grades within Banded Iron Formation rocks. The drill holes were located on the south side of BIF Hill and were spaced 40 meters apart on N-S drill fences. The holes, drilled due north at angles of -50 and -55 degrees below the
horizontal, were designed to test the grade and to define the geometry of the gold mineralization.
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Our Current Business
We are an exploration stage corporation focused on acquiring, exploring and developing gold deposits in the Lake Victoria Greenstone Belt in Tanzania, East Africa. We hold prospective gold projects, consisting of 18 Prospecting Licenses (PLs) and 71
Primary Mining Licenses (PMLs) and 4 uranium projects consisting of 7 Prospecting and Reconnaissance Licenses, within its Tanzania property portfolio, covering approximately 1,772 square kilometers (485,809 acres). Our main area of interest is
acquiring, exploring and evaluating mineral properties through our ongoing exploration program. Following exploration, we intend to either advance them to a commercially feasible mining stage, enter joint ventures to further develop these
properties, sell or dispose of them if the properties do not meet our requirements. Our properties are all early stage exploration properties. Within our mineral exploration land in Tanzania our focus is primarily on gold, although our portfolio
also contains uranium prospects.
Assuming funding is available, we plan to develop and conduct small-scale gold mining on selected mineral properties
within certain areas that are currently contained within primary mining licenses. The production decision or significant
development on these projects will not be based on mineral reserves supported by a technical report. We plan to
secure Special Mining Licenses for each of these potential mining areas.
We have no revenues, we have incurred losses since inception and we have relied upon the sale of our securities to fund operations. To date, we have not discovered a commercially viable ore body, mineral deposit or mineral reserve on any of our
properties and we will be unable to do so until further exploration is completed and a comprehensive evaluation is concluded with an economic study and a formal feasibility study.
Our property portfolio is large, therefore we may interest
other companies in our properties to either participate by means of option or
joint venture agreements in the exploration of them or to finance and establish
production if mineralization is found.
Prospective Gold Projects
The following is a brief overview of portfolio of prospective
mineral properties, the exploration developments on them where applicable and
some of the details of the historical option agreements for them. During the
nine months ended December 31, 2012, exploration work was confined to the
Kinyambwiga project
Musoma Bunda Murangi Gold
Project
Exploration Strategy
No on the ground exploration was undertaken on the Kinyambwiga
(PL 4653/2007), Suguti (PL
PL3966/2006
) and Murangi
(PL4511/2007)
licenses during the quarter. The Kinyambwiga license
has been reduced from 30.90 square kilometres to 15.45 square kilometres as part
of the required Government relinquishment of 50% of the ground holdings on
license renewal. The southern part of the license area, covered by black cotton
soil and underlain by granitic rocks with no known artisanal workings, has been
relinquished. The northern part of the license is host to the Kanunga 1 to 3
artisanal mine sites.
The new artisanal mining site, located 1 kilometer along strike
to the east of Kanunga 2, is currently still being exploited as well as minor
artisanal activities occurring at Kanunga 3 in the northern part of the license.
The Kanunga 1 Prospect has been earmarked for possible small
scale mining operations that will proceed once necessary funding has been
achieved. Currently, a scoping study involving mine planning and scheduling
together with financial evaluations are being carried out on the prospect. As
part of the requirement, metallurgical test work is to be undertaken by Peacock
and Simpson, Zimbabawe in order to determine the percentages of gravity
recoverable gold (free gold) versus leachable gold. Gold recovery results will
determine the final design of a gold recovery system.
A 50 kilogramme sample of the quartz reef at Kanunga 1 was
collected from 3 working artisanal shafts (
Table 1)
that varied from 14
metres to 44 metres in depth. Samples of quartz together with disseminated
pyrite and minor visible gold were collected from the working face and are +10cm
in size. An equal portion of sample was collected from each shaft, composited,
packed and shipped to Peacock and Simpson.
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Table 1
. Location and depth of artisanal
shafts at the Kanunga 1 Prospect.
Shaft ID
|
Easting
|
Northing
|
Elevation
|
Status
|
Depth(m)
|
|
KNSH001
|
581135
|
9776874
|
1191
|
Active
|
17.5
|
|
KNSH002
|
581147
|
9776878
|
1190
|
Active
|
15
|
|
KNSH003
|
581148
|
9776880
|
1190
|
Active
|
25
|
|
KNSH004
|
581158
|
9776884
|
1189
|
Active
|
31
|
|
KNSH005
|
581167
|
9776884
|
1188
|
Dormant
|
9.6
|
|
KNSH006
|
581177
|
9776884
|
1189
|
Dormant
|
8.6
|
|
KNSH007
|
581189
|
9776878
|
1190
|
Dormant
|
7.3
|
|
KNSH008
|
581197
|
9776892
|
1191
|
Dormant
|
8
|
|
KNSH009
|
581205
|
9776896
|
1191
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Active
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18.3
|
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KNSH010
|
581246
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9776914
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1190
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Dormant
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5.1
|
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KNSH011
|
581290
|
9776944
|
1193
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Dormant
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9.3
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KNSH012
|
581320
|
9776922
|
1191
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Active
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17
|
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KNSH013
|
581324
|
9776924
|
1191
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Active
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15.2
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KNSH014
|
581339
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9776938
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1192
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Active
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3.2
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KNSH015
|
581353
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9776950
|
1190
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Active
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11
|
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KNSH016
|
581355
|
9776948
|
1191
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Active
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22
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KNSH017
|
581358
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9776948
|
1192
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Active
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20
|
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KNSH018
|
581364
|
9776958
|
1191
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Active
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12
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KNSH019
|
581368
|
9776950
|
1192
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Dormant
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20
|
|
KNSH020
|
581377
|
9776954
|
1191
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Active
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44
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KNSH021
|
581386
|
9776958
|
1191
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Dormant
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15.4
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KNSH022
|
581390
|
9776958
|
1191
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Active
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17
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KNSH023
|
581382
|
9776964
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1192
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Active
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14.6
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KNSH024
|
581382
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9776968
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1192
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Dormant
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15
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KNSH025
|
581387
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9776976
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1192
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Active
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6
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Sampled Shafts for Metallurgical test work
The bulk rock sample, assaying 7.24 grams per tonne, was
crushed to 100 per cent passing minus 1.0 millimeter size and then transferred
to a Knelson concentrator; this early stage liberation test yielded a 24.2
percent gold recovery.
Fine grinding of the rock material to a size of 80 percent
minus 0.075 millimeters and then transferring the material to a Knelson
concentrator yielded a 54.5 percent gold recovery.
Agitated leaching of the gravity tails for a 24 hour period
resulted in a gold recovery of 84.1 percent.
The overall, gold recovery from Fine Grinding with Knelson
Concentration and Agitated Leaching totalled 92.7 percent.
Additional flotation tests were also carried out using:
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i.
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Gravity tails after impact crushing to minus 1 mm having
a head grade of 5.52g/t gold
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ii.
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Gravity tails after milling to 80% passing 75 microns
having a head grade of 3.37g/t gold
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A single stage flotation test was undertaken using a Denver D12
Laboratory floatation machine under the following conditions of CuSO4, SIBX and
Dowfroth conditioning.
Results indicate:
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i.
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Gold recovery of 18.7% of float feed (minus 1 mm)
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ii.
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Gold recovery of 58.3% of float feed (80% passing 76 micron)
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A 2
nd
flotation test was carried out on gravity
tails of which 80% passing 75 micron assaying 3.30g/t gold under different
chemical conditions of CuSO4, PAX and Dowfroth conditioning.
Results indicate an improved gold recovery of 64.4% of the
float feed.
Total recoveries, including gravity recoverable gold are
summarised below:
-
Gravity + CIL (leaching) = 92.7% recovery
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Gravity + SIBX flotation = 76.45% recovery
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Gravity + PAX flotation = 83.8% recovery
A Bond Index (BWI) of 19.48 was established for the quartz
reef.
In order to apply for a Special Mining Licence over the 24 PMLs that in part overlie the Kanunga 1 Prospect, an Environmental Impact Assessment (EIA) study must first be carried out and an EIA Certificate obtained.
TANSHEQ, a local Tanzanian consulting firm specialising in Environmental Management, was awarded the contract to undertake the Environmental Impact Assessment study on the Kanunga 1 Prospect. The final report is to be submitted to the National
Environmental Management Council (NEMC) of Tanzania, a Government body responsible for the issuance of the EIA certificate by the Minister responsible for Environment. The Company intends to complete and deliver the EIA certificate before the end of
March 2013. Field studies have been completed at site and a draft report of the Scoping study is to be submitted to NEMC in February 2013.
Future work
Kinyambwiga (PL 4653/2007)
The anomalous stone layer as encountered from previous RAB drilling during 2009 as well as the soil anomaly over the school requires further investigation. A number of auger drill traverses are planned to test the strike towards the southwest where
a number of anomalous soil samples have been indicated
(Map 1
). Since this area has been previously relinquished as part of the Government requirement to reduce the PL area by 50%, an application to renew the area of “shed-off” is
pending approval by the Ministry of Mines and an Offer has been received.
Map 1: Kanunga 1 East and School soil anomalies
Suguti (PL3966/20)
Future Exploration
Since the northern part of the Suguti Licence has been relinquished as part of the Government requirement to reduce the PL by 50%, the area of “shed-off” must first be re-instated prior to commencing any further exploration. Should the
area be awarded to the Company, further exploration is to be focused mainly at Target 1 and 3 across the known soil anomalies
(Map 2).
Infill soil sampling, including Auger drilling over mbuga covered areas, has been undertaken along 200
meter N-S traverse line on 10 meter sample intervals in order to define the present soil anomalies. To date 157 samples including 84 auger drill samples, have been collected and are pending submission to SGS laboratories Mwanza. Results will
determine whether a trenching programme is warranted across the targets.
Additional auger drill sampling is planned to be undertaken on the 200 ppb gold anomaly as well as the strike extensions of Zone 1,2 and 3 of Target 1 where no sampling has yet been undertaken (
Map 2
).
Map 2
:
Current state of exploration on the Suguti License showing present coverage of Auger drill and soil sampling across 3 target areas.
Murangi(PL4511/2007)
The southern part of the Suguti Licence has been relinquished as part of the Government requirement to reduce the PL by 50% which is the area of “shed-off. No exploration has been undertaken during the quarter.
Future Exploration
Exploration is to be focused primarily on 5 ground magnetic targets (
Map 3
) in which the following work is to be undertaken:
|
i.
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Mapping of the target areas on 1:2000 scale
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ii.
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Gradient IP survey across the entire license
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iii.
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Auger drilling, with the Company’s recently purchased Auger Rig, across each of the Ground magnetic and IP
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Targets to soil sample beneath the “mbuga” cover.
Map 3. Target generation map of the Murangi PL4511/2007 based on ground magnetic interpretation
.
Singida Gold Project
Future exploration
An evaluation of the Reverse Circulation drill results for both Phase 1 and 2 programs undertaken during 2010 and 2011 has shown that gold mineralization at the Singida-Londoni project consists of narrow medium to low grade and often discontinuous
lenses. The shear structures hosting the gold-rich zones typically “pinch and swell” along strike, which in places, has resulted in larger pods of limited size as at Sambaru 3 and Sambaru 4 which indicates that the gold deposits have
limited potential to be developed into a major ore resource contrary to the Company’s vision of discovering substantially larger and economically viable gold deposits in the short term. In this regard, the Company believes that the nature and
extent of the mineralization revealed thus far may lend itself towards a small-scale commercial mining operation. The Company intends to explore the possibilities of undertaking a small scale mining operation on a number of PMLs once a scoping study
has been completed. No exploration has been undertaken during the quarter.
Kiabakari East (PL7142/2011)
The Kiabakari East Project is located approximately 55 kilometers southeast of Musoma town, in the Mara Region. The PL, covering 15.2 square kilometers and lying within the central part of the Musoma-Mara Greesntone Belt, was granted to Lake
Victoria Resources by the Ministry of Energy and Minerals in April 2011.
The PL was previously investigated by Randgold Resources who excavated a number of N-S trenches across a small hill, rising some 50 meters above the landscape. This hill is comprised of Banded Iron Formation (BIF Hill) rocks in the central to
southern part of the PL. Randgold also undertook 3 N-S drill fences, totaling 24 reverse circulation drill holes, along strike to the east of the BIF hill. No detailed information is currently available from Randgold’s work. Minor artisanal
mining activities are present on BIF Hill. Recently, the eastern part of the license at the Kyarano Prospect has been occupied by +500 artisanal miners who have exposed a NNE-SSW trending gold bearing structure hosted in a quartz porphyry dyke
within a surrounding metasedimentary rock sequence
(Map 4).
No exploration has been undertaken during the quarter.
Exploration Strategy
The following exploration work has been completed across the Kiabakari East License:
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Landsat Imagery for the license area and the surrounding environs.
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Detailed mapping
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Trenching (342.7 meters) including the re-opening of existing trenches as well as new trenches were mapped and sampled across BIF Hill
-
Regional geological mapping
-
In-house ground magnetic surveying along 200 meter spaced N-S traverse lines
-
In-house Gradient IP Survey was undertaken along the same grid as used for the ground magnetic survey
-
Regional rock sampling of specific localities on the PL
-
Termite mound sampling
-
Soil sampling – regional sampling on 200 meter x 50 meter centers utilizing the geophysics grid Schlumberger Survey- Schlumberger VES N-S and E-W profiles were undertaken across BIF Hill and the artisanal workings at the Kyarano Prospect
respectively,
-
Four inclined diamond drill holes, amounting to 648.72 meters, were collared on the southern side of BIF Hill on 40 meter spaced N-S drill fences and drilled to the north at declinations of 50 and 55 degrees to test and define the geometry of the
BIF hosted gold mineralization. All boreholes intersected wide zones of anomalous gold mineralization including
1.03 g/t gold over 37.50 meters and 0.58g/t Au over 43.35 meters,
inclusive of higher grade intersections
of
1.75 g/t gold over 6.13 meters
and
2.05 g/t over 3.00 meters
.
Map 4: Plan of BIF Hill and Kyarano Prospects showing position of Schlumberger profiles and diamond drill collars
Kyarano Prospect
The Kyarano Prospect, located on the eastern side of the Kiabakari East Permit, is a recent and active artisanal site in which up to +500 artisanal miners have been present. Shafts, aligned along a NNE trend were sunk into a quartz porphyry/felsite
“dyke” rock for a strike distance of some 400 meters. Mining activities decreased as flooding of the shafts occurred from 15-20 meters below ground. A short diamond drill program was initially planned across the strike length of the
gold occurrences but the program is pending. No exploration has been undertaken during the quarter.
Future exploration
Metallurgical test work is to be undertaken on the oxide rock material taken from artisanal working and trenches on surface as part of the scoping study to determine the viability of commencing and open pit/underground small scale mining operation
at BIF Hill. In order to get a better understanding of the geology and gold mineralisation, the Company is considering developing of a north trending adit from the base of the southern side of the hill.
Uyowa Gold Project
The Uyowa Gold project, located 120 kilometers northwest of Tabora town, previously consisted of seven (7) Prospecting Licenses (PLs) that covered a total area of 729.73 square kilometers in the west-central area of Tanzania. Due to increased
Ministerial holding costs of annual renewals coupled with the Company’s objective to focus its exploration efforts on more potentially viable ground holding, the total amount of licenses have been reduced to 4 PLs (
Map 5
).
Map 5: Current license holdings of the Uyowa Project
No exploration has been undertaken during the quarter.
Exploration has been previously focused on PL5153/2008 in which the following work was undertaken:
Exploration
Exploration on the Uyowa Project commenced in the 1
st
quarter of 2011 and to date the following work has been undertaken:
PL 3425/2005
-
Re-processing and interpretation of the aeromagnetic data, flown by Geosurvey International G.m.b.H between 1977 to 1980 purchased from the Geological Survey, Dodoma.
-
Ground Magnetometer survey over part of PL3425/2005 on 400 meter x 50 meter grid
-
Soil sampling on 400 meter x 50 meter grid totaling 2616 samples
-
Termite mound sampling
-
Regolith mapping
-
Remote sensing studies
PL 3425/2005 has subsequently been relinquished.
PL 5153/2007 (
Map 6
)
-
Regional Mag survey on 200 meter spaced N-S lines covering a 12 kilometers x 6 kilometers grid
-
Gradient array survey on 400 meter spaced N-S lines across the optioned PML and extending out along strike across a grid of 10 kilometers x 4 kilometers
-
Soil sampling on 200 meters x 50 meter grid across a grid area of 2.25 kilometers x 10 kilometers (excluding the artisanal site
-
Schlumberger profiles
-
Regolith mapping
-
Detailed mapping
-
Termite mound sampling
-
Soil and termite mound sampling - on 200 meter x 50 meter grid totaling 2616 samples. All the anomalous gold values occur as single point values along the known E-W zone of gold mineralization. A single maximum value of 400 ppb gold occurs on the
far eastern side of the trend.
-
Shaft sampling
-
A total of 29 reverse circulation drill holes, amounting to 2,486 meters, was drilled to test the down-dip continuity of thickness and grade as well as exploring the strike extensions of the 4 main mineralized zones across the PMLs, was completed in
September 2011.
-
An eleven hole diamond drill program, totaling 1459 meters, was aimed at defining and understanding the structural controls of the 4 gold veins across 300 meters of strike length, was completed in the 2
nd
Quarter. Gold mineralization was
traced to a vertical depth of some 150 meters
(Map 7)
Map 6:
Grid layouts of exploration surveys undertaken across the artisanal workings and environs on PL 5153/2008
Map 7
. Distribution and location of shear hosted gold structures as defined both by RC and diamond drilling.
The distribution of gold in Lens 2 suggests that there are 3, equally spaced gold “shoots” of approximately 80 meters broad plunging at 30 degrees to the west which are open at depth
(Map 8).
A left lateral fault on the western
side of the main drilling target has offset the strike of the lenses by some 100 meters. Some of the highest gold intercepts, which have been reported from drilling, occur in the western shoot. The central and eastern ore shoots appear to have lower
overall gold grades and narrower intercepts.
Map 8
: Longitudinal section showing gold distribution plot along strike of mineralized zone.
Future exploration
PL5153/2008
Interpretation of the ground magnetic survey suggests the presence of a graben structure that coincides with the last of the artisanal workings on the western side of known mineralized zone. The area, unlike the artisanal site where laterite is
often exposed on surface, is overlain by sand cover for some 500 meters to the west before lateritic soils are again present suggesting possible continuation of the mineralized trend further to the west. Landsat imagery clearly shows area of
laterite and lateritic soil over the area. Based on the recent soil geochemistry results, follow up specific soil sampling is planned across the interpolated trend of gold mineralization to both the west and east of the artisanal workings covering a
total strike length of 3.5 kilometers as shown in
Map 9.
Conventional soil sampling is planned across areas of lateritic soil cover. Initially a RAB program had been recommended to test the intervening areas covered by black cotton soil (“mbuga’). However, prior to embarking on such a program,
an orientation survey using enzyme geochemistry has been recommended as a trial study over a portion of the area to be sampled. Should results be positive further sampling incorporating this geochemical method will continue to be used to outline the
gold anomaly.
A scoping study is planned to be undertaken across the central part of the Uyowa Prospect where the highest gold grades have been defined by both by RC and diamond drilling. A bulk sample is to be collected of the mineralised ductile shear zone for
metallurgical test work prior to undertaking a feasibility study on the potential to develop a
small scale mining operation. A N43-101 complaint report is currently being prepared by an independent Geological Consultant.
Map 9: Soil sampling plan to trace the strike extensions of the mineralized gold structure across PL5152/2008.
Handeni Gold Project
The Handeni Project comprises of a single License PL 7148/2011 of 12 square kilometers and is located approximately 240 kilometers, by road, north-west of Dar es Salaam and some 30 kilometers south of Handeni town within the Handeni District (
Map
10
). The Company has retained 100% of the mineral rights of PL7148/2011. (Note Error reporting in 2
nd
Quarter Report stating that PL 4816/2007 was retained).
Map 10: Location map of the Handeni Project showing the PL 7148/2011 in yellow.
Exploration
No exploration was undertaken on the Handeni Project during the quarter.
Future exploration
An infill soil sampling program on 100 meter x 25 meter grid is recommended across the Mkulima Hill (188 samples) in order to better define the apparent gold anomalies prior to planning a trenching programme across the main anomalous zones (
Map
11
). Should a trenching program be warranted, further soil sampling on 100 meter x 50 meter grid is proposed around the hill on 200 meter x 50 meter grid (623 samples) to increase the area of investigation and strike extend of the gold anomalies
(
Table 2 , Map 11
).
Map 11: Soil sampling grids across Mukulima East outlining
potential soil anomalies
Table 2. Planned soil grid across the Mkulima East License
|
|
From
|
To
|
Length
|
50
|
|
|
|
North (Arc
|
East (Arc
|
|
|
|
Section
|
East (Arc 60 37S)
|
60 37S)
|
60 37S)
|
(m)
|
Sample Number
|
|
9358900E
|
407400
|
9358900
|
410250
|
2850
|
58
|
|
9358500E
|
407400
|
9358500
|
410250
|
2850
|
58
|
|
9358100E
|
407400
|
9358100
|
410250
|
2850
|
58
|
|
9357700E
|
407400
|
9357700
|
410250
|
2850
|
58
|
|
9357700E
|
407500
|
9357700
|
410200
|
2700
|
55
|
|
9357300E
|
407600
|
9357300
|
410150
|
2550
|
52
|
|
9357100E
|
407650
|
9357100
|
408300
|
650
|
14
|
|
|
408325
|
9357100
|
408450
|
125
|
6
|
|
9357000E
|
407700
|
9357000
|
410100
|
2400
|
49
|
|
9356900E
|
408200
|
9356900
|
409150
|
950
|
39
|
|
9356800E
|
407650
|
9356800
|
408250
|
600
|
13
|
|
|
409250
|
9356800
|
410050
|
800
|
17
|
|
9356700E
|
408300
|
|
409450
|
1150
|
47
|
|
9356600E
|
407750
|
9356600
|
408450
|
700
|
15
|
|
|
409250
|
9356600
|
409500
|
250
|
6
|
|
9356500E
|
409450
|
9356500
|
409650
|
200
|
5
|
|
9356400E
|
407800
|
9356400
|
408550
|
750
|
16
|
|
9356325E
|
408900
|
9356325
|
409600
|
700
|
29
|
|
9356250E
|
408100
|
9356250
|
409200
|
1100
|
23
|
|
|
409000
|
9356250
|
409750
|
750
|
31
|
|
9356150E
|
409200
|
9356150
|
409600
|
400
|
17
|
|
9356050E
|
409200
|
9356050
|
409600
|
400
|
9
|
|
|
409200
|
9356050
|
409650
|
450
|
19
|
|
|
409700
|
9356050
|
409850
|
150
|
4
|
|
9355850E
|
408150
|
9355850
|
409800
|
1650
|
34
|
|
9355850E
|
408250
|
9355850
|
410200
|
1950
|
40
|
|
9355450E
|
408350
|
9355450
|
410250
|
1900
|
39
|
|
Total samples
|
|
|
|
|
811
|
|
25m centres
|
(Total samples 188)
|
PHASE 1
|
|
|
|
|
50m centres
|
(Total samples 623)
|
PHASE 2
|
|
|
|
North Mara Gold Projects
The North Mara Gold Project, now comprising of 4 Prospecting
licenses and covering 91.78 square kilometers, have been divided into 3 blocks,
namely the Tarime-Utegi, Kubiasi Kiserya project which includes the Kiagata
Project and the recently successful tender for the Maji Moto license
(HQ-P23869). Six of the 10 licenses previously held by the Company have been
relinquished after reconnaissance exploration indicated poor potential to
discover an economic resources within the near future. Minor artisanal activity
was noted on these licenses.
A recent tender has won the Company the Maji Moto license
(HQ-P23869) which will be an addition to the North Mara Gold project area upon
our submission of the tender fees. It is located 28 kilometers to the southwest
of the African Barrick, North Mara Gold mine.
No exploration activities were undertaken on any of the
licenses during this quarter.
Tarime & Utegi
The remaining Tarime PL4882/2005 and Utegi PL4873/2007
licenses, from a previous 6 Pls are located on the western side of the North
Mara Greenstone Belt. Since much of the area is overlain by “mbuga” soils,
target generation has to be made from undertaking detailed structural analysis
from both Magnetic and IP data. The detailed aeromagnetic survey data undertaken
by the Finnish Geological Survey (2003) was purchased from the Government and
processed. A number of magnetically interpreted structural targets have been
delineated for field investigation. Both licenses are considered of low
priority.
No exploration activities were undertaken on any of the
licences during the quarter
Kiagata
The Kiagata project (PL4225/2007), located within the North
Mara Greenstone belt, is situated in the Musoma District and is about 30
kilometers from Musoma Town, the main commercial hub in the area. The project is
located immediately south of the Mara River and west of the Serengeti National
Park. A reconnaissance survey involving mapping, termite sampling, and selected
soil and rock sampling were carried out but results suggest that no gold
mineralization is present on the property. The license is to be relinquished.
Kubiasi Kiserya
The Kiserya project (PL4833/2007) is located in northeastern
Tanzania approximately 18 kilometers southeast from African Barrick’s North Mara
Gold Mine, within the N Mara Gold Belt. The license lies adjacent to the Mara
River
and to the north of the Serengeti Game Reserve. The northern and western parts of the license are underlain by greenstone rocks that tend to crop out as series of large hills that dot the surrounding plains. The remainder of the license is underlain
by granite. Little to no colluvium of black clay “mbuga” is present.
Future Exploration
Although previous exploration did indicate positive signs of gold mineralisation, no gold resource has yet been identified. The potential to discover a gold resource in the immediate future is considered low. On account of austerity measures and the
need to focus on a number of key projects within the Company portfolio, this license is to be relinquished as soon as the rental term has expired. No further work is to be undertaken on the license.
Maji Moto HQ-P23869
A recent pending addition to the North Mara group of licenses is the Maji Moto license that was awarded to the Company by the Ministry of Mines through application and tender in April 2012.
The license is situated in the North Mara Greenstone Belt (Eastern Musoma Goldfields) approximately 28 kilometers to the SW of African Barrick’s N Mara Gold Mine (
Map 12
). Three artisanal gold mining sites are known on the license.
Exploration
Exploration has not yet commenced on the license.
Map 12:
.
Location map of Maji Moto HQ-P23869
Note: HQ-P23869 is the Application number. The license, upon
issue, will be allocated a PL number by the Ministry.
Future
exploration
The following exploration strategy (Phase 1) will be followed
as soon as a field camp is established on site:
-
Regional ground Magnetic survey
-
Regional mapping of the license
-
Regional soil sampling on 200 meter x 50 meter sample grid
-
Detailed mapping and soil/rock sampling at and around the artisanal sites
-
Schlumberger profiles across the known artisanal sites
Phase 2 will be dependent on the results achieved from the
Phase 1 exploration programme.
Acquisition of Prospecting Licenses in Tanzania
General
The following is a discussion and analysis of our plan of
operation and results of operations for the nine month period ended December 31,
2012, and the factors that could affect our future financial condition. This
discussion and analysis should be read in conjunction with our consolidated
unaudited financial statements and the notes thereto included elsewhere in this
quarterly report. Our consolidated financial statements are prepared in
accordance with United States generally accepted accounting principles. All
references to dollar amounts in this section are in United States dollars unless
expressly stated otherwise.
Plan of Operation
As of December 31, 2012, we had negative working capital of
approximately $298,000. We plan to spend approximately $455,000 for our property
acquisitions and holding costs and $3,000,000 for development and production of
small scale mining for the next twelve months, with work being conducted on
several projects including soil sampling, trenching and drilling. We will need
to raise additional funds to finance the exploration activities on our projects.
No assurance can be given that additional financing will be available, or that
it can be obtained on terms acceptable to the Company and its shareholders. Our
estimated expenses over the next twelve months are as follows:
|
Cash Requirements during the Next Twelve Months
|
|
|
Expense
|
|
($)
|
|
|
Property acquisition and holding costs
|
|
455,000
|
|
|
Mine development
and production costs
|
|
3,000,000
|
|
|
Professional fee
|
|
150,000
|
|
|
General and
administration fee
|
|
500,000
|
|
|
Total
|
|
4,105,000
|
|
There is no historical financial information about us upon
which to base an evaluation of our performance. We are an exploration stage
corporation and have not generated any revenues from operations. We cannot
guarantee we will be successful in our business operations. Our business is
subject to risks inherent in the establishment of a new business enterprise,
including limited capital resources, possible delays in the exploration of our
properties, possible cost overruns due to price and cost increases for services
and economic conditions. Because the Company does not currently derive any
production revenue from operations, its ability to conduct exploration and
development on properties is largely based upon its ability to raise capital by
equity funding.
Our exploration objective is to find an economic mineral body
containing gold. Our success depends upon finding mineralized material. This
includes a determination by our contracted consultants and professional staff
whether the property contains resources and/or reserves. Mineralized material is
a mineralized body, which has been delineated by appropriately spaced drilling
or underground sampling to support sufficient tonnage and average percentage
grade of metals to justify removal. If we don’t find mineralized material or we
cannot remove mineralized material, either because we do not have the money to
do so or because it is not economically feasible to do so, we will cease
operations or seek other properties.
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three and Nine Month Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Revenue
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
Expenses
|
|
617,534
|
|
|
813,452
|
|
|
2,192,207
|
|
|
2,230,491
|
|
|
Other income (expenses)
|
|
872,455
|
|
|
(36
|
)
|
|
864,600
|
|
|
661,587
|
|
|
Net Income (Loss)
|
$
|
254,921
|
|
$
|
(813,488
|
)
|
$
|
(1,327,607
|
)
|
$
|
(1,568,904
|
)
|
Revenue
We had no operating revenues for the nine month period ended
December 31, 2012 and 2011. We anticipate that we will not generate any revenues
until we generate additional financing to support our planned operations.
Operating Costs and Expenses
The major components of our expenses for the three and nine
months ended December 31, 2012 and 2011 are outlined in the table below:
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and depreciation
|
|
10,183
|
|
|
9,991
|
|
|
30,550
|
|
|
26,042
|
|
|
Exploration costs
|
|
246,090
|
|
|
324,110
|
|
|
868,320
|
|
|
668,106
|
|
|
General and administrative
|
|
104,030
|
|
|
57,679
|
|
|
249,612
|
|
|
244,275
|
|
|
Impairment of mineral property acquisition costs
|
|
–
|
|
|
–
|
|
|
8,550
|
|
|
371,612
|
|
|
Management and director fees
|
|
9,000
|
|
|
9,000
|
|
|
27,000
|
|
|
23,000
|
|
|
Professional fees
|
|
105,559
|
|
|
33,148
|
|
|
226,182
|
|
|
198,535
|
|
|
Salaries
|
|
118,165
|
|
|
141,822
|
|
|
377,884
|
|
|
434,052
|
|
|
Stock-based compensation
|
|
–
|
|
|
213,825
|
|
|
362,336
|
|
|
213,825
|
|
|
Travel and accommodation
|
|
24,507
|
|
|
23,877
|
|
|
41,773
|
|
|
51,044
|
|
|
Total
Expenses
|
|
617,534
|
|
|
813,452
|
|
|
2,192,207
|
|
|
2,230,491
|
|
General and Administrative Expenses
The Company reported a loss of $1,327,607 for the nine months
ended December 31, 2012 compared with a loss of $1,568,904 for same period in
fiscal 2011. The decreased loss in the current period is mainly attributed to
decreased mineral property acquisition costs.
The $4,458 increase in our general and administrative expenses
for the nine month period ended December 31, 2012 as compared to the same period
in fiscal 2011 was primarily due to the decrease in promotion and shareholder
relationship expenses.
Liquidity and Capital Resources
Working Capital
|
|
|
December 31, 2012
|
|
|
March 31, 2012
|
|
|
Current Assets
|
$
|
505,128
|
|
$
|
586,592
|
|
|
Current
Liabilities
|
|
802,917
|
|
|
219,879
|
|
|
Working Capital
|
$
|
(297,789
|
)
|
$
|
366,713
|
|
Cash Flows
|
|
|
Nine Months Ended
|
|
|
|
|
December 31, 2012
|
|
|
Cash used in Operating Activities
|
$
|
(1,220,501
|
)
|
|
Cash used in
Investing Activities
|
|
849,669
|
|
|
Cash provided by Financing Activities
|
|
292,301
|
|
|
Net Increase (Decrease) in Cash
|
$
|
(78,540
|
)
|
We had a cash balance of approximately $445,000 and negative
working capital of $298,000 as of December 31, 2012 compared to cash of $523,000
and working capital of $367,000 as of March 31, 2012. The decrease of cash
balance and working capital primarily due to cash spent on exploration and
general and administration expenses. We anticipate that we will incur
approximately $4,105,000 for operating expenses, including professional, legal
and accounting expenses during the next twelve months. Accordingly, we will need
to obtain additional financing in order to complete our full business plan.
Going Concern
The unaudited financial statements accompanying our quarterly
report on Form 10-Q for the quarter ended December 31, 2012 have been prepared
on a going concern basis, which implies that our company will continue to
realize its assets and discharge its liabilities and commitments in the normal
course of business. Our company has not generated revenues since inception and
has never paid any dividends and is unlikely to pay dividends in the immediate
future. The continuation of our company as a going concern is dependent upon the
continued financial support from our shareholders, the ability of our company to
obtain necessary equity financing to achieve our operating objectives, and the
attainment of profitable operations. As of December 31, 2012, we had a cash
balance of approximately $445,000 and we estimate that we will require
approximately $650,000 for general and administration costs and professional
fees, and $3,455,000 for property acquisition holding and small-scale mining
evaluation, development and production costs associated with our plan of
operation over the next twelve months. We do not have sufficient funds for
general and administration activities and planned mineral property acquisition
and exploration activities and therefore we will be required to raise additional
funds. No assurance can be given that additional financing will be available, or
that it can be obtained on terms acceptable to the Company and its shareholders.
The advancement of our business is dependent upon us raising
additional financial support. The issuance of additional equity securities by us
could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
Future Financings
We had an approximate cash balance of $445,000 and negative
working capital of $298,000 as of December 31, 2012 compared to a cash balance
of $523,000 and working capital of $367,000 as of March 31, 2012 and we estimate
that we will require approximately $4,105,000 for costs associated with our plan
of operation over the next twelve months. Accordingly, we do not have sufficient
funds for planned operations and we will be required to raise additional funds
for operations. We intend to raise additional funds from another equity offering
or loans. At the present time, we are attempting to raise additional money, but
there is no assurance that we will be successful. If we need additional funds
and are unable to raise them, we will have to suspend or cease operations until
we succeed in raising additional funds.
Outstanding shares and options
As of February 13, 2013, we have 114,554,067 shares of common
stock outstanding, 9,520,000 stock options outstanding and 26,649,734 warrants
outstanding.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.
Risks and Uncertainties
Much of the information included in this quarterly report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections and estimates made by us and our
management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual
results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially
affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”.
Risks Associated with Mining
All of our properties are in the exploration stage. There is no assurance that we can establish the existence of any mineral resource on any of our properties in commercially exploitable quantities. Until we can do so, we cannot earn any revenues
from operations and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral resource in a commercially exploitable quantity, our business could fail.
Despite exploration work on our mineral properties, we have not established that any of them contain any mineral reserve, nor can there be any assurance that we will be able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7
) as that part of a mineral deposit
which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that meets the requirements of the Securities and Exchange
Commission’s Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any ‘reserve’ and any funds that we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those resources. Both mineral exploration and development
involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a
smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.
Mineral operations are subject to applicable law and government regulation. Even if we discover a mineral resource in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral
resource. If we cannot exploit any mineral resource that we might discover on our properties, our business may fail.
Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development,
mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or
maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could
fail.
We believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to remain in compliance. Current laws and regulations could be
amended and we might not be able to comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.
Our business activities are conducted in Tanzania.
Our mineral exploration activities in Tanzania may be affected in varying degrees by political stability and government regulations relating to the mining industry and foreign investment in that country. The government of Tanzania may institute
regulatory policies that adversely affect the exploration and development (if any) of the Company’s properties. Any changes in regulations or shifts in political conditions in this country are beyond the control of the Company and may
adversely affect its business. Investors should assess the political and regulatory risks related to the Company’s foreign country investments. Our operations may be affected in varying degrees by government regulations with respect to
restrictions on production, price controls, export controls, foreign exchange controls, income taxes, expropriation of property, environmental legislation and mine safety.
We may not have clear title to our properties.
Acquisition of title to mineral properties is a very detailed and time-consuming process, and the Company’s title to its properties may be affected by prior unregistered agreements or transfers, or undetected defects. Several of the
Company’s prospecting licenses are currently subject to renewal by the Ministry of Energy and Minerals of Tanzania. In result, there is a risk that we may not have clear title to all our mineral property interests, or they may be subject to
challenge or impugned in the future. We have exploration licenses. We do not have a license to mine any minerals or reserves whatsoever at this time on any part of our properties. Once exploration has advanced to a point where mining on one or more
of our properties is feasible, we plan to apply for a mining license or licenses.
If we establish the existence of a mineral resource on any of our properties in a commercially exploitable quantity, we will require additional capital in order to develop the property into a producing mine. If we cannot raise this additional
capital, we will not be able to exploit the resource, and our business could fail.
If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it and develop
extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can
there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.
Mineral exploration and development is subject to extraordinary operating risks. We do not currently insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which would have an adverse
impact on our company.
Mineral exploration, development and production involve many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the hazards and risks inherent in the
exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including
liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not
currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.
Mineral prices are subject to dramatic and unpredictable fluctuations.
We expect to derive revenues, if any, either from the sale of our mineral resource properties or from the extraction and sale of precious and base metals such as gold, silver and copper. The price of those commodities has fluctuated widely in recent
years, and is affected by numerous factors beyond our control, including international, economic and political
trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production
methods. The effect of these factors on the price of base and precious metals, and therefore the economic viability of any of our exploration properties and projects, cannot accurately be predicted.
The mining industry is highly competitive and there is no assurance that we will continue to be successful in acquiring mineral claims. If we cannot continue to acquire properties to explore for mineral resources, we may be required to reduce or
cease operations.
The mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate
and acquire mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically
feasible. Readily available markets exist worldwide for the sale of mineral products. Therefore, we will likely be able to sell any mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical facilities. This competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.
If our costs of exploration are greater than anticipated, then we may not be able to complete the exploration program for our Tanzanian properties without additional financing, of which there is no assurance that we would be able to obtain.
We are proceeding with the initial stages of exploration on our Tanzanian properties. We are carrying out an exploration program that has been recommended by a consulting geologist. This exploration program outlines a budget for completion of the
recommended exploration program. However, there is no assurance that our actual costs will not exceed the budgeted costs. Factors that could cause actual costs to exceed budgeted costs include increased prices due to competition for personnel and
supplies during the exploration season, unanticipated problems in completing the exploration program and delays experienced in completing the exploration program. Increases in exploration costs could result in our not being able to carry out our
exploration program without additional financing. There is no assurance that we would be able to obtain additional financing in this event.
Because of the speculative nature of exploration of mining properties, there is substantial risk that no commercially exploitable minerals will be found and our business will fail.
We are in the initial stages of exploration of our mineral property, and thus have no way to evaluate the likelihood that we will be successful in establishing commercially exploitable reserves of gold, silver or other valuable minerals on our
Tanzanian properties.
The search for valuable minerals as a business is extremely risky. We may not find commercially exploitable reserves of gold, silver or other valuable minerals in our mineral property. Exploration for minerals is a speculative venture necessarily
involving substantial risk. The expenditures to be made by us on our exploration program may not result in the discovery of commercial quantities of ore. 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 that we plan to undertake. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result
in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.
Because our executive officers have limited experience in mineral exploration and do not have formal training specific to the technicalities of mineral exploration, there is a higher risk that our business will fail.
Our executive officers have limited experience in mineral exploration and do not have formal training as geologists or in the technical aspects of management of a mineral resource exploration company. As a result of this inexperience, there is a
higher risk of our being unable to complete our business plan for the exploration of our mineral property. With no direct training or experience in these areas, our management may not be fully aware of many of the specific
requirements related to working within this industry. Our decisions and choices may not take into account standard engineering or managerial approaches mineral resource exploration companies commonly use. Consequently, the lack of training and
experience of our management in this industry could result in management making decisions that could result in a reduced likelihood of our being able to locate commercially exploitable reserves on our mineral property with the result that we would
not be able to achieve revenues or raise further financing to continue exploration activities. In addition, we will have to rely on the technical services of others with expertise in geological exploration in order for us to carry out our planned
exploration program. If we are unable to contract for the services of such individuals, it will make it difficult and maybe impossible to pursue our business plan. There is thus a higher risk that our operations, earnings and ultimate financial
success could suffer irreparable harm and our business will likely fail.
Risks Relating to Our Common Stock
If we issue additional shares in the future, it will result in the dilution of our existing shareholders.
Our articles of incorporation authorize the issuance of up to 250,000,000 shares of common stock with a par value of $0.00001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or
to provide additional financing in the future. The issuance of any such shares will reduce the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the
proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.
Our common stock is illiquid and shareholders may be unable to sell their shares.
There is currently a limited market for our common stock and we can provide no assurance to investors that a market will develop. If a market for our common stock does not develop, our shareholders may not be able to re-sell the shares of our common
stock that they have purchased and they may lose all of their investment. Public announcements regarding our company, changes in government regulations, conditions in our market segment or changes in earnings estimates by analysts may cause the
price of our common shares to fluctuate substantially. In addition, stock prices for junior mineral exploration companies fluctuate widely for reasons that may be unrelated to their operating results. These fluctuations may adversely affect the
trading price of our common shares.
Penny stock rules will limit the ability of our stockholders to sell their stock.
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited
investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these
penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for its shares.
Because of the early stage of development and the nature of our business, our securities are considered highly speculative.
Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our development. We are engaged in the business of identifying, acquiring, exploring and developing commercial reserves of
primarily gold and potentially uranium. Our properties are in the exploration stage only and are without known reserves of gold and/or uranium. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date
and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of gold and/or uranium,
which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business
operations.
We do not intend to pay dividends on any investment in the shares of stock of our company.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit
the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment
in our company.
Risks Related to Our Company
Our by-laws contain provisions indemnifying our officers and directors.
Our by-laws provide the indemnification of our directors and officers to the fullest extent legally permissible under the Nevada corporate law against all expenses, liability and loss reasonably incurred or suffered by them in connection with any
action, suit or proceeding. Furthermore, our by-laws provide that our board of directors may cause our company to purchase and maintain insurance for our directors and officers, and we have implemented director and officer insurance coverage.
Because most of our directors and officers are residents of other countries other than the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our directors and officers.
Most of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for
investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.