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EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - ROYAL MINES & MINERALS CORPexhibit31-1.htm
EX-10.42 - CONSULTING AGREEMENT DATED FOR REFERENCE SEPTEMBER 8, 2011 BETWEEN THE COMPANY AND JAMES MACK - ROYAL MINES & MINERALS CORPexhibit10-42.htm
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EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - ROYAL MINES & MINERALS CORPexhibit31-2.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - ROYAL MINES & MINERALS CORPexhibit32-1.htm
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EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - ROYAL MINES & MINERALS CORPexhibit32-2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2011

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

For the transition period from ________ to ________

Commission File Number 000-52391

ROYAL MINES AND MINERALS CORP.
(Exact name of registrant as specified in its charter)

NEVADA 20-4178322
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
Suite 112, 2580 Anthem Village Dr.  
Henderson, NV 89052
(Address of principal executive offices) (Zip code)

(702) 588-5973
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]    No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ] Accelerated filer                     [   ]
Non-accelerated filer   [   ] (Do not check if a smaller reporting company) Smaller reporting company [X]

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
As of September 8, 2011, the Registrant had 171,760,352 shares of common stock outstanding.


PART I - FINANCIAL INFORMATION

ITEM 1.                    FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three months ended July 31, 2011 are not necessarily indicative of the results that can be expected for the year ending April 30, 2012.

As used in this Quarterly Report, the terms “we,” “us,” “our,” “Royal Mines,” and the “Company” mean Royal Mines And Minerals Corp. and its subsidiaries, unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.

2


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
BALANCE SHEETS

    July 31, 2011     April 30, 2011  
    (Unaudited)     (Audited)  
 ASSETS   
             
Current assets            
   Cash and cash equivalents $  238,557   $  17,805  
   Prepaid expenses   12,033     16,914  
   Advance   34,150     -  
       Total current assets   284,740     34,719  
             
Non-current assets            
   Loan receivable   983,055     900,000  
   Property and equipment, net   148,726     164,341  
   Intellectual property, net   150,000     150,000  
   Mineral properties   42,600     42,600  
   Other assets   16,355     8,350  
       Total non-current assets   1,340,736     1,265,291  
             
       Total assets $  1,625,476   $  1,300,010  
             
LIABILITIES AND STOCKHOLDERS' EQUITY   
             
Current liabilities            
   Accounts payable $  68,678   $  64,162  
   Accounts payable - related party   70,000     65,000  
   Accrued liabilities   65,000     72,000  
   Accrued interest - related party   21,290     144,771  
   Notes payable   50,000     50,000  
   Loans payable - related party   -     299,179  
       Total current liabilities   274,968     695,112  
             
       Total liabilities   274,968     695,112  
             
Commitments and contingencies            
             
Stockholders' equity            
   Preferred stock, $0.001 par value; 100,000,000 shares 
       authorized, zero shares issued and outstanding
  -     -  
   Common stock, $0.001 par value; 300,000,000 shares 
       authorized, 171,440,352 and 148,420,352 shares issued 
       and outstanding, respectively
  171,440     148,420  
   Additional paid-in capital   12,871,432     11,743,452  
   Accumulated deficit during exploration stage   (11,692,364 )   (11,286,974 )
       Total stockholders' equity   1,350,508     604,898  
             
Total liabilities and stockholders' equity $  1,625,476   $  1,300,010  

The accompanying notes are an integral part of these financial statements.
F-1


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)

                For the Period  
                From Inception  
                (December 14, 2005)  
    For the Three Months Ended     Through  
    July 31, 2011     July 31, 2010     July 31, 2011  
                   
                   
Revenue $  31,264   $  14,285   $  120,570  
                   
Operating expenses                  
   Mineral exploration and evaluation expenses   264,039     124,356     3,306,327  
   Mineral exploration and evaluation expenses - related party   30,000     30,000     728,500  
   General and administrative   65,220     46,490     2,836,055  
   General and administrative - related party   51,000     51,000     4,351,844  
   Depreciation and amortization   15,615     25,065     498,827  
                   
       Total operating expenses   425,874     276,911     11,721,553  
                   
Loss from operations   (394,610 )   (262,626 )   (11,600,983 )
                   
Other income (expense):                  
   Interest and other income   -     -     103,666  
   Interest expense   (10,780 )   (10,468 )   (195,047 )
                   
       Total other income (expense)   (10,780 )   (10,468 )   (91,381 )
                   
Net loss $  (405,390 ) $  (273,094 ) $  (11,692,364 )
                   
Loss per common share - basic:                  
   Net loss $  (0.00 ) $  (0.00 )      
                   
Weighted average common shares outstanding - 
   Basic
  152,924,265     111,785,352      

The accompanying notes are an integral part of these financial statements
F-2


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

                For the Period  
                From Inception  
                (December 14, 2005)
    For the Three Months Ended     Through  
    July 31, 2011     July 31, 2010     July 31, 2011  
                   
CASH FLOWS FROM OPERATING ACTIVITIES                  
   Net loss $  (405,390 ) $  (273,094 ) $  (11,692,364 )
   Adjustments to reconcile net loss to net cash used in operating activities:            
           Depreciation and amortization   15,615     25,065     498,827  
           Stock based expenses   -     -     1,212,960  
           Stock based expenses - related party   -     -     3,539,179  
   Changes in operating assets and liabilities:                  
           Prepaid expenses   4,881     -     (5,033 )
           Accrued liabilities   (7,000 )   -     5,873  
           Other assets   (8,005 )   -     (16,355 )
           Accounts payable   4,516     35,089     574,042  
           Accounts payable and accrued interest- related party   15,519     28,468     427,424  
                   
 Net cash used in operating activities   (379,864 )   (184,472 )   (5,455,447 )
                   
CASH FLOW FROM INVESTING ACTIVITIES                  
   Loan receivable   (83,055 )   (80,000 )   (983,055 )
   Advance   (34,150 )   -     (34,150 )
   Cash paid on mineral property claims   -     -     (32,100 )
   Cash acquired on reverse merger   -     -     2,306  
   Purchase of fixed assets   -     -     (597,553 )
                   
   Net cash used in investing activities   (117,205 )   (80,000 )   (1,644,552 )
                   
CASH FLOW FROM FINANCING ACTIVITIES                  
   Proceeds from stock issuance   500,000     -     3,968,581  
   Proceeds on borrowings - related party   217,821     253,578     3,369,975  
                   
   Net cash provided by financing activities   717,821     253,578     7,338,556  
                   
NET CHANGE IN CASH   220,752     (10,894 )   238,557  
                   
CASH AT BEGINNING OF PERIOD   17,805     37,559     -  
                   
CASH AT END OF PERIOD $  238,557   $  26,665   $  238,557  
                   
                   
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                  
                   
Interest Paid $  -   $  -   $  5,406  
Income Taxes Paid $  -   $  -   $  -  
                   
NON-CASH INVESTING AND FINANCING ACTIVITIES                  
                   
                   
   Acquisition of intellectual property for stock $  -   $  -   $  200,000  
   Acquisition of mineral property for stock $  -   $  -   $  10,500  
   Stock issued in reverse acquisition of Centrus Ventures Inc. $  -   $  -   $  (63,195 )
   Stock issued in safisfaction of debt $ (134,000 ) $ (25,000 ) $ (759,845 )
   Stock issued in satisfaction of loans made to the Company $ (517,000 ) $ (100,000 ) $ (3,408,000 )

The accompanying notes are an integral part of these financial statements.
F-3


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2011

1.

DESCRIPTION OF BUSINESS, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   

Basis of Presentation – The accompanying unaudited financial statements have been prepared in accordance with the Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair statement of the results for the interim period have been included. The interim results reflected in the unaudited financial statements are not necessarily indicative of expected results for the full year. The financial statements should be read in conjunction with the Form 10-K for the fiscal year ended April 30, 2011 of Royal Mines and Minerals Corp. (the “Company”).

   

The interim financial statements present the balance sheets, statements of operations, and cash flows of the Company. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

   

Description of Business – The Company is considered an exploration stage company. The Company's primary objectives are to 1) commercially extract and refine precious metals from its own and others leachable assets, 2) use its lixiviation processes to convert specific ore bodies and fly ash landfills/monofills into valuable assets, and 3) joint venture, acquire and develop mining projects in North America. The Company has not yet realized significant revenues from its primary objectives.

 

Going Concern - As of July 31, 2011, the Company has incurred cumulative net losses of ($11,692,364) from operations and has working capital of $9,772. The Company is still in the exploration stage and has not fully commenced its mining and minerals processing operations, raising substantial doubt about its ability to continue as a going concern.

   

The ability of the Company to continue as a going concern is dependent on the Company raising additional sources of capital and the successful execution of the Company’s objectives. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

   

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

   

Cash and Cash Equivalents - The Company considers all investments with an original maturity of three months or less to be a cash equivalent.

   

Mineral Property Rights – Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

F-4


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2011

1. DESCRIPTION OF BUSINESS, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 

Exploration Costs – Mineral exploration costs are expensed as incurred.

 

Fair Value of Financial Instruments - Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:


  Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

  Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

  Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company’s financial instruments consist of mineral property purchase obligations. These obligations are classified within Level 2 of the fair value hierarchy as their fair value is determined using interest rates which approximate market rates. The Company is not exposed to significant interest or credit risk arising from these financial instruments.

Earnings (Loss) Per Share - The Company follows ASC 260, Earnings Per Share, and ASC 480, Distinguishing Liabilities from Equity, which establish standards for the computation, presentation and disclosure requirements for basic and diluted earnings per share for entities with publicly held common shares and potential common stock issuances. Basic earnings (loss) per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities, such as stock options and warrants. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. Common stock equivalents, which include stock options and warrants to purchase common stock, on July 31, 2011 and 2010 that were not included in the computation of diluted earnings per share because the effect would be antidilutive were 122,837,340 and 68,688,100, respectively.

   

Stock-Based Compensation – The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

   

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

F-5


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2011

1 DESCRIPTION OF BUSINESS, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 

Recent Accounting Pronouncements – From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s financial position, results of operations, or cash flows upon adoption.

     
2.

LOAN RECEIVABLE

     

As of July 31, 2011 and April 30, 2011, the Company has advanced $983,055 and $900,000, respectively, to Golden Anvil to permit Golden Anvil to complete its refurbishment and relocation of its mineral processing plant in Nayarit, Mexico. On November 19, 2010, the Company entered into a Memorandum of Understanding with Golden Anvil, covering the total advanced by the Company to Golden Anvil. The loan bears no interest, matures within 180 days of receiving the first 20 tons of concentrates, which the Company has yet to receive, and is secured by Golden Anvil’s equipment and mineral claims.

     

Under the terms of the Memorandum of Understanding, we formed a Nevada corporation called Golden Anvil Inc. (the “Joint Venture Company”) and planned to contribute funding to the Joint Venture Company totaling $3,000,000 (the “Funding Amount”), including the amount of the Loan. Upon our providing the Funding Amount, Golden Anvil would transfer 100% of the Golden Anvil Mine and the Processing Plant (the “Golden Anvil Assets”) to the Joint Venture Company. The additional $2,400,000 is to be funded as follows:

     
(a)

$300,000 within 45 days of the date of the Memorandum of Understanding (which has been paid); and

     
(b)

The balance of $2,100,000 within 180 days of the date that Golden Anvil delivers to the Phoenix Plant the first 20 tons of concentrate generated from the Processing Plant.

If we are able to complete the funding, of which there is no assurance, and Golden Anvil transfers the assets to the Joint Venture Company, the Joint Venture Company will be owned 50% by us and 50% by Golden Anvil.

In the event that we are unable to raise the Funding Amount in the time required, we will forfeit our right to proceed with the Joint Venture and the Loan will be payable in 12 months with interest at 18% from the dates of advancement and secured by the Golden Anvil Assets. The Loan will be paid with the net profits of Golden Anvil. Any net profit earned by Golden Anvil will be credited to the earned interest first.

Currently, we are working with the management of Golden Anvil to move the Golden Anvil Assets to an entity on the Toronto Stock Exchange or similar exchange, from which we would receive a percentage ownership via common stock from the conversion of our Loan.

F-6


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2011

3.

PROPERTY AND EQUIPMENT

   

Property and equipment consists of the following:


    As of     As of  
    July 31, 2011     April 30, 2011  
Process, lab and office equipment $  418,284   $  418,284  
Site Equipment   179,269     179,269  
Less: accumulated depreciation   (448,827 )   (433,212 )
  $  148,726   $  164,341  

Depreciation expense was $15,615 and $25,065 for the three months ended July 31, 2011 and 2010, respectively.

   
4.

INTELLECTUAL PROPERTY

   

On April 2, 2007 the Company entered into a Technology and Asset Purchase Agreement (“NVRM Agreement”) with Robert H. Gunnison and New Verde River Mining Co. Inc. (“NVRM”), whereby the Company acquired equipment and the technology for lixiviation of metals from ore utilizing thiourea stabilization (“Intellectual Property”). The equipment and intellectual property were acquired with the issuance of 2,000,000 shares of the Company’s $0.10 per share common stock and a future cash payment of $300,000, for a purchase price of $500,000. The purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. The intellectual property was valued at $200,000. For the year ended April 30, 2010, the intellectual property was deemed impaired by $50,000 and expensed accordingly. Based on estimated future cash flows expected to be generated from the intellectual property, the Company does not believe the asset to be impaired as of July 31, 2011.

   
5.

MINERAL PROPERTIES

   

As of July 31, 2011 and April 30, 2011, mineral properties totaling $42,600, consist of twenty-one (21) mining claims located south of Searchlight, Nevada in the Piute Valley. On January 28, 2007, the Company entered into mineral option agreements to acquire an 87.5% interest in twenty-four (24) mining claims with the issuance of 1,050,000 shares of the Company’s common stock on the date of signing of the option agreement, with the provision that the Company issue an additional 420,000 and 210,000 shares on the fifth anniversary and tenth anniversary, respectively, of the signing of the option agreement if the Company wishes to acquire legal interest to the mining claims. The transaction was valued at an agreed upon price of $10,500. Each mining claim is comprised of 160 acres. In August 2008 the Company did not pay the renewal fee on four (4) of the mining claims after confirming title to the claims were void due to not being properly located and being subject to prior segregation.

 

On March 16, 2007 the Company entered into a lease agreement of property with one (1) mining claim, for a term of twenty years, for exploration and potential mining production on 20 acres in Searchlight, Nevada. The Company paid a one-time signing bonus of $5,000 upon execution of the agreement and pays a $4,000 rental fee each August. The Company will also pay an annual royalty equal to five (5) percent of the net profit from any mining production on the property.

   

Mining claims are capitalized as tangible assets in accordance with Emerging Issues Task Force abstract 04-02. Upon completion of a bankable feasibility study, the claims will be amortized using the unit-of-production method over the life of the claim. If the Company does not continue with exploration after the completion of the feasibility study, the claims will be expensed at that time.

F-7


ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2011

6.

ACCOUNTS PAYABLE - RELATED PARTY

   

As of July 31, 2011 and April 30, 2011, accounts payable – related party consisted of $70,000 and $65,000, respectively, due to directors and officers of the Company for consulting fees.

During the three months ended July 31, 2011 and 2010, the Company incurred consulting fees totaling $70,000 and $105,000, respectively, in connection with consulting agreements with directors and officers of the Company.

   
7.

NOTES PAYABLE

   

As of July 31, 2011 and April 30, 2011, notes payable consists of an unsecured $50,000 payable to New Verde River Mining and Robert H. Gunnison pursuant to the NVRM Agreement noted above (see Note 4). Mr. Gunnison signed an extension agreement extending the payment deadline to June 30, 2012. The note payable bears 6% interest annually.

   
8.

LOANS PAYABLE AND ACCRUED INTEREST – RELATED PARTY

   

As of July 31, 2011 and April 30, 2011, loans payable – related party of zero and $299,179, respectively, mainly consists of borrowings, directly and indirectly, from one director of the Company. The balances bear 10% interest, are unsecured and are due on demand. As of July 31, 2011 and April 30, 2011, accrued interest – related party was $21,290 and $144,771, respectively.

On July 13, 2011, 10,340,000 shares were issued in satisfaction of $517,000 of loans payable – related party and 2,680,000 shares were issued in satisfaction of $134,000 of accrued interest- related party.


9.

STOCKHOLDERS’ EQUITY

   

Common and Preferred Stock:

   

As of July 31, 2011 and April 30, 2011, there were 171,440,352 and 148,420,352 shares of common stock outstanding, respectively and zero shares of preferred stock outstanding.


On July 13, 2011, the Company issued 10,340,000 units in satisfaction of $517,000 in loans made to the Company from one director, 10,000,000 units for $500,000 in cash and 2,680,000 units to retire $134,000 in corporate indebtedness, at a price of $0.05 per unit, with each unit consisting of one share of common stock and one share purchase warrant, with each warrant entitling the holder to purchase one additional share of common stock at a price of $0.10 per share for a period of two years from the date of issue.

   
10.

RELATED PARTY TRANSACTIONS

   

For the three months ended July 31, 2011 and 2010, the Company incurred $81,000 and $81,000, respectively, in consulting fees expense from companies with a common director or officer.

   
For the period from inception (December 14, 2005) through July 31, 2011, the Company incurred $1,634,531 in consulting fees expense from companies with a common director or officer.
 
11. SUBSEQUENT EVENTS
 

On September 8, 2011, the Company entered into a consulting agreement with James Mack to provide marketing consulting services to the Company. As compensation for the consulting services, the Company has agreed to issue the following: 1) 160,000 shares of common stock on signing the agreement; 2) 1,000,000 warrants, exercisable for a period of two years, to purchase common stock at $0.10 per share; 3) 30,000 warrants, exercisable for a period of two years, to purchase common stock at $0.25 per share; and 4) monthly compensation of $8,000 or 160,000 shares of common stock per month, at the option of the consultant, during the nine-month period of the consulting agreement.

F-8



ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part II – Item 1A. Risk Factors" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and Current Reports, that we file from time to time with the United States Securities and Exchange Commission (the “SEC”).

OVERVIEW

We were incorporated on December 14, 2005 under the laws of the State of Nevada. We are an exploration stage company and our primary objectives are to: (i) commercially extract and refine precious metals from our own and others mineralized materials; (ii) use our lixiviation processes (Cholla and thiourea) to recover precious metals from specific ore bearing materials and fly ash landfills/monofills, and (iii) joint venture, acquire and develop mining projects in North America.

We are focusing our business on commercially processing specific fly ash and other mineable materials, using a closed loop, leach process that exposes extractable gold (the “Cholla Process”) at our processing and refining plants located in Phoenix, Arizona (the “Phoenix Facility”) and Scottsdale, Arizona (the “Scottsdale Facility”). Our facilities have a capacity to process up to 10 tons per day. In our Phoenix Facility, we also utilize our environmentally friendly proprietary technology for the extraction of precious metals from other materials using thiourea stabilization (the “Lixiviation Technology”). The use of thiourea stabilization is more environmentally friendly than cyanide or sulfuric acid, which have traditionally been used for this purpose. See “Facilities and Technologies” below.

We entered into a Memorandum of Understanding dated October 19, 2010 with Golden Anvil, SA de CV (“Golden Anvil”) with respect to the proposed formation and funding of a proposed joint venture for the exploration and development of mineral concessions owned by Golden Anvil in the State of Nayarit, Mexico (the “Golden Anvil Mine”). We had previously entered into a Letter of Intent and a Toll Processing Agreement in connection with the proposed Joint Venture and the processing of concentrates at our Phoenix Facility. See “Golden Anvil” below.

We also plan to engage in the exploration and development of our Piute Valley Property located in Clark County, Nevada. Our Piute Valley Property is a potential gold project that consists of a mineral lease covering 20.61 acres of patented claims (the “Smith Lease”) and an option to acquire a 7/8th interest in 20 unpatented claims (the “BLM Claims”) located near the Smith Lease. Each BLM Claim is comprised of 160 acres. See “The Piute Valley Property” below.

We are actively seeking to enter into joint ventures with third parties who have legal rights to fly ash resources, including landfills/monofills. There are no assurances that we will be able to commercially extract precious metals from fly ash or other mineable ores using our Cholla or thiourea processes or that we will be able to enter into joint ventures for the exploration and development of additional mining projects.

3


RECENT CORPORATE DEVELOPMENTS

The following corporate developments occurred since our fiscal year ended April 30, 2011:

Dismissal and Appointment of Independent Registered Public Accounting Firm

On May 2, 2011, we dismissed Sarna & Company (“Sarna”), as our independent registered public accounting firm and appointed De Joya Griffith & Company, LLC, ("De Joya") as our new independent registered public accounting firm.

Issuance of Common Stock

On July 13, 2011, we issued an aggregate of 23,020,000 Units (the "Units") at a price of $0.05 per Unit in separate concurrent private placement offerings for aggregate consideration of $1,151,000 as described below. Each Unit was comprised of one share of our common stock and one share purchase warrant, with each warrant entitling the holder to purchase an additional share of our common stock at an exercise price of $0.10 per share for a two year period from the date of issuance.

(a)

US Private Placement: We issued 21,700,000 Units for cash proceeds of $500,000 and to settle outstanding indebtedness of $585,000. The issuances were completed pursuant to the provisions of Rule 506 of Regulation D of the United States Securities Act of 1933, as amended (the “Act”). Each subscriber represented that they were an accredited investor as defined under Regulation D of the Act.

   
(b)

Section 4(2) Private Placement: We issued 1,320,000 Units to settle outstanding indebtedness of $66,000. The issuances were completed pursuant to the provisions of Section 4(2) of the Act. Each of the subscribers were corporations, all of the shares of which are owned by directors or executive officers or close personal friends, relatives or business associates of a director or executive officer of the Company.

Consulting Agreement

On September 8, 2011, the Company entered into a consulting agreement (the “Consulting Agreement”) with James Mack (the “Consultant”) whereby the Consultant will provide marketing consulting services to the Company. The Consultant will provide services in connection with its advanced mineral recovery technology including, but not limited to, liaising with government, liaising with technical and general press, assisting in marketing the company's technology, developing plans for expansion of the technology and introducing potential joint venture partners for plants utilizing the technology. The Agreement is for a nine month term.

Facilities and Technologies

Our Phoenix Facility is an industrial building of approximately 9,800 square feet located in Phoenix, Arizona. The Phoenix Facility is designed as a compact, modular, cost efficient, turn-key operation, with a capacity of processing 4 tons of fly ash per day. In processing fly ash at our Phoenix Facility, we utilize our Cholla Process and our Lixiviation Technology, being a closed loop, zero liquid discharge, leach extraction process. Below is a diagram of a 2 ton per hour processing circuit. The circuit at our Phoenix Facility is smaller in size, however we expect to lease additional equipment to increase our capacity.

4


We acquired our interest in the Lixiviation Technology and our Phoenix Facility on April 2, 2007 under the terms of a Technology and Asset Purchase Agreement (the “Technology Agreement”) with New Verde River Mining Co., Inc. (“New Verde”) and Robert H. Gunnison. In consideration of the Lixiviation Technology and the Phoenix Facility, we paid and issued the following:

  (a)

$300,000 to New Verde for the purchase of the equipment within the Phoenix Facility as follows:

       
  (i)

$175,000 upon execution of the Technology Agreement (which amount has been paid); and

       
  (ii)

$125,000 of which $50,000 is outstanding.

       
  (b)

issued 2,000,000 shares to Mr. Gunnison for the Lixiviation Technology.

Concurrent with the acquisition of the Lixiviation Technology and the Phoenix Facility, we entered into an Employment Agreement dated April 2, 2007 (the “Employment Agreement”) with Robert H. Gunnison whereby Mr. Gunnison agreed to act as our Production Manager commencing on April 2, 2008. In consideration of Mr. Gunnison’s services, we pay Mr. Gunnison a salary of $120,000 per annum.

On March 13, 2009, we entered into the Payment Extension and License Agreement with New Verde and Mr. Gunnison whereby New Verde and Mr. Gunnison agreed to extend the deadline for the balance owed to New Verde to June 30, 2010. In consideration of the extension, we agreed to pay interest at 6% per annum on the balance owing to New Verde. We also agreed to grant New Verde and Mr. Gunnison a non-exclusive worldwide license on the Technology (the “License”). The License will only take effect in the event of the termination of the employment agreement between Mr. Gunnison and the Company. New Verde and Mr. Gunnison will not be permitted to assign or sub-license without our prior written approval. On July 22, 2010 and July 7, 2011, we entered into a payment extension with New Verde and Mr. Gunnison whereby New Verde and Mr. Gunnison agreed to extend the deadline for the balance owed to New Verde to June 30, 2011 and June 30, 2012, respectively. In consideration of the extension, we agreed to extend the accrual of interest at 6% per annum on the balance owing to New Verde.

Our Scottsdale Facility is an industrial building of approximately 6,825 square feet located in Scottsdale, Arizona. The Scottsdale Facility is designed specifically for processing fly ash using our Cholla Process, a closed-loop, modular, turn-key, leaching operation, with a capacity of processing 6 tons of fly ash per day. We are in the process of leasing additional equipment to increase our capacity.

We have yet to realize significant revenues from our Cholla Process and Lixiviation Technology.

Golden Anvil

On October 19, 2010, we executed a Memorandum of Understanding with Golden Anvil, SA de CV (“Golden Anvil”) with respect to the formation of a proposed Joint Venture for the exploration, development and production of mineral concessions owned by Golden Anvil in the State of Nayarit, Mexico (the “Golden Anvil Mine”). The Memorandum of Understanding further defines the terms of the proposed Joint Venture as contemplated in a Letter of Intent dated October 21, 2009.

Previous, we loaned to Golden Anvil a total of $600,000 (the “Loan”) to permit Golden Anvil to establish a new facility (the “Processing Plant”) in Mexico for the purposes of concentrating ore mined from the Golden Anvil Mine. We also toll process concentrates from the Golden Anvil Mine at our Phoenix Plant under the terms of the Toll Processing Agreement.

Under the terms of the Memorandum of Understanding, we formed a Nevada corporation called Golden Anvil Inc. (the “Joint Venture Company”) and planned to contribute funding to the Joint Venture Company totaling $3,000,000 (the “Funding Amount”), including the amount of the Loan. Upon our providing the Funding Amount, Golden Anvil would transfer 100% of the Golden Anvil Mine and the Processing Plant (the “Golden Anvil Assets”) to the Joint Venture Company. The additional $2,400,000 is to be funded as follows:

5



  (a)

$300,000 within 45 days of the date of the Memorandum of Understanding (which has been paid); and

     
  (b)

The balance of $2,100,000 within 180 days of the date that Golden Anvil delivers to the Phoenix Plant the first 20 tons of concentrate generated from the Processing Plant.

If we are able to complete the funding, of which there is no assurance, and Golden Anvil transfers the assets in the Joint Venture Company, the Joint Venture Company will be owned 50% by us and 50% by Golden Anvil.

In the event that we are unable to raise the Funding Amount in the time required, we will forfeit our right to proceed with the Joint Venture and the Loan will be payable in 12 months with interest at 18% from the dates of advancement and secured by the Golden Anvil Assets.

The final terms of the Joint Venture will be set out in a formal agreement currently being prepared by legal counsel for the parties. There is no assurance that we will enter into a formal agreement.

The concentration plant has begun operations at a projected production rate of 50 tons of head ore per day, resulting in 3 to 4 tons of concentrate per week. The weekly concentrates are being processed and sold in Mexico to pay for the Processing Plants operations.

Currently, we are working with the management of Golden Anvil to move the Golden Anvil Assets to an entity on the Toronto Stock Exchange, from which we would receive a percentage ownership via common stock from the conversion of our Loan.

The Piute Valley Property

The Piute Valley Property is a potential gold project consisting of the Smith Lease and the BLM Claims. We intend to focus our operations on the Smith Lease and other leasable, patented mining property adjacent to our Piute Valley Property.

The Smith Lease is a leased patented mineral claim covering approximately 20.61 acres located in Clark County, Nevada. We acquired our interest in the Smith Lease upon entering into a Restatement and Amendment to Lease Agreement dated April 12, 2007 (the “Lease Agreement”) with Erline Y. Smith, Trustee, Erline Y. Smith Trust and Lawana Hooper (collectively referred to as the “Lessors”). Under the terms of the Lease Agreement, we were granted the right to explore, and if proved feasible, develop the Smith Lease. These rights were granted as a lease for a term of 20 years. As consideration for the Smith Lease, we agreed to do the following:

  (a)

pay $5,000 to the Lessors upon execution of the Lease Agreement (which amount has been paid);

  (b)

pay an annual rental fee of $1,000 to the Lessors per each five acre parcel of the Smith Lease (we have paid the annual rental fee through August 13, 2012); and

  (c)

pay an annual royalty equal to five percent of “net smelting profit” from production. Net smelting profit is defined as the net profit derived from the sale of metals and minerals produced from the Smith Lease.

In addition to the Smith Lease, our BLM Claims consist of an option to acquire a 7/8th undivided interest in 20 mineral claims, covering approximately 3,200 acres located in Clark County, Nevada. Readers are cautioned that eight of the BLM Claims appear to be invalid due to conflicts with patented claims or more senior claims. We are investigating this further in order to determine the exact extent of the conflict with these claims.

Under the terms of various option agreements entered into in January 2007 (the “Option Agreements”) with certain optionors (the “Optionors”), we are required to issue to the Optionors the following consideration in order to maintain and exercise our option on the BLM Claims:

6



  (a)

1,050,000 shares of common stock on execution of the Option Agreements (which shares have been issued);

  (b)

an additional 420,000 shares of common stock on the fifth anniversary of the Option Agreements; and

  (c)

an additional 210,000 shares of common stock on the tenth anniversary of the Option Agreements.

PLAN OF OPERATION

Our plan of operation over the next twelve months is to focus our financial resources on commercializing the extraction of gold and other precious metals from fly ash or other ash deposits using our Cholla Process and Lixiviation Technology. We are in the process of leasing additional equipment to increase our capacity of fly ash we can process daily using our Cholla Process, to concentrate the treated material and to extract the gold from the concentrates.

The leased equipment for our Phoenix Facility and Scottsdale Facility will consist of:

1.

Upgrading our Phoenix Facility by installing another filter press, bulk bag unloader, Helix screw auger, 30 HP compressor with 400 gallon receiver, 55’ conveyor and a gravity concentration table to increase the process rate.

2.

Upgrading our Scottsdale Facility by installing another filter press, a metal separator and three wave concentration tables to increase the process rate.

We also plan on implementing a drilling program of prime targets on the Smith Lease. The implementation of this drilling program requires the filing of a Plan of Operations with the Federal Bureau of Land Management (BLM). We are starting the required Environmental Assessment process and anticipate completion of a report and approval from the BLM within 180 days. We anticipate that this drilling program will cost approximately $500,000. The completion of this drilling program will depend on obtaining sufficient funds for the drilling and mineral analysis. We also will continue to seek strategic partnerships for the exploration of additional Piute Valley Property.

In addition, we are working with the management of Golden Anvil to move the Golden Anvil Assets to an entity on the Toronto Stock Exchange, from which we would receive a percentage ownership via common stock from the conversion of our $983,055 Loan.

As of July 31, 2011, we had cash in the amount of $238,557. Accordingly, we do not have sufficient resources to meet the ongoing costs of our Phoenix Facility and Scottsdale Facility, the anticipated costs of completing our plan of operation for our Phoenix Facility and Scottsdale Facility, the Smith Lease or meeting the administrative costs of operating our business for the next twelve months. In order to complete our plan of operation, we will be required to obtain substantial financing from the sale of our common stock, of which there is no assurance.

RESULTS OF OPERATIONS

Three Months Summary                  
    Three Months Ended     Percentage  
    July 31, 2011     July 31, 2010     Increase / (Decrease)  
Revenue $  31,264   $  14,285     118.9%  
Operating Expenses   (425,874 )   (276,911 )   53.8%  
Interest Expense   (10,780 )   (10,468 )   3.0%  
Net Loss $  (405,390 ) $  (273,094 )   48.4%  

Revenues

During the three months ended July 31, 2011 and 2010, we earned revenues of $31,264 and $14,285, respectively. We are currently in the exploration stage of our business. We have begun to process fly ash at

7


our Phoenix Facility and Scottsdale Facility; however, our initial income from the use of our Phoenix Facility and Scottsdale Facility has been minimal. We can provide no assurances that we will earn significant revenue from the processing of fly ash or that we will discover commercially exploitable levels of mineral resources on our Piute Valley Property, or if such resources are discovered, that we will be able to enter into commercial production of our Piute Valley Property.

Expenses

The major components of our operating expenses for the three months ended July 31, 2011 and 2010 are outlined in the table below:

    Three Months Ended     Percentage  
                Increase /  
    July 31, 2011     July 31, 2010     (Decrease)  
Mineral exploration and evaluation expenses $  264,039   $  124,356     112.3%  
Mineral exploration and evaluation expenses – related party   30,000     30,000     0.0%  
General and administrative   65,220     46,490     40.3%  
General and administrative – related party   51,000     51,000     0.0%  
Depreciation and amortization   15,615     25,065     (37.7)%  
Total Expenses $  425,874   $  276,911     53.8%  

Our operating expenses for the three months ended July 31, 2011 increased as compared to the three months ended July 31, 2010. The increase in our operating expenses primarily relates to an increases in mineral exploration and evaluation expenses and general and administrative expenses. The increase was partially offset by a decrease in depreciation and amortization.

Mineral exploration and evaluation expenses primarily consisted of rent, processing extraction costs, consulting fees and labor expenses in connection with our Phoenix Facility and Scottsdale Facility., as well as subcontractor costs with our exploration program on the Smith Lease. The additional mineral exploration and evaluation expenses during the three months ended July 31, 2011 was due to the costs associated with our Scottsdale Facility which we opened in November 2010.

During the three months ended July 31, 2011, our general and administrative and general and administrative related party expenses primarily consisted of: (i) monthly consulting fees paid to our Chief Executive Officer, Mr. Matheson and to our Chief Financial Officer, Mr. Mitchell; and (ii) legal and accounting fees in connection with meeting our reporting requirements under the Exchange Act.

We anticipate that our operating expenses will increase significantly as we implement our plan of operation for our Phoenix Facility, Scottsdale Facility and our Piute Valley Property.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital                  
                Percentage  
    At July 31, 2011     At April 30, 2011     Increase / (Decrease)  
Current Assets $  284,740   $  34,719     720.1%  
Current Liabilities   274,968     (695,112 )   (139.6)%  
Working Capital Surplus (Deficit) $  9,772   $  (660,393 )   (101.5)%  

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Cash Flows            
    Three Months Ended  
    July 31, 2011     July 31, 2010  
Net Cash Used in Operating Activities $  (379,864 ) $  (184,472 )
Net Cash Used In Investing Activities   (117,205 )   (80,000 )
Net Cash Provided By Financing Activities   717,821     253,578  
Net Increase (Decrease) in Cash During Period $  220,752   $  (10,894 )

As at July 31, 2011, we had a working capital surplus of $9,772 as compared to a working capital deficit of $660,393 as at our year ended April 30, 2011. The change in our a working capital from a deficit to a surplus is primarily due to an increase in cash and decreases in accrued interest to related parties and loans payable to related parties as a result of our July 13, 2011 private placement.

FINANCING REQUIREMENTS

Currently, we do not have sufficient financial resources to complete our plan of operation for the next twelve months. As such, our ability to complete our plan of operation is dependent upon our ability to obtain additional financing in the near term.

Our Board of Directors has approved the following separate private placement offerings:

(a)

U.S. Private Placement: On July 13, 2011, our Board of Directors approved a private placement offering of up to 21,700,000 units (the “Units”) at a price of $0.05 US per Unit, with each Unit consisting of one share of our common stock and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of common stock exercisable for a period of two years at a price of $0.10 US per share. The offering was made in the United States to persons who are accredited investors as defined in Regulation D of the Act. We issued 10,000,000 units for cash proceeds of $500,000, 9,300,000 units in satisfaction of $465,000 in loans and 2,400,000 units to retire $120,000 in corporate indebtedness under this private placement offering.

   
(b)

Section 4(2) Private Placement: On July 13, 2011, our Board of Directors approved a private placement offering of up to 1,320,000 units (the “Units”) at a price of $0.05 US per Unit, with each Unit consisting of one share of our common stock and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of common stock exercisable for a period of two years at a price of $0.10 US per share. The offering was made in the United States to persons as defined in Section 4(2) of the Act. We issued 1,040,000 units in satisfaction of $52,000 in loans and 280,000 units to retire $14,000 in corporate indebtedness under this private placement offering.

There is no assurance that any additional securities will be issued under these private placement offerings.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned mining, development and exploration activities.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant 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 is material to stockholders.

9


CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 1 to our interim financial statements included in this Quarterly Report.

Mineral Property Rights – Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Exploration Costs – Mineral exploration costs are expensed as incurred.

Stock-Based Compensation – The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

ASC 505, "Compensation-Stock Compensation," establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

Recent Accounting Pronouncements – From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s financial position, results of operations, or cash flows upon adoption.

ITEM 3.                    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T.                 CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2011 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended July 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.                    LEGAL PROCEEDINGS.

We are not a party to any legal proceedings and, to our knowledge, no other legal proceedings are pending, threatened or contemplated.

ITEM 1A.                 RISK FACTORS.

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

If we do not obtain additional financing, we may not be able to continue our operations at our Facilities, enter into the proposed Joint Venture with Golden Anvil or complete our exploration and development programs on the Piute Valley Property.

As of July 31, 2011, we had cash on hand of $238,557 and accumulated net loss of $11,692,364 since inception. Our plan of operation calls for significant expenses in connection with the operation of our Phoenix Facility and Scottsdale Facility, the entry into the proposed Joint Venture with Golden Anvil and the exploration and development of our Piute Valley Property. If we are unable to raise sufficient financing, there is a substantial risk that we will be unable to meet payments of principal and interest to our creditors and pay our consultants and employees. In addition, we will require substantial financing in order to implement our plan of operation over the next twelve months.

Our Board of Directors has approved two U.S. Private Placement offerings. To date, we have issued 23,020,000 units under the U.S. Private Placement offerings. However, there is no assurance that we will be able to complete the sale of any additional securities and there is no assurance that this will satisfy all of our working capital requirements for the next twelve months or that these funds will be sufficient to complete our planned exploration and development programs.

Because we are an exploration stage company, we face a high risk of business failure.

We have commenced earning revenues, although minimal, from the processing of ore at our Phoenix Facility. Our primary business activities have involved the acquisition of the Piute Valley Property, the exploration and development on the Piute Valley Property and the commencement of operations at our Phoenix Facility and Scottsdale Facility. Potential investors should be aware of the difficulties normally encountered by exploration stage companies and the high rate of failure of such enterprises. 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. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

Because we anticipate our operating expenses will increase prior to our earning significant revenues, we may never achieve profitability.

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses prior to realizing any significant revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the operation of our Phoenix Facility and Scottsdale Facility or the exploration and development of our mineral property and the production of minerals thereon, if any, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we may not be able to ever generate any operating revenues or achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

11


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.

The search for valuable minerals as a business is extremely risky. We may not find commercially exploitable reserves of precious metals on our mineral claims. Exploration for minerals is a speculative venture, necessarily involving substantial risk. The expenditures to be made by us in the upcoming exploration of the mineral claims may not result in the discovery of commercial quantities of ore. 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 of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages if and when we conduct mineral exploration activities.

The search for valuable minerals involves numerous hazards. As a result, if and when we conduct exploration activities we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

There is no assurance that our due diligence requirements will be satisfied or that we will be able to reach a joint venture agreement with Golden Anvil under the terms of the Memorandum of Understanding.

There is no assurance that the proposed transaction with Golden Anvil will be completed as planned or at all. If we decide to proceed with the joint venture, there is no assurance that we will be able to reach an agreement or that we will have sufficient financing to fund the proposed Joint Venture.

Even if we discover commercial reserves of precious metals on our Piute Valley Property, we may not be able to successfully obtain commercial production.

Our Piute Valley Property does not contain any known bodies of ore. If our exploration programs are successful in discovering ore of commercial tonnage and grade, we will require additional funds in order to place those mineral claims into commercial production. At this time, there is a risk that we will not be able to obtain such financing as and when needed.

In order to maintain our rights to the Piute Valley Property, we will be required to make annual filings with federal and state regulatory agencies and/or be required to complete assessment work on those properties.

In order to maintain our rights to the Piute Valley Property, we will be required to make annual filings with federal and state regulatory authorities. Currently the amount of these fees is minimal; however, these maintenance fees are subject to adjustment. In addition, we may be required by federal and/or state legislation or regulations to complete minimum annual amounts of mineral exploration work on the Piute Valley Property. A failure by us to meet the annual maintenance requirements under federal and state laws could result in the loss of our rights to the Piute Valley Property.

As we undertake exploration of our Piute Valley Property, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.

There are several government regulations that materially restrict the exploration of minerals. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program.

Certain work to be performed on our mineral projects may require us to apply for permits from federal, state or local regulatory bodies.

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If our applications for permits from the relevant regulatory bodies are denied, we may not be able to proceed with our exploration and development programs as disclosed above, which could have a negative effect on our business.

If we receive positive results from our exploration program and we decide to pursue commercial production, we may be subject to an environmental review process that may delay or prohibit commercial production.

If the results of our geological exploration program indicate commercially exploitable reserves, and we decide to pursue commercial production of our mineral property, we may be subject to an environmental review process under environmental assessment legislation. Compliance with an environmental review process may be costly and may delay commercial production. Furthermore, there is the possibility that we would not be able to proceed with commercial production upon completion of the environmental review process if government authorities did not approve our mine or if the costs of compliance with government regulation adversely affected the commercial viability of the proposed mine.

If we are unable to hire and retain key personnel, we may not be able to implement our business plan and our business will fail.

Our success will largely depend on our ability to hire highly qualified personnel with experience in geological exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Our failure to hire key personnel when needed could have a significant negative effect on our business.

If we complete additional financings through the sale of shares of our common stock, our existing stockholders will experience dilution.

The most likely source of future financing presently available to us is through the issuance of our common stock. The only other anticipated alternative for the financing of further exploration would be the offering by us of an interest in our properties to be earned by another party or parties carrying out further exploration thereof, which is not presently contemplated. Issuing shares of our common stock, for financing purposes or otherwise, will dilute the interests of our existing stockholders.

Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

Our common stock is considered to be a “penny stock” since it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Exchange Act. Our common stock is a “penny stock” because it meets one or more of the following conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Stock Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets less than $5 million.

The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor's account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the

13


broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

ITEM 2.                    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On September 8, 2011, the Company issued 320,000 shares of its common stock and 1,030,000 warrants as described in Item 5 below. The issuance of securities was completed pursuant to the provisions of Rule 506 of Regulation D of the Act. The Consultant represented that he is an accredited investor as defined under Regulation D of the Act.

ITEM 3.                    DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5.                    OTHER INFORMATION.

Consulting Agreement

On September 8, 2011, the Company entered into a consulting agreement (the “Consulting Agreement”) with James Mack (the “Consultant”) whereby the Consultant will provide marketing consulting services to the Company. The Consultant will provide services in connection with its advanced mineral recovery technology including, but not limited to, liaising with government, liaising with technical and general press, assisting in marketing the company's technology, developing plans for expansion of the technology and introducing potential joint venture partners for plants utilizing the technology. The Agreement is for a nine month term.

As compensation for the Consultant’s services, the Company has agreed to issue the following securities to the Consultant:

(a)

A bonus on signing of the Consulting Agreement of 160,000 shares of common stock in the capital of the Company and 1,030,000 warrants (the "Warrants") as follows:

     
  (i)

One million (1,000,000) warrants, with each warrant exercisable for a period of two years to purchase one share of common stock at a price of $0.10 per share; and

     
  (ii)

Thirty thousand (30,000) warrants, with each warrant exercisable for a period of two years to purchase one share of common stock at a price of $0.25 per share.

     
(b)

Monthly compensation of $8,000 or at the option of the Consultant 160,000 shares of the Company's common stock payable on the 1st day of each calendar month during the nine-month period covered by the Consulting Agreement.

The Consultant has elected to received 160,000 shares in lieu of cash in respect of the month of September.

ITEM 6.                    EXHIBITS.

Exhibit  
Number Description of Exhibits
2.1

Agreement and Plan of Merger dated September 24, 2007 among the Company, Royal Mines Acquisition Corp., Royal Mines Inc. and Kevin B. Epp. (4)

2.2

Agreement and Plan of Merger dated October 6, 2007 between the Company and Royal Mines Acquisition Corp. (5)

3.1

Articles of Incorporation. (1)

3.2

Certificate of Change Pursuant to NRS 78.209 increasing the authorized capital of common stock to 300,000,000 shares, par value $0.001 per share. (2)

3.3

Bylaws. (1)

3.4

Articles of Merger between the Company and Royal Mines Acquisition Corp. (5)

4.1

Form of Share Certificate. (1)

10.1

Mineral Property Option Agreement dated January 28, 2007 between Eugene E. Phebus and Royal Mines Inc. (5)

10.2

Mineral Property Option Agreement dated January 28, 2007 between Charles G. Moore and Royal Mines Inc. (5)

10.3

Mineral Property Option Agreement dated January 10, 2007 between James E. Sharp and Royal Mines Inc. (5)

10.4

Mineral Property Option Agreement dated January 28, 2007 between Ben Barnes and Royal Mines Inc. (5)

10.5

Mineral Property Option Agreement dated January 28, 2007 between Walter Simmons II and Royal Mines Inc. (5)

10.6

Mineral Property Option Agreement dated January 28, 2007 between Leo Corbet and Royal Mines Inc. (5)

10.7

Mineral Property Option Agreement dated January 28, 2007 between William Tao and Royal Mines Inc. (5)

10.8

Mineral Property Option Agreement dated January 28, 2007 between Dr. Wilbur J. Guay and Royal Mines Inc. (5)

10.9

Mineral Property Option Agreement dated January 28, 2007 between Olivia Tearnan and Royal Mines Inc. (5)

14



Exhibit

Number

Description of Exhibits

10.10

Mineral Property Option Agreement dated January 28, 2007 between Jim Mack and Royal Mines Inc. (5)

10.11

Mineral Property Option Agreement dated January 28, 2007 between Ron Manarey and Royal Mines Inc. (5)

10.12

Mineral Property Option Agreement dated January 28, 2007 between William Lintz and Royal Mines Inc. (5)

10.13

Technology and Asset Purchase Agreement dated April 2, 2007 among New Verde River Mining Co., Inc., Robert H. Gunnison and Royal Mines Inc. (5)

10.14

Restatement and Amendment to Lease Agreement dated April 12, 2007 among Erline Y. Smith, Trustee, Erline Y. Smith Trust, Lawana Hooper and Royal Mines Inc. (5)

10.15

AV Executive Suites Service Agreement dated September 13, 2007 between Royal Mines Inc. and Anthem Village Executive Suites, LLC. (5)

10.16

Residential Lease Agreement of La Cienega Office. (5)

10.17

Lease Agreement dated June 6, 2007 among McKendry Enterprises Inc., Profit Sharing Plan and Retirement Trust and Royal Mines Inc. (5)

10.18

2008 Stock Incentive Plan. (6)

10.19

Non-Qualified Stock Option Agreement between the Company and William C. Tao. (6)

10.20

Non-Qualified Stock Option Agreement between the Company and Jason S. Mitchell. (6)

10.21

Extension Agreement between the Company and Robert H. Gunnison.(7)

10.22

Settlement Agreement and Mutual Release dated effective November 15, 2008 between the Company and William C. Tao. (8)

10.23

Extension Agreement dated November 18, 2008 between the Company and Robert H. Gunnison. (9)

10.24

2009 Stock Incentive Plan. (10)

10.25

Form of Non-Qualified Stock Option Agreement for Directors and Executive Officers. (10)

10.26

Management Consulting Agreement dated February 24, 2009 between the Company and Jason S. Mitchell. (11)

10.27

Payment Extension and License Agreement dated March 13, 2009 between New Verde River Mining Co., Inc., Robert H. Gunnison and the Company. (12)

10.28

Proprietary Intellectual Property License Agreement dated March 24, 2009 between the Company and Greene Lyon Group, LLC. (13)

10.29

Consulting Agreement dated August 14, 2009 between the Company and Mirador Consulting, Inc. (14)

10.30

Brecheisen License Agreement dated August 12, 2009 between Brecheisen Company, Inc., Keith D. Brecheisen, Lorna J. Brecheisen and the Company. (15)

10.31

Letter of Intent dated October 21, 2009 between the Company and Golden Anvil, SA de CV. (16)

10.32

First Amendment of Lease Agreement dated November 20, 2009 among McKendry Enterprises Inc., Profit Sharing Plan and Retirement Trust and Royal Mines Inc. (5)

10.33

Toll Processing Agreement dated December 3, 2009 between the Company and Golden Anvil, SA de CV. (17)

10.34

2010 Stock Incentive Plan. (17)

10.35

Form of Non-Qualified Stock Option Agreement for Directors and Executive Officers. (17)

10.36

Extension Agreement dated for reference February 15, 2010 between the Company and Golden Anvil, SA de CV. (18)

10.37

Loan Agreement between Royal Mines And Minerals Corp. (Lender) and Golden Anvil, SA de CV (Borrower). (19)

10.38

Extension Agreement dated July 22, 2010, between Robert H. Gunnison (Lender) and Royal Mines and Minerals Corp (Borrower).(20)

10.39

2011 Stock Incentive Plan.(20)

10.40

Consulting Agreement dated for reference March 10, 2011 between the Company and Complete Advisory Partners, LLC.(21)

10.41

Form of Compensation Stock Award Agreement.(22)

10.42 Consulting Agreement dated for reference September 8, 2011 between the Company and James Mack.
14.1

Code of Ethics. (3)

31.1

Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

15



Exhibit  
Number Description of Exhibits
31.2

Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Notes:  
(1)

Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on August 17, 2006, as amended.

(2)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed June 12, 2007.

(3)

Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed July 30, 2007.

(4)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on September 28, 2007

(5)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed October 12, 2007.

(6)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed February 5, 2008.

(7)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 15, 2008.

(8)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed November 18, 2008.

(9)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed December 15, 2008.

(10)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed January 16, 2009.

(11)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed February 26, 2009.

(12)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 17, 2009.

(13)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed March 26, 2009.

(14)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed August 17, 2009.

(15)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 14, 2009.

(16)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed November 3, 2009.

(17)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed December 10, 2009.

(18)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 16, 2010.

(19)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed August 31, 2010.

(20)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 15, 2010.

(21)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 17, 2011.

(22)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed April 1, 2011.

16


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

        ROYAL MINES AND MINERALS CORP.
         
         
         
Date: September 13, 2011   By: /s/ K. Ian Matheson
        K. IAN MATHESON
        Chief Executive Officer
        (Principal Executive Officer)
         
         
         
         
Date: September 13, 2011   By: /s/ Jason S. Mitchell
        JASON S. MITCHELL
        Chief Financial Officer
        (Principal Accounting Officer)