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EX-5.1 - EXHIBIT 5.1 - AURORA GOLD CORPv238353_ex5-1.htm
EX-23.2 - EXHIBIT 23.2 - AURORA GOLD CORPv238353_ex23-2.htm
EX-24.1 - EXHIBIT 24.1 - AURORA GOLD CORPv238353_ex24-1.htm

As filed with the Securities and Exchange Commission on October [], 2011

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form S-1

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

Aurora Gold Corporation
(Exact name of registrant as specified in its charter)

Delaware
 
1040
 
13-3945947
(State or Other Jurisdiction of
incorporation or organization
 
(Primary Standard Industrial
Classification Code Number)
 
(IRS Employer Identification Number)

   
Lars Pearl
C/- Coresco AG
Level 3
Gotthardstrasse 20
6304 Zug
Switzerland
 
C/- Coresco AG
Level 3
Gotthardstrasse 20
6304 Zug
Switzerland
Telephone: (+41) 7887-96966
Facsimile: (+41) 44 274 2818
 
Telephone: (+41) 7887-96966
Facsimile: (+41) 44 274 2818
(Address, including zip code and telephone number,
including area code, of registrant's principal executive
offices)
 
(Address, including zip code and telephone number,
including area code, of agent for service)
 
Copies of all communications and notices to:
Joseph Sierchio, Esq.
Sierchio & Company, LLP
430 Park Avenue
7th Floor
New York, New York 10022
Telephone: (212) 246-3030
Facsimile: (212) 246-3039

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
 


If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933, as amended, check here: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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. (Check one):

Large Accelerated Filer ¨
 
Accelerated Filer ¨
     
Non-accelerated Filer ¨
(Do not check if a smaller reporting company)
Smaller reporting
company x

Calculation of Registration Fee

Securities to be Registered
 
Number of
Shares
Registered
   
Proposed
Maximum
Offering
Price Per
Share (1)
   
Proposed
Maximum
Offering Price (1)
   
Registration Fee
 
Common Stock Par Value $0.001
    50,000,000 (2)   $ 0.10     $ 5,000,000     $ 573.00  
Common Stock Par Value $0.001
    50,000,000 (3)   $ 0.20     $ 10,000,000     $ 1146.00  
Total
    100,000,000 (4)           $ 15,000,000     $ 1,719.00 (5)

(1)
Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(c) under the Securities Act of 1933; the closing sale price of our stock on October 26, 2011, as quoted on the OTCQB was $0.10 per share. It is not known how many shares will be purchased under this registration statement.

(2)
Represents 50,000,000 shares of our common stock, par value $0.001 per share, which we are offering in units, each unit consisting of one share of common stock and one Series A Stock Purchase Warrant on a no minimum basis. Each full Series A Stock Purchase Warrant entitles the holder thereof to purchase an additional share of our common stock at $0.20 per share for a period of two years from November 1, 2011 through October 31, 2013, directly through our officers and directors.

(3)
Represents the 50,000,000 shares of the Registrant’s common stock issuable upon exercise of the Series A Stock Purchase Warrants.

(4)
All of the 100,000,000 shares being registered are offered by the Company. Accordingly, this registration statement includes an indeterminate number of additional shares of common stock issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of outstanding shares of our common stock. In the event of a stock split, stock dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act.

(5)
Paid herewith.

Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the commission, acting under said section 8(a), may determine.

 
 

 

Subject to Completion, Dated October [], 2011

The information in this Prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sales is not permitted.

Prospectus
Aurora Gold Corporation

50,000,000 Units

We are offering up to a maximum of 50,000,000 units (the “Units”) of our securities at an offering price of $0.10 per Unit in a direct public offering, without any involvement of underwriters or broker-dealers. Each Unit consists of:

 
·
one (1) share of our common stock, $0.001 par value per share (collectively, the “Unit Shares”); and,
 
·
one (1) Series A Stock Purchase Warrant (collectively, the “Series A Warrants”).

Each full Series A Warrant entitles the holder to purchase one additional share of our common stock (the “Warrant Shares”) at a price of $0.20 for a period of two years commencing on November 1, 2011 through October 31, 2013; no fractional shares will be sold. The Units will be sold by our Chief Executive Officer and President. Please refer to “Plan of Distribution.” The Warrant Shares and the Unit Shares are collectively referred to as the “Securities.”

Our common stock is presently quoted for trading under the symbol “AXRG” on the OTC Markets Groups, Inc. QB tier (the “OTCQB”). On October 26, 2011, the closing price of our common stock, as reported on the OTCQB was $0.10 per share.

We are conducting the offering on a no minimum basis. This means that:

 
·
we have no requirement to sell any specific number of Units;
 
·
we will not return any funds received from investors in the event that we do not sell all of the securities being offered or if the funds received are insufficient for the purposes set forth herein; and
 
·
we will not deposit the proceeds from this offering in an escrow, trust or similar account.

Accordingly, the proceeds from this offering will be immediately available to us for our use. Please refer to “Plan of Distribution.”

Purchase of the Securities is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading “Risk Factors” beginning on page 6 of this Prospectus (the “Prospectus”) before making a decision to purchase any of the Securities offered pursuant to this Prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Date Of This Prospectus Is _______, 2011
 
 
 

 
 
Table of Contents

 
Page
Prospectus Summary
  3
Risk Factors
  6
Note Regarding Forward-Looking Statements
  10
Use of Proceeds
  11
Determination Of Offering Price
  12
Market Price of and Dividends On Our Common Stock and Related Stockholder Matters
  12
Management’s Discussion and Analysis Of Financial Condition and Results of Operations
  14
Description of Our Business and Properties
  27
Directors, Executive Officers and Control Persons
  34
Executive Compensation
  40
Security Ownership of Certain Beneficial Owners and Management
  44
Transactions With Related Persons, Promoters and Certain Control Persons
  45
Description of Securities
  46
Plan of Distribution
  48
Legal Matters
  50
Experts
  50
Where to Find Additional Information
  50
Index to Consolidated Financial Statements
  51
Consolidated Financial Statements
  F-1

You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 
2

 

Prospectus Summary

This summary contains material information about us and the offering which is described in detail elsewhere in the Prospectus. Since it may not include all of the information you may consider important or relevant to your investment decision, you should read the entire Prospectus carefully, including the more detailed information regarding our company, the risks of purchasing our common stock discussed under “Risk Factors” on page 6, and our financial statements and the accompanying notes.

Unless the context otherwise requires, the terms “we,” “our,” “us,” the “Company” and “Aurora Gold” refer to Aurora Gold Corporation, a Delaware corporation.

Our Business

We were incorporated under the laws of the State of Delaware on October 10, 1995, under the name “Chefs Acquisition Corp.” Initially formed for the purpose of engaging in the food preparation business, we redirected our business efforts in late 1995 following a change of control, which occurred on October 30, 1995, to the acquisition, exploration and, if warranted, the development of mineral mineralized material properties. We changed our name to “Aurora Gold Corporation” on August 20, 1996, to more fully reflect our mineralized material exploration business activities.

Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. Our continued operations and the recoverability of mineral property costs is dependent upon the existence of economically recoverable mineral reserves, confirmation of our interest in the underlying properties, our ability to obtain necessary financing to complete the development and upon future profitable production.

Since 1996 we have acquired and disposed of a number of properties. We have not established reserves on any of the properties that we owned or in which we have or have had an interest.

We currently have interests in four (4) properties none of which contain any reserves. Please refer to “Description of Our Business and Properties.” We have no revenues, have sustained losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We will not generate revenues even if any of our exploration programs indicate that a mineral deposit may exist on our properties. Accordingly, we will be dependent on future financings in order to maintain our operations and continue our exploration activities. Please refer toRisk Factors.”

Our principal and technical office, from which we conduct our exploration and property acquisition activities, is located at C/- Coresco AG, Level 3, Gotthardstrasse 20, 6304 Zug, Switzerland. The telephone number is (+41) 7887-96966.

Risk Associated With Our Business

The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that the exploration of any of the properties in which we have or may acquire an interest will uncover commercially exploitable mineral reserves. It is likely that such properties will not contain any reserves and, in all likelihood, any funds spent on exploration will probably be lost. In addition, problems such as unusual or unexpected geological formations or other variable conditions are involved in exploration and, often result in unsuccessful exploration efforts.

 
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In addition, due to our limited capital and mineralized materials, we are limited in the amount of exploration work we can do. As a result, our already low probability of successfully locating mineral reserves will be reduced significantly further. Therefore, we may not find a commercial mineable ore deposit prior to exhausting our funds. Furthermore, exploration costs may be higher than anticipated, in which case, the risk of utilizing all of our funds prior to locating any ore deposits shall be greatly increased. Factors that could cause exploration costs to increase are: adverse conditions, difficult terrain and shortages of qualified personnel. Please refer toRisk Factors.”

The Offering

Securities Being Offered

We are offering up to 50,000,000 Units at a purchase price of $0.10 per Unit ($5,000,000 in the aggregate). Each Unit consists of (i) one (1) share of our common stock and (ii) one (1) Series A Warrant. Each full Series A Warrant entitles the holder to purchase one share of our common stock at a price of $0.20 per share for a period of two years commencing on November 1, 2011 through October 31, 2013. Please refer to “Plan of Distribution.”

We are offering the Units on a no minimum basis. This means that:

 
·
we have no requirement to sell any specific number of Units;
 
·
we will not return any funds received from investors in the event that we do not sell all of the securities being offered or if the funds received are insufficient for the purposes set forth herein; and
 
·
we will not deposit the proceeds from this offering in an escrow, trust or similar account.

Accordingly, the proceeds from this offering will be immediately available to us for our use. Please refer toPlan of Distribution.”

Offering Price

The offering price of $0.10 per Unit was arbitrarily determined by us and does not bear any significant relationship to our assets and is not necessarily reflective of the inherent or current, potential market or resale value of our shares. Please refer to “Determination of Offering Price.

Number of Shares Outstanding

There were 90,824,868 shares of our common stock issued and outstanding at September 30, 2011. If all of the offered shares are sold, and without giving effect to the exercise of outstanding options or the Series A Warrants there will be 140,824,868 shares issued and outstanding.

Duration of Offering

Subject to our right to terminate the offering at any time, the offering will be conducted by us on a best efforts basis for a period of the earlier of 180 days following the date of this Prospectus or the date on which we have sold all of the Units. We may, in our sole discretion and without notice, extend the offering for up to an additional 90 days.

 
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Number of Shares Outstanding

At September 30, 2011, we had a total of 90,824,868 shares issued and outstanding. Our common stock is currently quoted on the OTCQB under the symbol “ARXG.” There is only a limited trading market for our common stock. Please refer to “Risk Factors” and to “Market for Common Equity and Related Stockholder Matters.”

Selected Financial Data

The Company has not generated any operating revenues to date. Since incorporation it has been inactive as far as mining activities are concerned. The Company’s plans, funding requirements, sources and alternatives relating thereto are presented and discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The following table sets forth, for the periods and the dates indicated selected financial data for the Company. This information should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes thereto for the period ended December 31, 2010, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere herein.

The selected financial data provided below are not necessarily indicative of the future results of operations or financial performance of the Company. To date the Company has not paid any dividends on its common stock and it does not expect to pay dividends in the foreseeable future.

Consolidated Statements
of Operations Data:
 
For the Six
Months Ended
June 30, 2011
   
For the Six
Months Ended
June 30, 2010
   
For the Year
Ended December
31, 2010
   
For the Year
Ended December
31, 2009
 
Revenue
  $ 0     $ 0     $ 0     $ 0  
Operating loss
  $ (3,335,703 )   $ (930,541 )   $ (2,302,083 )   $ (1,779,477 )
Net loss available to common stockholders
  $ (3,335,703 )   $ (930,541 )   $ (2,302,083 )   $ (1,779,477 )
Basic and diluted net loss per share
  $ (0.04 )   $ (0.01 )   $ (0.03 )   $ (0.03 )
Weighted average number of common shares outstanding used in basic and diluted net loss per share calculation
    88,778,868       74,240,745       81,069,047       60,442,661  

Consolidated Balance Sheet
Data:
 
June 30,
2011
   
December 31,
2010
 
Cash and cash equivalents
  $ 38,913     $ 579,191  
Working Capital
  $ (504,583 )   $ 227,326  
Total assets
  $ 403,937     $ 3,532,696  
Total liabilities
  $ 577,044     $ 372,019  
Total stockholders’ equity (deficiency)
  $ (173,107 )   $ 3,160,677  

 
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Risk Factors

You should carefully consider the risks described below before purchasing any shares. Our most significant risks and uncertainties are described below; if any of the following risks actually occur, our business, financial condition, or results of operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment therein. You should acquire the Shares only if you can afford to lose your entire investment. Our filings with the Securities and Exchange Commission also contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we have described below. Please refer toNote Regarding Forward-Looking Statements on page 10 of this Prospectus.

RISKS RELATED TO OUR BUSINESS, PROPERTY AND INDUSTRY

We are an exploration stage company and have incurred substantial losses since inception.

We have never earned any revenues. In addition, we have incurred net losses of $21,108,965 for the period from our inception (October 10, 1995) through June 30, 2011, and, based upon our current plan of operation, we expect that we will incur losses for the foreseeable future.

Potential investors should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such companies. We are subject to all of the risks inherent to an exploration stage business enterprise, such as limited capital, mineralized materials, lack of manpower, and possible cost overruns associated with our exploration programs. Potential investors must also weigh the likelihood of success in light of any problems, complications, and delays that may be encountered with the exploration of our properties.

Because we are small and do not have much capital, we must limit our exploration activity. As such we may not be able to complete an exploration program that is as thorough as we would like. In that event, an existing ore body may go undiscovered. Without an ore body, we cannot generate revenues and you will lose your investment.

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

Our independent registered public accounting firm has issued its report, which includes an explanatory paragraph for going concern uncertainty on our consolidated financial statements as of and for the year ended December 31, 2010. Because we have not yet generated revenues from our operations our ability to continue as a going concern is currently heavily dependent upon our ability to obtain additional financing to sustain our operations. Such financing may take the form of the issuance of common or preferred stock or debt securities, or may involve bank financing. Although we have completed several equity financings, the fact that our auditors have issued a “going concern” opinion may hinder our ability to obtain additional financing in the future. Currently, we have no commitments to obtain any additional financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.

 
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Our failure to timely file certain periodic reports with the SEC poses significant risks to our business, each of which could materially and adversely affect our financial condition and results of operations.

We did not timely file with the SEC our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the quarterly periods ended March 31, June 30, and September 30, 2009. Consequently, we were not compliant with the periodic reporting requirements under the Securities Exchange Act of 1934, as amended. As a result of our failure to have timely filed our periodic reports with the SEC, our stock was removed from trading on the OTC Bulletin Board (the “OTCBB”) and began trading on the “Pink Sheets.” Our common stock was again listed on the OTCBB on August 5, 2010. In addition, our failure to timely file those and possibly future periodic reports with the SEC could subject us to enforcement action by the SEC and shareholder lawsuits. Any of these events could materially and adversely affect our financial condition and results of operations and our ability to register with the SEC public offerings of our securities for our benefit or the benefit of our security holders.

We cannot assure you that our common stock will be re-listed, or that once re-listed, it will remain listed.

As a result of the delay in filing our periodic reports with the SEC, we were unable to comply with the listing standards of OTCBB and our common stock was removed from the OTCBB effective May 20, 2009. Our common stock was again listed on the OTCBB on August 5, 2010. We are currently listed on the OTCQB, an interdealer quotation system that is, in almost all respects, comparable to the OTCBB and which requires that we timely file periodic reports with the SEC. If we were to become delinquent in our filings, our common stock may be de-listed from the OTCQB. If it is de-listed again in the future, the price of our common stock will likely be adversely affected and there may be a decrease in the liquidity of our common stock.

Because we do not have any revenues, we expect to incur operating losses for the foreseeable future.

We have never generated revenues and we have never been profitable. Prior to completing exploration on our mineral properties, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. If we are unable to generate financing to continue the exploration of our properties, we will fail and you will lose your entire investment in this offering.

None of the properties in which we have an interest or the right to earn an interest have any known reserves.

We currently have an interest or the right to earn an interest in four (4) properties, none of which have any reserves. Based on our exploration activities through the date of this Prospectus, we do not have sufficient information upon which to assess the ultimate success of our exploration efforts. If we do not establish reserves we may be required to curtail or suspend our operations, in which case the market value of our common stock may decline and you may lose all or a portion of your investment.

We have only completed the initial stages of exploration of our properties, and thus have no way to evaluate whether we will be able to operate our business successfully. To date, we have been involved primarily in organizational activities, acquiring interests in properties and in conducting preliminary exploration of properties. We have not earned any revenues and have not achieved profitability as of the date of this Prospectus.

 
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We are subject to all the risks inherent to mineral exploration, which may have an adverse affect on our business operations.

Potential investors should be aware of the difficulties normally encountered by mineral exploration 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. If we are unsuccessful in addressing these risks, our business will likely fail and you will lose your entire investment.

We are subject to the numerous risks and hazards inherent to the mining industry and resource exploration including, without limitation, the following:

 
·
interruptions caused by adverse weather conditions; and
 
·
unforeseen limited sources of supplies resulting in shortages of materials, equipment and availability of experienced manpower.

The prices and availability of such equipment, facilities, supplies and manpower may change and have an adverse effect on our operations, causing us to suspend operations or cease our activities completely.

It is possible that our title for the properties in which we have an interest will be challenged by third parties.

We have not obtained title insurance for our properties. It is possible that the title to the properties in which we have our interest will be challenged or impugned. If such claims are successful, we may lose our interest in such properties. For more information please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our failure to compete with our competitors in mineral exploration for financing, acquiring mining claims, and for qualified managerial and technical employees will cause our business operations to slow down or be suspended.

Our competition includes large established mineral exploration companies with substantial capabilities and with greater financial and technical mineralized materials than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We may also compete with other mineral exploration companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration programs may be slowed down or suspended.

Compliance with environmental regulations applicable to our operations may adversely affect our capital liquidity.

All phases of our operations in Brazil and Canada, where our properties are located, will be subject to environmental regulations. Environmental legislation in Brazil and Canada is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. It is possible that future changes in environmental regulation will adversely affect our operations as compliance will be more burdensome and costly.

 
8

 

Because we have not allocated any money for reclamation of any of our mining claims, we may be subject to fines if a mining claim is not restored to its original condition upon termination of our activities.

Our directors may face conflicts of interest in connection with our participation in certain ventures because they are directors of other mineral mineralized material companies.

Our directors may also be a director of other companies (including mineralized material exploration companies) and, if those other companies participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. It is possible that due to our directors’ conflicting interests, we may be precluded from participating in certain projects that we might otherwise have participated in, or we may obtain less favorable terms on certain projects than we might have obtained if our directors were not also directors of other participating mineral mineralized materials companies. In an effort to balance their conflicting interests, our directors may approve terms equally favorable to all of their companies as opposed to negotiating terms more favorable to us but adverse to their other companies. Additionally, it is possible that we may not be afforded certain opportunities to participate in particular projects because those projects are assigned to our directors’ other companies for which the directors may deem the projects to have a greater benefit.

Our future performance is dependent on our ability to retain key personnel, loss of which would adversely affect our success and growth.

Our performance is substantially dependent on performance of our senior management. In particular, our success depends on the continued efforts of Mr. Pearl, our President and Chief Executive Officer. The loss of his services could have a material adverse effect on our business, results of operations and financial condition as our potential future revenues would most likely dramatically decline and our costs of operations would rise. We do not have employment agreements in place with any of our officers or our key employees, nor do we have key person insurance covering our employees.

The value and transferability of our shares may be adversely impacted by the limited trading market for our shares.

There is only a limited trading market for our common stock on the OTCQB. This may make it more difficult for you to sell your stock if you so desire.

Our common stock is a penny stock and because “penny stock” rules will apply, you may find it difficult to sell the shares of our common stock you acquired in this offering.

Our common stock is a “penny stock” as that term is defined under Rule 3a51-1 of the Securities Exchange Act of 1934. Generally, a “penny stock” is a common stock that is not listed on a national securities exchange and trades for less than $5.00 a share. Prices often are not available to buyers and sellers and the market may be very limited. Penny stocks in start-up companies are among the riskiest equity investments. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the Securities and Exchange Commission. The document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser's written agreement to the purchase. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of purchasers of our stock to sell their shares in the secondary market. It may also cause fewer broker dealers to make a market in our stock.

 
9

 

Many brokers choose not to participate in penny stock transactions. Because of the penny stock rules, there is less trading activity in penny stock and you are likely to have difficulty selling your shares.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, Financial Industry Regulatory Authority ( “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 our shares.

Sales of a substantial number of shares of our common stock into the public market by certain stockholders may result in significant downward pressure on the price of our common stock and could affect the ability of our stockholders to realize any current trading price of our common stock.

Sales of a substantial number of shares of our common stock in the public market could cause a reduction in the market price of our common stock, when and if such market develops. When this registration statement is declared effective, a substantial number of our shares of common stock which will be issued may be available for immediate resale when and if a market develops for our common stock, which could have an adverse effect on the price of our common stock. As a result of any such decreases in price of our common stock, purchasers who acquire shares under this offering may lose some or all of their investment.

Future sales of shares by us may reduce the value of our stock.

If required, we will seek to raise additional capital through the sale of our common stock. Future sales of shares by us could cause the market price of our common stock to decline and may result in further dilution of the value of the shares owned by our stockholders.

Note Regarding Forward-Looking Statements

This Prospectus contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon our current assumptions, expectations and projections, but there can be no assurance that these expectations will be achieved or accomplished.

Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows, (b) our growth strategies, (c) expectations from our ongoing sponsored research and development activities, (d) anticipated trends in the industries in which our technology would be utilized, (e) our future financing plans, and (f) our anticipated needs for working capital.

 
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Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation.

We have little likelihood of long-term success unless we are able to continue to raise capital from the sale of our securities or financing from other sources until, if ever, we generate positive cash flow from operations.

Use Of Proceeds

The Units are being offered directly by us on a no minimum basis directly through our Chief Executive Officer. The offering will be conducted by us for a period of up to 180 days following the date of this Prospectus or the date on which we have sold all of the offered shares. We may extend the offering period for an additional 90 days in our sole discretion and without notice. Please note that:

 
·
we have no requirement to sell any specific number of shares;
 
·
we will not return any funds received from investors in the event that we do not sell all of the securities being offered or if the funds received are insufficient for the purposes set forth herein; and
 
·
we will not deposit the proceeds from this offering in an escrow, trust or similar account.

Accordingly, the proceeds from this offering will be immediately available to us for our use.

Because we cannot with any certainty determine the number of Units which we will actually sell, the following table sets forth our intended use of proceeds depending on the number of Units sold as specified. The actual number of Units sold may be greater or less than the amounts provided for in the tables.

USE OF PROCEEDS
 
50,000,000
Units Sold
   
25,000,000
Units Sold
   
10,000,000
Units Sold
 
Offering Expenses (1)
  $ 45,000     $ 45,000     $ 45,000  
Working Capital
  $ 4,955,000     $ 2,455,000     $ 955,000  
TOTAL
  $ 5,000,000     $ 2,500,000     $ 1,000,000  

(1) Includes, estimated accounting and legal fees.

The net proceeds are not allocated for a specific purpose. Following the payment of the offering expenses the net proceeds will be used for working capital, general corporate purposes, and will be applied towards working capital in an effort to minimize our operating losses.

 
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While we currently intend to use the proceeds of this offering substantially in the manner discussed above, we reserve the right to reassign the use if, in the judgment of our board of directors, changes are necessary or advisable. At present, no material changes are contemplated. Should there be any material changes in the above projected use of proceeds in connection with this offering, we will issue an amended Prospectus reflecting the same.

The amounts and timing of our actual expenditures will depend on numerous factors, including marketing and sales activities, and the growth of our customer base. We may find it necessary to use portions of the net proceeds for other purposes.

Pending these uses, we intend to invest our net proceeds in short-term, investment grade securities, at prevailing market rates of interest. No portion of the proceeds of the offering will be paid to officers, directors and/or any of their respective affiliates as compensation for the offer and sale of the Units.

Determination Of Offering Price

The offering price of $0.10 per Unit has been arbitrarily determined by us, and bears no significant relationship to our assets, earnings, book value or any other objective standard of value. Among the factors considered by us in determining the initial offering price were:

 
·
our capital requirements;
 
·
our current capital resources;
 
·
our experience in our industry;
 
·
the experience of our management;
 
·
our technologies and the state of their current development;
 
·
the current market price of our common stock;
 
·
the volatility and lack of liquidity with respect to the public market for our common stock;
 
·
the percentage of our issued and outstanding shares to be represented by the Unit Shares the Warrant Shares; and
 
·
the general equity market conditions.

Accordingly, the offering price should not be viewed by you as an indication of the resale or market value of the Unit Shares and the Warrant Shares you purchase. Please refer to “Plan of Distribution.”

Market Price of and Dividends On Our Common Stock and Related
Stockholder Matters
 
Our Common Stock is currently quoted on the OTCQB. Our common stock was removed from the OTCBB effective May 20, 2009 and relisted on the OTCBB on August 5, 2010. Please refer to “Risk Factors.”

The following table sets forth the high and low bid prices for the Common Stock for the calendar quarters indicated as reported by the various listing services for the last two years. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions. Our stock is also quoted on the Stuttgart Exchange under the symbol A4G.SG and the Frankfurt Exchange under the symbols “A4G.F,” and “XE7RA.A4G.DE” and on the Berlin-Bremen Exchange under the symbol “A4G.BER.”

 
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First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
 
2011 – High
  $ 0.40     $ 0.32     $ 0.18     $ 0.10 (1)
2011 – Low
  $ 0.24     $ 0.12     $ 0.09     $ 0.10 (1)
2010 – High
  $ 0.61     $ 0.52     $ 0.52     $ 0.41  
2010 – Low
  $ 0.38     $ 0.35     $ 0.30     $ 0.25  

(1) The high and low bid prices for our Common Stock for the Fourth Quarter of 2011 were for the period October 1, 2011 to October 26, 2011. The closing price on October 26, 2011, was $0.10.

As of September 30, 2011, there were approximately 718 holders of record of the Common Stock. We have not paid any cash dividends. Please refer to “Dividend Policy” below. We do not have securities authorized for issuance under an equity compensation plan.

There are 1,700,000 shares reserved for issuance pursuant to options granted under the Company’s stock option plan.

We did not make any repurchases of our securities during the fiscal year ended December 31, 2010, or the subsequent period through to September 30, 2011.

Transfer Agent

The transfer agent of our common stock is Worldwide Stock Transfer, LLC, having an office at 433 Hackensack Avenue, Level L. Hackensack, NJ, USA 07601.

Penny Stock

The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Our stock is currently a “penny stock.” Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities’ laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form as the Commission shall require by rule or regulation. The broker-dealer also must provide to the customer, prior to effecting any transaction in a penny stock, (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.

 
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These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules.

Rule 144

There were 90,824,868 shares of our common stock issued and outstanding at September 30, 2011, of which 10,921,544 shares are deemed “restricted securities,” within the meaning of Rule 144; of these restricted shares, 5,000,000 are owned by Global Minerals, Ltd., a private corporation. Absent registration under the Securities Act, the sale of such shares is subject to Rule 144, as promulgated under the Securities Act.

In general, under Rule 144, subject to the satisfaction of certain other conditions, a person deemed to be one of our affiliates, who has beneficially owned restricted shares of our common stock for at least one year is permitted to sell in a brokerage transaction, within any three-month period, a number of shares that does not exceed the greater of 1% of the total number of outstanding shares of the same class, or, if our common stock is quoted on a stock exchange, the average weekly trading volume during the four calendar weeks preceding the sale, if greater.

Rule 144 also permits a person who presently is not and who has not been an affiliate of ours for at least three months immediately preceding the sale and who has beneficially owned the shares of common stock for at least nine months to sell such shares without restriction other than the requirement that there be current public information as set forth in Rule 144. To the extent that Rule 144 is otherwise available, this provision is currently applicable to all of the restricted shares. If a non-affiliate has held the shares for more than one year, such person may make unlimited sales pursuant to Rule 144 without restriction.

The possibility that substantial amounts of our common stock may be sold under Rule 144 into the public market may adversely affect prevailing market prices for the common stock and could impair our ability to raise capital in the future through the sale of equity securities. Please refer to “Risk Factors.”

Dividend Policy

We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future, but intend to retain our capital mineralized materials for reinvestment in our business. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and other factors as the board of directors deems relevant.

Management’s Discussion And Analysis Of Financial Condition And
Results Of Operations

The following information should be read in conjunction with our audited consolidated financial statements and related notes thereto for the years ended December 31, 2010 and 2009, included elsewhere in this Prospectus. We also urge you to review and consider our disclosures describing various risks that may affect our business, which are set forth under the heading “Risk Factors.”

 
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General

We are a mineral exploration company engaged in the exploration of base, precious metals and industrial minerals worldwide. We were incorporated under the laws of the State of Delaware on October 10, 1995, under the name “Chefs Acquisition Corp.” We conduct our exploration and property acquisition activities through our head office which is located at is located at C/- Coresco AG, Level 3, Gotthardstrasse 20, 6304 Zug, Switzerland. The telephone number is (+41) 7887-96966. We also maintain an office in Brazil at Av. Jornalista Ricardo Marinho, 360, sala 113, Ed. Cosmopolitan, Barra da Tijuca, Rio de Janeiro, CEP 22631-350.

We had no revenues during the fiscal years ended December 31, 2009 and 2010. Funds raised in fiscal 2009 and 2010 were used for exploration of our properties and general administration. We have sustained losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We will not generate revenues even if any of our exploration programs indicate that a mineral deposit may exist on our properties. Accordingly, we will be dependent on future financings in order to maintain our operations and continue our exploration activities.

Significant developments during the six month period ended June 30, 2011 and Subsequent Events

We are a mineral exploration company engaged in the exploration of base, precious metals and industrial minerals worldwide. We were incorporated under the laws of the State of Delaware on October 10, 1995, under the name “Chefs Acquisition Corp.”

We have no revenues, have sustained losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We will not generate revenues even if any of our exploration programs indicate that a mineral deposit may exist on our properties. Accordingly, we will be dependent on future financings in order to maintain our operations and continue our exploration activities. Funds raised in fiscal 2009 and 2010 were used for exploration of our properties, payment on the Asset Purchase Agreement and general administration.

During 2011 through September 30, 2011, we have been evaluating our property holdings in order to determine whether to implement exploration programs on our existing properties or to acquire interests in new properties.

For the six month periods ended June 30, 2011 and 2010, we recorded exploration expenses of $238,249 compared to $232,720, respectively.

On June 15, 2010, pursuant to the Asset Purchase Agreement between Global Minerals Ltd. (“GML”) and Mount Royale Ventures, LLC (“MRV”), as Sellers, and the Company and AGC Resources LLC, the Company’s wholly-owned subsidiary(“AGC”), as Buyers, AGC acquired 50% interest in the Front Range Gold Project joint venture (“JV”), and title to the Gold Hill Mill, and became a joint venture partner with Gold Reef Mining Company, Mi Vida Enterprises, Inc., Gold Hill Mines, Inc. and Southern Cross Prospecting Company (“Property Owners”).

On March 10, 2011, Mi Vida Enterprises, Inc., Gold Hill Mines, Inc. and Southern Cross Prospecting Company intervened in a preexisting lawsuit commenced by MRV against Gold Reef Mining Company in Boulder County District Court (the “Action”). Among other things, they have alleged that GML was in material default of the JV agreement prior to the assignment by GML of its rights in the JV to AGC in June of 2010, that GML wrongfully assigned its rights in the JV without permission of the Property Owners, and have asked the court to declare the JV terminated. The Property Owners also alleged that the transfer of title to the Gold Hill Mill was subject to a right of first refusal in favor of Gold Hill Mines, Inc., and that MRV conveyed its title to the Gold Hill Mill to AGC without giving proper notice to Gold Hill Mines Inc. and in violation of a right of first refusal in favor of Gold Hill Mines, Inc., and requested the court to enter an order granting Gold Hill Mines Inc. an option to purchase the Gold Hill Mill for $10,000, the amount set in the right of first refusal.

 
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On June 14, 2011, the Company, entered into an Asset Purchase Agreement with Devtec Management Ltd. (“Devtec”), pursuant to which the Company sold its subsidiary, AGC Resources LLC, which owns certain properties in Boulder, Colorado, to Devtec for a total of $2 million, plus royalty. Devtec will pay the Company $1 million upon production of the cumulative total of 1,000 ounces of gold and/or silver, and a further $1 million on the six month anniversary of the payment of the first One Million Dollars. Additionally, Devtec will pay Aurora a 5% royalty from the start of production.

A court decision in favor of the Property Owners may have a material adverse affect on the Company’s ability to collect the purchase price, plus royalty from the sale of AGC to Devtec Management Ltd. since an unfavorable court decision may result in AGC losing its 50% interest in the JV as well as its interest in and to the Gold Hill Mill.

Exploration Activities

We conduct our activities from our principal and technical office located at, C/- Coresco AG, Level 3, Gotthardstrasse 20, Zug, 6304 Switzerland. The telephone number is (+41) 7887-96966. We believe that these offices are adequate for our purposes and operations. These offices are provided to us on a month to month basis. We believe that these offices are adequate for our purposes. We do not own any real property or significant assets. Management believes that this space will meet our needs for the next 12 months.

Our strategy is to concentrate our efforts on: (i) existing operations where an infrastructure already exists; (ii) properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) grass-roots exploration opportunities.

We are currently concentrating our property exploration activities in Brazil and Canada. We are also examining data relating to the potential acquisition of other exploration properties in Latin America and South America.

Our properties are in the exploration stage only and are without a known body of mineral reserves. Development of the properties will follow only if satisfactory exploration results are obtained. Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration and development activities will result in any discoveries of commercially viable bodies of mineralization. The long-term profitability of our operations will be, in part, directly related to the cost and success of our exploration programs, which may be affected by a number of factors.

Results of Operations

Three and six months ended June 30, 2011 (Fiscal 2011) versus three and six months ended June 30, 2010 (Fiscal 2010)

Revenues-The Company has yet to generate any revenues or establish any history of profitable operations. For the three and six month periods ended June 30, 2011, we recorded a net loss of $2,951,002 (fiscal 2010 net loss - $540,416), and $3,335,703 (fiscal 2010 net loss - $930,541) respectively, or $(0.03) [fiscal 2010 – $(0.01)] and $(0.04) [fiscal 2010 – $(0.01)] per share.

 
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Expenses – Our general and administrative expenses consist primarily of personnel costs, legal costs, investor relations costs, stock based compensation costs, accounting costs and other professional and administrative costs. For the three and six months ended June 30, 2011, we recorded General and Administrative expenses of $370,014 (fiscal 2010 - $390,357) and $585,164 (fiscal 2010 - $697,821). Administrative costs were lower in fiscal 2011 as a result of cut backs in administrative expenses. For the three and six month periods this amount includes, professional fees - accounting $46,349 (fiscal 2010 - $103,678) and $67,602 (fiscal 2010 - $151,057) respectively, and legal $81,672 (fiscal 2010 - $77,759) and $96,377 (fiscal 2010 - $179,068). The majority of the legal costs incurred during fiscal 2010 relate to the Global Asset Purchase Agreement.

Exploration expenditures – Exploration expenses are charged to operations as they are incurred. For the three and six months ended June 30, 2011 we recorded exploration expenses of $68,698 (fiscal 2010 - $150,059) and $238,249 (fiscal 2010 - $232,720) respectively. The following is a breakdown of the exploration expenses by property: Colorado, $65,334 (2010 – $137,454) and $216,774 (2010 - $137,454) respectively; Brazil $3,364 (2010 – $12,605) and $18,894 (2010 - $92,911) respectively; and Canada, Kumealon property $0 (2010 - $0) and $2,581 (2010 - $2,355) respectively.

Depreciation expense – Depreciation expenses charged to operations for six months ended June 30, 2011 were $15,463 (fiscal 2010 - $7,244) respectively.

Sale of AGC - On June 14, 2011, the Company, entered into an Asset Purchase Agreement with Devtec Management Ltd. (“Devtec”), pursuant to which the Company sold its subsidiary, AGC, which owns certain properties in Boulder, Colorado (see note 3(b) for a discussion of the specific assets purchased by AGC in June 2010), to Devtec for a total of $2 million, plus royalty. Under the terms of the agreement, Devtec will pay the Company $1 million upon production of the cumulative total of 1,000 ounces of gold and/or silver, and a further $1 million on the six month anniversary of the payment of the first $ 1 million. Additionally, Devtec will pay the Company a 5% royalty from the start of production.

The Company is unable to reasonably estimate the amount of minerals the properties will produce, if any, and thus there is uncertainty as to whether the purchase price will be collected. Further, the collection of any purchase price is also contingent on the outcome of the court case described in note 3(b). Given these factors, collection of the purchase price is not considered reasonably possible at the time of these consolidated financial statements given the current uncertain status of exploration work on the Boulder ,Colorado properties and the uncertainties of the related legal action and thus no purchase price has been recorded as of June 30, 2011. Therefore, the Company is recognizing a loss on the sale of its subsidiary of $2,512,290 for the three and six months ended June 30, 2011, which represents the net book value of the assets transferred to Devtec on June 14, 2011 (no liabilities were assumed by Devtec) as follows:

Buildings and equipment
  $ 753,605  
Participating interest in mineral property
    1,758,685  
    $ 2,512,290  

Capital Resources and Liquidity

June 30, 2011 versus December 31, 2010:

Recent developments in capital markets have restricted access to debt and equity financing for many companies. The Company's exploration properties are in the exploration stage, have not commenced commercial production and consequently the Company has no history of earnings or cash flow from its operations. As a result, the Company is reviewing its 2011 exploration and capital spending requirements in light of the current and anticipated, global economic environment.

 
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The Company currently finances its activities primarily by the private placement of securities. There is no assurance that equity funding will be accessible to the Company at the times and in the amounts required to fund the Company’s activities. There are many conditions beyond the Company’s control which have a direct bearing on the level of investor interest in the purchase of Company securities. The Company may also attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its properties; however, there is no assurance that any such activity will generate funds that will be available for operations. Debt financing has been used to fund the Company’s property acquisitions and exploration activities; however the Company has no current plans to use debt financing. The Company does not have “standby” credit facilities, or off-balance sheet arrangements and it does not use hedges or other financial derivatives. The Company has no agreements or understandings with any person as to additional financing.

At June 30, 2011, we had cash of $38,913 (December 31, 2010 - $579,191) and working capital deficiency of $504,583 (working capital at December 31, 2010 – $227,326). Total liabilities as of June 30, 2011 were $577,044 (December 31, 2010 - $372,019).

During the period January 1 to December 31, 2010, we received cash of $3,895,000 from a private placement of 12,983,335 common shares at $0.30 per share, paid non cash finder’s fees of 1,126,111 shares in connection with the private placement, issued 685,900 shares in settlement of indebtedness and payment of expenses amounting to $205,770 and paid a non cash finder’s fee of 500,000 shares in connection with a property acquisition valued at $0.30 per share. In April 2011, as an incentive to assist with future private placements, the Company authorized the payment of a non cash finders fee of 450,000 shares of common stock of the Company in connection with the private placement completed in April 2010. The shares were issued in May 2011. All shares issued were to individuals and companies who reside outside the United States of America. The issuance of the shares was exempt from the registration requirements of Securities Act by virtue of Section 4(2) thereof as well as the exemption from registration requirements afforded by Regulation S.

In June 2010, pursuant to an Asset Purchase Agreement, the Company issued 5 million shares of its common stock, which had a market value of $0.40 per share, paid $600,000 in cash, of which $100,000 was paid in November 2009 on signing the Letter Agreement, and acquired: (i) Global Minerals Ltd. 50% participating interest in the joint venture agreement dated December 18, 2002 between Consolidated Global Minerals Ltd. and the property owners of the Front Range Gold JV property; (ii) the personal property assets of Mount Royale Ventures, LLC., which include a permitted mill, permitted to 70,000 tons per year, and the associated mining equipment; and, (iii) a 50% equity interest in the Black Cloud Mine Claim Group tenements, located within the Front Range Gold property. The issuance of the shares was exempt from the registration requirements of Securities Act by virtue of Section 4(2) thereof as well as the exemption from registration requirements afforded by Regulation S.

Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As discussed in note 1 to the consolidated financial statements, we have incurred recurring operating losses since inception, have not generated any operating revenues to date and used cash of $833,983 from operating activities in 2011 through June 30. We require additional funds to meet our obligations and maintain our operations. We do not have sufficient working capital to (i) pay our administrative and general operating expenses through December 31, 2011, and (ii) to conduct our preliminary exploration programs. Without cash flow from operations, we may need to obtain additional funds (presumably through equity offerings and/or debt borrowing) in order, if warranted, to implement additional exploration programs on our properties. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of our properties, there is no assurance that any such activity will generate funds that will be available for operations. Failure to obtain such additional financing may result in a reduction of our interest in certain properties or an actual foreclosure of our interest. We have no agreements or understandings with any person as to such additional financing.

 
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Our exploration properties have not commenced commercial production and we have no history of earnings or cash flow from our operations. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of our property, there is no assurance that any such activity will generate funds that will be available for operations.

Cash Flow

Six months ended June 30, 2011 versus six months ended June 30, 2010:

Operating activities: We used cash of $833,983 for the six months ended June 30, 2011 (June 30, 2010 - $976,809). The following is a breakdown of cash used for operating activities, aside from the net losses in each period: Depreciation and amortization of $15,463 (June 30, 2010 - $7,244). A loss of $2,512,290 was recorded on the sale of AGC. Changes in prepaid expenses and other assets resulted in a decrease in cash of $11,066 (decrease in cash June 30, 2010 - $15,917). Changes in accounts payable and accrued expenses (including related party) resulted in a decrease in cash of $14,967 (decrease in cash June 30, 2010 - $37,595).

Investing Activities: During the six months ended June 30, 2011, the financial warranty with respect to the Colorado Mined Land Reclamation bonds was reduced by $80,000 to $245,221 and these funds were returned to us. There were no investing activities during the six months ended June 30, 2010.

Financing Activities: We intend to finance our activities by raising capital through the equity markets. During the six months ended June 30, 2011, the Company received funds from advances from an individual and a company, totaling $212,100, that were non-interest bearing, were due on demand and were unsecured. In April 2010, the Company completed a private placement of 12,983,335 common shares, which were authorized for issuance at $0.30 per share for net cash proceeds of $3,895,000. Of the $3,895,000 in proceeds, $1,350,000 was received during the first quarter of 2010 prior to completion of formal signed private placement agreements, which occurred in April 2010. The shares were physically issued in April 2010 to individuals and companies who reside outside the United States of America.

Year Ended December 31, 2010 (Fiscal 2010) versus Year Ended December 31, 2009 (Fiscal 2009)

Revenues-The Company has yet to generate any revenues or establish any history of profitable operations. For the year ended December 31, 2010, we recorded a net loss of $2,302,083 (2009 net loss - $1,779,477), respectively, or $(0.03) [2009 – $(0.03)] per share, respectively.

Expenses – Our general and administrative expenses consist primarily of personnel costs, legal costs, investor relations costs, stock based compensation costs, accounting costs and other professional and administrative costs. For the year ended December 31, 2010 we recorded General and Administrative expenses of $1,657,770 (2009 - $697,039) respectively. This amount includes, professional fees - accounting of $120,220 (2009 - $43,263) respectively and legal $308,323 (2009 - $10,787) respectively.

 
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Exploration expenditures – Exploration expenses are charged to operations as they are incurred. For the year ended December 31, 2010, we recorded exploration expenses of $644,313 (2009 - $67,973) respectively. The following is a breakdown of the exploration expenses by property: Colorado, $526,596 (2009 - $0) respectively; Brazil $115,362 (2009 - $65,956) respectively; and Canada, Kumealon property $2,355 (2009 - $2,017) respectively.

Depreciation expense – Depreciation expenses charged to operations for the year ended December 31, 2010 were $17,738 (2009 - $13,172) respectively.

Capital Resources and Liquidity

December 31, 2010 versus December 31, 2009:

Recent developments in capital markets have restricted access to debt and equity financing for many companies. The Company's exploration properties are in the exploration stage, have not commenced commercial production and consequently the Company has no history of earnings or cash flow from its operations. As a result, the Company is reviewing its 2011 exploration and capital spending requirements in light of the current and anticipated, global economic environment.

The Company currently finances its activities primarily by the private placement of securities. There is no assurance that equity funding will be accessible to the Company at the times and in the amounts required to fund the Company’s activities. There are many conditions beyond the Company’s control which have a direct bearing on the level of investor interest in the purchase of Company securities. The Company may also attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its properties; however, there is no assurance that any such activity will generate funds that will be available for operations. Debt financing has been used to fund the Company’s property acquisitions and exploration activities; however the Company has no current plans to use debt financing. The Company does not have “standby” credit facilities, or off-balance sheet arrangements and it does not use hedges or other financial derivatives. The Company has no agreements or understandings with any person as to additional financing.

At December 31, 2010, we had cash of $579,191 (December 31, 2009 - $556,957) and working capital of $227,326 (working capital deficiency December 31, 2009 – $893,013). Total liabilities as of December 31, 2010 were $372,019 (December 31, 2009 - $1,523,226).

During the period January 1 to December 31, 2010, we received cash of $3,895,000 from a private placement of 12,983,335 common shares at $0.30 per share, paid non cash finder’s fees of 1,126,111 shares in connection with the private placement, issued 685,900 shares in settlement of indebtedness and payment of expenses amounting to $205,770 and paid a non cash finder’s fee of 500,000 shares in connection with a property acquisition valued at $0.30 per share. The shares were issued to individuals and companies who reside outside the United States of America. The issuance of the shares was exempt from the registration requirements of Securities Act by virtue of Section 4(2) thereof as well as the exemption from registration requirements afforded by Regulation S.

In June 2010, pursuant to an Asset Purchase Agreement, the Company issued 5 million shares of its common stock, which had a market value of $0.40 per share, paid $600,000 in cash, of which $100,000 was paid in November 2009 on signing the Letter Agreement, and acquired: (i) Global Minerals Ltd. 50% participating interest in the joint venture agreement dated December 18, 2002 between Consolidated Global Minerals Ltd. and the property owners of the Front Range Gold JV property; (ii) the personal property assets of Mount Royale Ventures, LLC., which include a permitted mill, permitted to 70,000 tons per year, and the associated mining equipment; and, (iii) a 50% equity interest in the Black Cloud Mine Claim Group tenements, located within the Front Range Gold property. The issuance of the shares was exempt from the registration requirements of Securities Act by virtue of Section 4(2) thereof as well as the exemption from registration requirements afforded by Regulation S.

 
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Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As discussed in note 1 to the consolidated financial statements, we have incurred recurring operating losses since inception, have not generated any operating revenues to date and used cash of $2,423,112 from operating activities in 2010. We require additional funds to meet our obligations and maintain our operations. We do not have sufficient working capital to (i) pay our administrative and general operating expenses through December 31, 2011, and (ii) to conduct our preliminary exploration programs. Without cash flow from operations, we may need to obtain additional funds (presumably through equity offerings and/or debt borrowing) in order, if warranted, to implement additional exploration programs on our properties. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of our properties, there is no assurance that any such activity will generate funds that will be available for operations. Failure to obtain such additional financing may result in a reduction of our interest in certain properties or an actual foreclosure of our interest. We have no agreements or understandings with any person as to such additional financing.

Our exploration properties have not commenced commercial production and we have no history of earnings or cash flow from our operations. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of our property, there is no assurance that any such activity will generate funds that will be available for operations.

Cash Flow

Operating activities: We used cash of $2,423,112 for the year ended December 31, 2010 (2009 - $395,791). The following is a breakdown of cash used for operating activities, aside from the net losses in each period: Depreciation and amortization of $17,738 (2009 $13,172). Expenses satisfied with the issuance of common stock was $210,000 (2009 - $0). Changes in prepaid expenses and other assets resulted in a increase in cash of $54,449 (decrease in cash of $55,121 during the year ended December 31, 2009). Changes in accounts payable and accrued expenses (including related party) resulted in a decrease in cash of $403,216 (increase of $266,469 during the year ended December 31, 2009). A non-cash loss of $1,014,465 was realized on the settlement of debt during the year ended December 31, 2009. A non-cash foreign exchange loss of $144,701 was realized during the year ended December 31, 2009.

Investing Activities: During the year ended December 31, 2010, $500,000 was spent acquiring the Front Range Gold joint venture property and related buildings and equipment in Boulder, Colorado, USA (year ended December 31, 2009 - $0). During the year ended December 31, 2010, $325,221 was spent on Mined Land Reclamation Bonds with the State of Colorado and the Front Range Project joint venture (year ended December 31, 2009 $0).

Financing Activities: We intend to finance our activities by raising capital through the equity markets. Proceeds from common stock were $3,895,000 during the year ended December 31, 2010
(2009 - $800,000). Both loans payable were repaid at $250,000 each during the year ended December 31, 2010 and both advances payable received during the year ended December 31, 2009, were repaid at $50,000 each during the year ended December 31, 2010.

 
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Dividends

The Company has neither declared nor paid any dividends on its Common stock. We intend to retain our earnings to finance growth and expand our operations and do not anticipate paying any dividends on our common stock in the foreseeable future.

Asset-Backed Commercial Paper

The Company has no asset-backed commercial paper.

Fair Value of Financial Instruments and Risks

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.

The carrying value of cash, accounts payable and accrued expenses, accounts payable and accrued expenses – related parties, advances payable and advances payable – related party, and loans payable approximate their fair value because of the short-term nature of these instruments.

Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

The Company operates outside of the United States of America (primarily in Brazil) and is exposed to foreign currency risk due to the fluctuation between the currency in which the Company operates in and the U.S. dollar.

Share Capital

At September 30, 2011, we had:

 
·
Authorized share capital of 300,000,000 (June 30, 2011 – 300,000,000) common shares with par value of $0.001 each.
 
·
90,824,868 common shares were issued and outstanding (June 30, 2011 – 89,153,868, December 31, 2010 - 88,703,868).
 
·
1,700,000 stock options outstanding under our incentive stock option plan. The stock options are exercisable at $0.26 per share, with expiry date of August 6, 2012. If the holders were to acquire all 1,700,000 shares issuable upon the exercise of all incentive stock options outstanding, we would receive an additional $442,000.

Market Risk Disclosures

We have not entered into derivative contracts either to hedge existing risks or for speculative purposes during the six months ended June 30, 2011, and the subsequent period to September 30, 2011.

Off-balance Sheet Arrangements and Contractual Obligations

We do not have any off-balance sheet arrangements or contractual obligations at June 30, 2011, and the subsequent period to September 30, 2011, that are likely to have or are reasonably likely to have a material 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 have not been disclosed in our consolidated financial statements.

 
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Application of Critical Accounting Policies

The accounting policies and methods we utilize in the preparation of our consolidated financial statements determine how we report our financial condition and results of operations and may require our management to make estimates or rely on assumptions about matters that are inherently uncertain. Our accounting policies are described in note 2 to our December 31, 2010, consolidated financial statements. Our accounting policies relating to mineral property and exploration costs and depreciation and amortization of property, plant and equipment are critical accounting policies that are subject to estimates and assumptions regarding future activities.

Buildings and Equipment

Buildings and equipment are carried at cost (including development and preproduction costs, capitalized interest, other financing costs and all direct administrative support costs incurred during the construction period, net of cost recoveries and incidental revenues), less accumulated depletion and depreciation including write-downs. Following the construction period, interest, other financing costs and administrative costs are expensed as incurred.

On the commencement of commercial production, depletion of each mining property is provided on the unit-of-production basis, using estimated proven and probable reserves as the depletion basis.

Buildings and equipment utilized directly in commercial mining activities are depreciated, following the commencement of commercial production, over their expected economic lives using either the unit-of-production method or the straight-line method.

Depreciation for non-mining equipment is provided over the following useful lives:

Vehicles: 10 years
Office equipment, furniture and fixtures: 2 to 10 years

The Company reviews the carrying values of its buildings and equipment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. An impairment is considered to exist if total estimated future cash flows, or probability-weighted cash flows on an undiscounted basis, are less than the carrying value of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows associated with values beyond proven and probable reserves and resources. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable future cash flows that are largely independent of cash flows from other asset groups. Generally, in estimating future cash flows, all assets are grouped at a particular property for which there is identifiable cash flows. Buildings and equipment utilized directly in commercial mining activities are depreciated, following the commencement of commercial production, over their expected economic lives using either the unit-of-production method or the straight-line method.

Mineral Properties and Exploration Expenses

The Company accounts for its mineral properties on a cost basis whereby all direct costs, net of pre-production revenue, relative to the acquisition of the properties are capitalized. All sales and option proceeds received are first credited against the costs of the related property, with any excess credited to earnings. Once commercial production has commenced, the net costs of the applicable property will be charged to operations using the unit-of-production method based on estimated proven and probable recoverable reserves. The net costs related to abandoned properties are charged to operations.

 
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Exploration costs are charged to operations as incurred until such time that proven reserves are discovered. From that time forward, the Company will capitalize all costs to the extent that future cash flow from mineral reserves equals or exceeds the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. As at December 31, 2010 and 2009, the Company did not have proven reserves. Exploration activities conducted jointly with others are reflected at the Company's proportionate interest in such activities.

The Company reviews the carrying values of its mineral properties on a regular basis by reference to the project economics including the timing of the exploration and/or development work, the work programs and the exploration results experienced by the Company and others. The review of the carrying value of any producing property will be made by reference to the estimated future operating results and net cash flows. When the carrying value of a property exceeds its estimated net recoverable amount, provision is made for the decline in value.

The recoverability of the amounts recorded for mineral properties is dependent on the confirmation of economically recoverable reserves, confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain the necessary financing to successfully complete their development and the attainment of future profitable operations or proceeds from disposition.

Estimated costs related to site restoration programs during the commercial development stage of the property are accrued over the life of the project.

Related Party Transactions

Our proposed business raises potential conflicts of interests between certain of our officers and directors and us. Certain of our directors are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In appropriate cases, we will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. From time to time, several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, involvement in a greater number of programs and reduction of the financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment.

In determining whether we will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to us, the degree of risk to which we may be exposed and our financial position at that time. Other than as indicated, we have no other procedures or mechanisms to deal with conflicts of interest. We are not aware of the existence of any conflict of interest as described herein.

 
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Other than as disclosed below, during the six months ended June 30, 2011 and 2010, none of our current directors, officers or principal shareholders, nor any family member of the foregoing, nor, to the best of our information and belief, any of our former directors, senior officers or principal shareholders, nor any family member of such former directors, officers or principal shareholders, has or had any material interest, direct or indirect, in any transaction, or in any proposed transaction which has materially affected or will materially affect us.

During the three and six month period ended June 30, 2011, consulting fees of $71,706 (2010 - $91,279) and $155,983 (2010 - $153,881), respectively were incurred to directors and officers of the Company. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.

Included in accounts payable - related party at June 30, 2011, is $18,581 (December 31, 2010 - $17,264) payable to an officer/director and another director of the Company for consulting fees and various expenses incurred on behalf of the Company.

Other than as disclosed below, during the year ended December 31, 2010 and 2009, none of our current directors, officers or principal shareholders, nor any family member of the foregoing, nor, to the best of our information and belief, any of our former directors, senior officers or principal shareholders, nor any family member of such former directors, officers or principal shareholders, has or had any material interest, direct or indirect, in any transaction, or in any proposed transaction which has materially affected or will materially affect us.

During year ended December 31, 2010, consulting fees of $339,591 (2009 - $86,380), respectively were incurred to directors and officers of the Company and its subsidiary. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.
Included in accounts payable - related party at December 31, 2010 is $17,264 (December 31, 2009 - $127,813) payable to an officer and director of the Company for consulting fees and various expenses incurred on behalf of the Company.

CURRENT OUTLOOK

General Economic Conditions

Current problems in credit markets and deteriorating global economic conditions have lead to a slowdown of growth. The slowdown of growth is a major concern, as one of the biggest risks to a full recovery for the metals industry would be a weak and/or slow demand resurgence in critical end markets. Prices for raw materials continue to climb and/or remain near record highs. It is difficult in these conditions to forecast metal prices and demand trends for products that we would produce if we had current mining operations. Credit market conditions have also increased the cost of obtaining capital and limited the availability of funds. Accordingly, management is reviewing the effects of the current conditions on our business.

It is anticipated that for the foreseeable future, we will rely on the equity markets to meet our financing need. We will also consider entering into joint venture arrangements to advance our projects.

Capital and Exploration Expenditures

We are reviewing our capital and exploration spending in light of current market conditions. As a result of our review, we may curtail a portion of our capital and exploration expenditures during 2011.

We are currently concentrating our exploration activities in Brazil and Canada and examining data relating to the potential acquisition or joint venturing of additional mineral properties in either the exploration or development stage.

 
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Plans for Next Twelve Months

The following Plan of Operation contains forward-looking statements that involve risks and uncertainties, as described below. Our actual results could differ materially from those anticipated in these forward-looking statements.

During the next 12 months we intend to raise additional funds through equity offerings and/or debt borrowing to meet our administrative/general operating expenses and to conduct work on our exploration properties. There is, of course, no assurance that we will be able to do so and we do not have any agreements or arrangements with respect to any such financing.

Our exploration properties have not commenced commercial production and we have no history of earnings or cash flow from our operations. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its property, there is no assurance that any such activity will generate funds that will be available for operations.

We will concentrate our exploration activities on the Brazilian Tapajos properties and examine data relating to the potential acquisition or joint venturing of additional mineral properties in either the exploration or development stage in Brazil, United States, Canada and other South American countries. Additional employees will be hired on a consulting basis as required by the exploration properties.

Our exploration work program for the remainder of 2011 and through 2012 will focus on the Brazilian properties. In Brazil we intend to follow up results from previous work on the Sao Domingo property which resulted in 130,000 ounces of mineralized material, by exploration of the geophysical anomaly west of the current mineralized area. This work will entail surface mapping of geology, sampling of soils on a grid basis to delineate geochemical anomalies, stream sediment sampling, geophysical surveying and drilling.

We have set up a field operations centre at the Săo Domingos property and intend to continue to focus our exploration activities on anomalies associated with the Săo Domingos Property. We selected the Săo Domingos property based on its proximity to our other properties, and the logistics currently in place. Access to the Săo Domingos property is by light aircraft to a well-maintained strip, by road along the government maintained Trans Garimpeiro highway, and by boat along the multitude of waterways in the Amazon Basin.

After reviewing the geology and grade continuity from 2006 drilling on the Mineralized material at the Sao Domingos- Fofoca project, we initiated further drilling during July 2007 to test target extensions of the current mineralized material as well as to infill current drilling to increase the confidence levels. A resource estimate has been completed, by a third party consultant, for the Fofoca target on the Săo Domingo’s Property. We have calculated a body of mineralized material to Guide 7 standards in accordance with the JORC Code. The JORC resource is currently estimated at 130,000 ounces at 2.0 g/t calculated on a 0.5 g/t cut off.

Currently the mineralized material still remains open along strike in both directions and at depth. We will continue to evaluate the potential, and are confident that Fofoca could evolve along strike and link up with other noted targets further along strike

 
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In 2012, we will continue to follow up exploration results on the Fofoca area and plan to initiate further exploration programs on other areas of the Sao Domingos property. It is anticipated that we will drill a series of holes within the Fofoca area for engineering and metallurgical test work as well as to test for depth extensions of the known mineralization. Other exploration on the Săo Domingos property areas will involve further mapping of the outcrop geology and sampling soils and scree from shafts of previous workers in order to confirm lithologies and structural trends noted from drilling and published government maps. Currently, four anomalous areas on the Sao Domingos property have been identified from soil and rock chip sampling, at Atacadao, Esmeril, Fofoca and Cachoeira, and we plan to conduct further investigation.

A recent discovery was made on the Atacadau area and has been called Colibri. Here artisanal miners uncovered an area of stock work mineralization that was subsequently sampled and returned some high-grade assays. Further sampling of material that was exposed by artisanal activity around the Colibri occurrence was conducted. Whilst monitoring the artisanal activity mapping and measurements of the structures and orientations of theoretical mineralization channels were conducted. The results showed that there are possible correlations to the Atacadau mineralization noted from previous mapping and drilling. We intend to cut trenches across the strike of the mineralizing structures to better understand the size both laterally and along strike. We will then test the strike extent with geophysics in a similar manner as that conducted on the Fofoca area.

Exploration on the Săo Joăo, and the adjoining Comandante Araras properties is being managed by Samba Minerals Limited, who are earning up to an 80% interest in the properties by funding the exploration to a bankable feasibility exploration.

Together with our partner, Samba, we completed a ground geophysics program on the Săo Joăo property. The program targeted areas of known mineralization and covered the area along to the northeast to link up with other known mineralization. Exploration results to date show that the area has a geophysical trend continuing on from the known mineralization. During the geophysics program, other veins were noted and sampled and returned anomalous gold grades. Together with Samba, in 2011, we intend to evaluate the geophysics and determine various targets to test the sub surface extent of the known mineralization, and to test the geophysical anomalies within the area.

We are not planning to do any exploration work on the British Columbia Kumealon limestone property in 2012.

Description of Our Business and Properties

We conduct our activities from our principal and technical office located at Coresco AG, Level 3, Gotthardstrasse 20, 6304 Zug, Switzerland The telephone number is (+41) 7887-96966. These offices are provided to us on a month to month basis. We believe that these offices are adequate for our purposes. We do not own any real property or significant assets. Management believes that this space will meet our needs for the next 12 months.

Mining Properties

Our properties are located in the Tapajos Region of Brazil. In Brazil we have calculated a body of mineralized material to Guide 7 standards calculated in accordance with the Australasian Joint Ore Reserves Committee (the “JORC”) code for reporting of Mineral Resources and Ore Reserves (the “JORC Code”). The JORC resource is currently estimated at 130,000 ounces at 2.0 g/t calculated on a 0.5 g/t cut off. This mineralized material is located on our Săo Domingos property. The rest of our Brazil properties are in the preliminary exploration stage and do not contain any known bodies of ore.

 
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Our strategy is to concentrate our efforts on: (i) existing operations where an infrastructure already exists; (ii) properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) grass-roots exploration opportunities. We are currently concentrating our property exploration activities in Brazil. We are also examining data relating to the potential acquisition of other exploration properties in Latin America, South America.

Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. There is no assurance that our planned production will result in a commercial success, as production is gold price and politically sensitive. Once production has commenced we will be able to gauge the onward commercial viability of the project. There is no assurance that our planned mineral exploration and development activities will result in any further discoveries of commercially viable bodies of mineralization. The long-term profitability of our operations will be, in part, directly related to the cost and success of our exploration programs, which may be affected by a number of factors.

We currently have an interest in three (3) projects located in Tapajos gold province in Para State, Brazil and one (1) property located in British Columbia, Canada. We have conducted exploration activities on all our projects and have ranked the projects in order of merit and may discontinue such activities and dispose of some of the properties if further exploration work is not warranted.

Figure 1.            Brazil, South America-property locality guide

 
 
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Properties

Brazil

Săo Domingos
 
Location and access

The Săo Domingos property lies in the Tapajos Province of Para State, Brazil It is situated approximately 250 km SE of Itaituba, the regional centre, and includes an area of over 33,033.44 ha. Small aircraft service Itaituba daily and on this occasion flights were sourced via Manaus. Access from Itaituba to site is by small aircraft or unsealed road of average to poor quality. The road is subject to seasonal closures and as the visit was at the end of the ‘wet’ season site access was granted via light aircraft utilizing the local airstrip.

Tenure

a)           The project covers an area of 33,000 hectare DNPM Process 850.684/06:

Aurora has good title over the mineral rights object of the DNPM Process No. 850.684/06, which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. Aurora is the sole registered and beneficial holder of and owns and possesses good title to the referred mineral rights. On September 13, 2006, Aurora submitted to DNPM one Exploration Claim for gold covering an area of 4914,18 ha in the Municipality of Itaituba, State of Pará. According to information obtained such claim was correctly prepared and the required documents are in place.

The above mentioned area is not related to any payments or royalties to third parties since they were claimed by Aurora directly.

b)           DNPM Process 850.782/05:

Aurora has good title over the mineral rights object of the DNPM Process Nos 850.782/05, which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. On November 8 2005, it was submitted to DNPM the Exploration Claim for gold in the Municipality of Itaituba, State of Pará. The Exploration Permit was granted on November 28, 2006, for a 3 (three) years period. The transfer to Aurora was approved on March 24, 2009, and on September 28, 2009, it was requested the renewal of the Exploration Permit but it hasn’t been analyzed by the DNPM yet.

This area was reduced from 6.756 ha to 5.651,98 ha due to the overlapping with Garimpeira (alluvial) Mining properties held by Mr. Celio Paranhos. However the DNPM´s general attorney in Brasilia agreed with Aurora’s legal thesis and nullified all applications filed by Mr. Paranhos (about to 1.900 applications).

The files are in Brasilia where a new area control survey is being done after which the tenement 850.782/2005 shall return to its original size, except for a small 100 ha area held by third parties with priority rights.

No payments or royalties are due regarding the DNPM Process 850.782/05 since it was acquired through a permutation agreement with Altoro Mineração Ltda.

c)           DNPM Process 850.400/07:

Aurora has good title over the mineral rights object of the DNPM Process Nos 850.400/07, which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. It is located at the Municipality of Itaituba and Trairão, State of Pará. On June, 8 2007, it was submitted to DNPM the Exploration Claim for gold. The Exploration Permit was granted on July 9, 2008, for a 3 (three) years period covering an area of 9832,26 ha, and it is valid until July 9, 2011, and is renewable for three additional years (the Company has applied for a renewal of the Exploration Permit).

The above mentioned area is not related to any payments or royalties to third parties since they were claimed by Aurora directly.

 
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d)           DNPM Processes 850.012/06 and 850.013/06:

The tenements are held by Mr. Airton Mesquita Cardoso and were submitted to DNPM on January 19, 2006. The tenements and are located at Itaituba, state of Pará and are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes, but the area was blocked since it is inside of a Garimpeira Reserve.

The transfer to Aurora will be submitted after the Exploration Permit is granted.

There are no payments or royalties related to the tenements according to the agreement entered into with the previous owner.

e)           DNPM Process 850.119/06:

Aurora has good title over the mineral rights object of the DNPM Process No. 850.119/06, which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. Aurora is the sole registered and beneficial holder of and owns and possesses good title to the referred mineral rights. On March 7, 2006, Aurora submitted to DNPM one Exploration Claim for gold covering an area of 3531 ha in the Municipality of Itaituba, State of Pará. According to information obtained such claim was correctly prepared and the required documents are in place.

The above mentioned area is not related to any payments or royalties to third parties since they were claimed by Aurora directly.

f)            DNPM Process 859.587/95:

The tenement, which is held by Vera Lucia Lopes, is valid and in force, and is free and clear of any judicial and extrajudicial encumbrances and taxes. It is located at the Municipality of Itaituba, State of Pará. On November 27, 1995, it was submitted to DNPM the Exploration Claim for gold. The Exploration Permit was granted on September 15, 2006, for a three year period covering an area of 5000 ha, and it was valid until September 15, 2009. On July 15, 2009, it was requested the renewal of the Exploration Permit but it hasn’t been analyzed by the DNPM yet. The transfer to Aurora was submitted on November 23, 2006, but it hasn’t been approved yet.

There are no payments or royalties related to the tenements since all payments due under the terms of the agreement entered into with the previous owner have been already made.
 

 
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Geology

The geology of the Săo Domingos property is predominantly composed of paleo-proterozoic Parauari Granites that play host to a number of gold deposits in the Tapajos Basin. Typical Granites of the younger Maloquinha Intrusive Suite have been noticed in the vicinity of Molly Gold Target, and basic rocks considered to be part of the mesoproterozoic Cachoeira Seca Intrusive Suite occur around the Esmeril target area.

The Săo Domingos property was a previous large alluvial operation, and the property area covers numerous areas of workings.

Săo Joăo – Samba Minerals farm in agreement

In May 2008 we signed an agreement with Samba Minerals Limited (“Samba”), which was subsequently amended in August 2008, whereby Samba can earn up to an 80% participating interest in the Săo Joăo project by funding exploration expenditures to completion of a feasibility study on the property. Upon completion of a feasibility study, we will immediately transfer an 80% participation interest in the property to Samba and enter into a formal joint venture agreement to govern the development and production of minerals from the property. Samba can terminate its participation by providing us 30 days notice in writing. Upon withdrawal from its participation, Samba would forfeit to us all of its rights in relation to the project and would be free of any and all payment commitments yet to be due. Samba will be the manager of the Săo Joăo project. A feasibility study has not been completed as of September 30, 2011, and thus no joint venture has been formed as of that date.

Location and access

The Săo Joăo property is located in the central portion of the Southern Tapajos basin and is accessed by light aircraft from the regional centre of Itaituba. Access is also possible by unsealed roads linking up to the Transgarimpeiro highway and by a purpose cut heavy vehicle access track linking Sao Joao to the exploration centre at the primary project at Sao Domingo.

Tenure - Săo Joăo Project - DNPM Processes 851.533/94 to 851.592/94 inclusive:

The company has good title over the mineral rights which were granted in 1994 and 2005 by the Brazilian National department of Mineral Production DNPM - Departamento Nacional de Produçăo Mineral, as DNPM Process numbers 851.533/94 to 851.592/94 and which are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The Săo Joăo mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of the previous holder since an Exploration Permit has not yet been granted. The Săo Joăo mineral rights comprise 60 Applications for Alluvial Mine of 50 hectares each which was presented to DNPM on May 16, 1994. On August 30, 2006, the previous holder of the Applications applied for the conversion of the Applications to Exploration Permits. When the conversion request is approved by the Authorities, the previous holder will be granted the Exploration Permit for an area of 3000 ha. The assignment of the Săo Joăo mineral rights to Aurora can only be done after the approval of the Applications and the actual granting of an Exploration Permit to the previous Holder.

 
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Option Agreement

The Săo Joăo Option Agreement dated January 20, 2006, and amendments dated June 2, 2008, and December 2, 2008, allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Săo Joăo property mineral rights. Under the terms of the Option Agreement and amendments, a total amount of $1,435,000 is due by us for the acquisition of the Săo Joăo mineral rights. The total option agreement payments for the mineral rights are structured as follows: April 12, 2006 – $20,000 (paid); September 12, 2006 – $25,000 (paid); September 12, 2007 – $60,000 (paid); June 25, 2008 - $100,000 (paid by Samba Minerals Limited as part of the agreement with them as discussed in the Săo Joăo – Samba Minerals farm in agreement above); December 5, 2008 – $40.000 (paid by Samba Minerals Limited as part of the agreement with them as discussed in the Săo Joăo – Samba Minerals farm in agreement above); January 15, 2009 – $30,000 (paid by Samba Minerals Limited as part of the agreement with them as discussed in the Săo Joăo – Samba Minerals farm in agreement above); February 15, 2009 – $30,000 (paid by Samba Minerals Limited as part of the agreement with them as discussed in the Săo Joăo – Samba Minerals farm in agreement above); April 30, 2009 to March 30, 2011 – $8,333.33 per month (April 30, 2009 to June 30, 2011 paid by Samba Minerals Limited as part of the agreement with them as discussed in the Săo Joăo – Samba Minerals farm in agreement above); July 30, 2011 – $950,000 (has not been paid as of September 30, 2011). The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency, “R$”) of the equivalent of $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due.

Geology

The prime targets for the SăoJoăo property are located around and on the intersection of regional NW and NNW faults within the Pararui Intrusive Suite and this area has been the focus of large-scale alluvial workings. The Pararui Intrusive Suite has proven to host the vast majority of gold deposits elsewhere within the Tapajos Gold Province. We conducted a rock chip program over an area currently being excavated for gold in quartz systems via shallow underground workings. The sample results have demonstrated that the quartz vein systems are highly mineralized and considered continuous for at least 200m. We are confident that the quartz vein systems are much more extensive and are currently planning to increase the sample density of rock and soil sampling over, and adjacent to, the current workings to locate further mineralized vein systems, and to drill test their depth extensions in the near future.

Previous mining activity over a number of years focused on the alluvial deposits within its many tributaries, and has now progressed to include the saprolite host rock and out cropping quartz veins.

Comandante Araras - Samba Minerals farm in agreement

In May 2008 we signed an agreement with Samba, which was subsequently amended in August 2008, whereby Samba can earn up to an 80% participating interest in the Comandante Araras projects by funding exploration expenditures to completion of a feasibility study on the property. Upon completion of a feasibility study, we will immediately transfer an 80% participation interest to Samba and enter into a formal joint venture agreement to govern the development and production of minerals from the property. Samba can terminate its participation by providing us 30 days notice in writing. Upon withdrawal from its participation, Samba would forfeit to us all of its rights in relation to the project and would be free of any and all payment commitments yet to be due. Samba will be the manager of the Comandante Araras project. A feasibility study has not been completed as of September 30, 2011, and thus no joint venture has been formed as of that date.

 
32

 
 
Location and access

The Comandante Araras property is located in the central portion of the Southern Tapajos basin and is accessed by light aircraft from the regional centre of Itaituba. The project adjoins the Săo Joăo project to the south east. Access is also possible by unsealed roads linking up to the Transgarimpeiro highway and by a purpose cut heavy vehicle access track linking Săo Joăo to the exploration centre at the primary project at Sao Domingo.

Tenure - Comandante Araras Project - DNPM Processes 853.785/93 to 853.839/93 inclusive:

We have good title over the mineral rights which were granted by the Brazilian Department of Mines (Departamento Nacional de Produçăo Mineral – “DNPM”) as DNPM Process numbers 853.785/93 to 853.839/93 and which are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The Comandante Araras mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of the previous holder since an Exploration Permit has not yet been granted. The Comandante Arara mineral rights comprise 55 Applications for Alluvial Mine of 50 hectares each and the Applications for the rights were presented to DNPM on October 5, 1993. The conversion to Exploration Permits has not been applied for yet. The assignment of the Comandante Araras mineral rights to Aurora can only be done after the approval for the conversion of the Applications and the actual granting of an Exploration Permit to the previous Holder.

Option Agreement

The Comandante Araras Option Agreement dated July 2, 2007, and amendments dated June 2, 2008, November 10, 2008, and September 18, 2009, allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Comandante Araras property mineral rights via structured cash payments. The total option agreement payments for the mineral rights are structured as follows: November 1, 2006 R$20,000 (paid); November 15, 2006 – R$40,000 (paid); December 15, 2006 R$40,000 (paid); May 18, 2007 - R$15,000 (paid); May 29, 2007 – R$50,000 (paid); June 25, 2008 – USD $80,000 (paid by Samba Minerals Limited as part of the agreement with them as discussed in the Comandante Araras - Samba Minerals farm in agreement above); November 30, 2008 – $20,000 or 100,000 shares of Samba Minerals Limited at a deemed issue price of $0.20 per Samba share (paid by Samba Minerals Limited as part of the agreement with them as discussed in the Comandante Araras - Samba Minerals farm in agreement above); November 30, 2008 – 400,000 shares of Samba Minerals Limited at a deemed issue price of $0.20 per Samba share (to be issued by Samba when the Exploration Permit is granted and transferred to Aurora). The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals of the equivalent of $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due.

Geology

The geology of the Comandante Araras property is dominated by two regional faults in the Parauari granite that strike North west in the northern half of the property and South east in the southern part of the property. The project was selected based on the potential trends of mineralization striking towards Comandante Araras from the Săo Joăo project.
 
 
33

 
 
British Columbia, Canada

Kumealon

Location and access

In February 1999, we acquired, by staking, a high grade limestone property three (3) square kilometers (741 acres) located on the north shore of Kumealon Inlet, 54 kilometers south-southeast of Prince Rupert, British Columbia, Canada.

This property is highlighted by consistence of purity and whiteness of the limestone zone outcropping along the southwest shore of Kumealon Lagoon. The zone is comprised mostly of white, recrystallized, fine to course grained limestone, striking 150 degrees and can be traced for at least 1200 meters. The zone is estimated to have an average stratigraphic thickness of 180 meters. Chip samples taken across the zone averaged 55.06% CaO, 2.11% insolubles and 43.51% ignition loss. This property has no known reserves.

We have conducted only preliminary exploration activities on these properties. None of the foregoing properties contain any known reserves.

Directors, Executive Officers and Control Persons

The following table and text set forth the names and ages of all directors and executive officers of our company as of September 30, 2011. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. There are no family relationships between or among the directors, executive officers or persons nominated or charged by our company to become directors or executive officers. Executive officers serve at the discretion of the Board of Directors, and are appointed to serve by the Board of Directors. Also provided herein are brief descriptions of the business experience of each director and executive officer during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.

Our Board of Directors currently consists of three members. Directors serve for a term of one year and stand for election at our annual meeting of stockholders. Pursuant to our Bylaws, any vacancy occurring in the board of directors, including a vacancy created by an increase in the number of directors, may be filled by the stockholders or by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy shall hold office only until the next election of directors by the stockholders. If there are no remaining directors, the vacancy shall be filled by the stockholders.

Name and Address
Age and Position
Lars M. Pearl
Hofnerstrasse 13
6314 Unterageri, Switzerland
Age 49, President, Chief Executive Officer and Director since April 27, 2007.
Ross Doyle
C/- Coresco AG
Level 3
Gotthardstrasse 20
6304 Zug, Switzerland
Age 39, Chief Financial Officer and director since October 11, 2011
Agustin Gomez de Segura (1)
c.Kerria 32, 3A Alcobendas
Soto de la Moraleja
E-28109, Madrid, Spain
Age 56, Director since November 15, 2010.

(1) On October 11, 2011, Mr. Gomez de Segura was appointed as Chairman of the Board.

Effective as of June 17, 2011, Mr. Michael Montgomery resigned from his position as Chief Operating Officer and a director of the Company.

 
34

 

Mr. Ross Doyle was appointed as the Company’s Chief Financial Officer and director on October 11, 2011.

The following is a description of the employment history for each of our directors and officers for the last five years:

Lars Pearl, 49, President, Director and Chief Executive Officer of Cigma Metals Corporation (2004 to 2008); Mr. Pearl has been self employed as a geological consultant from 1993 to 2004. Mr. Pearl has spent over 10 years as a geological consultant to projects in Australia, Tanzania, Russia, Kazakhstan, Peru, Colombia and Ecuador. During the last 5 years Mr. Pearl was acting as a consultant geologist to various companies, including Aurora Gold Corporation, Cigma Metals Corporation, Carnavale Resources Ltd and De Beira Goldfeilds in Australia, Brazil, Peru, Ecuador and Tanzania before joining the board of Aurora Gold Corporation in April 2007. Mr. Pearl devotes approximately 80% of his time dealing with the affairs of Aurora Gold. Mr. Pearl received a Bachelor of Applied Geology degree from the University of Technology, Sydney Australia in 1993. Mr. Pearl’s extensive experience, training and education as a geologist and his experience with other resources exploration companies make him particularly qualified to serve as our director.

Ross Doyle, 39, Ross Doyle has been employed as a strategic business analyst and CFO for the past 15 years.  During this period his time was spent working with large commodity trading firms and financial institutions. During the last 5 years Mr Doyle worked as a CFO at the head office of Glencore International AG in their Coal division. Subsequent to departing Glencore, Mr Doyle has advised other commodity firms in a similar capacity, before joining the board of Aurora Gold Corporation in October 2011. Mr. Doyle received a Bachelor of Commerce from the University of Queensland, Brisbane Australia and is a Chartered Accountant. Mr. Doyle’s extensive experience, training and education with other resources companies makes him particularly qualified to act as our CFO and as a director.

Agustin Gomez de Segura, 56, was awarded a Diploma in Engineering in Physical Chemistry from the Moscow Technological University “MISA” (former Moscow Institute for Steel and Alloys). Mr. Gomez de Segura also completed 4 years of a Doctorate in Metal's Physics at Moscow Technological University. Mr. Gomez de Segura has had several senior roles in publicly listed companies. Mr. Gomez de Segura's positions both past and present include: Director for Labtam Information & Scientific Instruments (Australia) from 1983 till 1990. He was the Chairman of Advisory Board of Alina Bank (Russia) from 1994 till 1997. Mr. de Segura’s extensive scientific experience, training and education and his overall business experience make him particularly qualified to serve as our director.

There are no family relationships between any of the directors or executive officers.

Consideration of Director Nominees

Director Qualifications

We believe that our Board, to the extent that our limited resources permit, should encompass a diverse range of talent, skill and expertise sufficient to provide sound and prudent guidance with respect to the Company's operations and interests. Each director also is expected to: exhibit high standards of integrity, commitment and independence of thought and judgment; use his or her skills and experiences to provide independent oversight to our business; participate in a constructive and collegial manner; be willing to devote sufficient time to carrying out their duties and responsibilities effectively; devote the time and effort necessary to learn our business; and, represent the long-term interests of all shareholders.

 
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The Board has determined that the Board of Directors as a whole must have the right diversity, mix of characteristics and skills for the optimal functioning of the Board in its oversight of our affairs. The Board believes it should be comprised of persons with skills in areas such as: finance; real estate; banking; strategic planning; human resources and diversity; leadership of business organizations; and legal matters. The Board may also consider in its assessment of the Board's diversity, in its broadest sense, reflecting, but not limited to, age, geography, gender and ethnicity.

In addition to the targeted skill areas, the Board looks for a strong record of achievement in key knowledge areas that it believes are critical for directors to add value to the Board, including:

 
·
Strategy—knowledge of our business model, the formulation of corporate strategies, knowledge of key competitors and markets;
 
·
Leadership—skills in coaching and working with senior executives and the ability to assist the Chief Executive Officer;
 
·
Organizational Issues—understanding of strategy implementation, change management processes, group effectiveness and organizational design;
 
·
Relationships—understanding how to interact with investors, accountants, attorneys, management companies, analysts, and communities in which we operate;
 
·
Functional—understanding of finance matters, financial statements and auditing procedures, technical expertise, legal issues, information technology and marketing; and
 
·
Ethics—the ability to identify and raise key ethical issues concerning our activities and those of senior management as they affect the business community and society.

Nomination Procedures

We have no nominating committee, and all nominating functions are handled directly by the full Board of Directors, which the Board believes is the most effective and efficient approach, based on the size of the Board and our current and anticipated operations and needs. As outlined above in selecting a qualified nominee, the Board considers such factors as it deems appropriate which may include: the current composition of the Board; the range of talents of the nominee that would best complement those already represented on the Board; the extent to which the nominee would diversify the Board; the nominee's standards of integrity, commitment and independence of thought and judgment; and the need for specialized expertise.

The Board and Board Meetings

Our Board of directors consists of two members. Directors serve for a term of one year and stand for election at our annual meeting of stockholders. Pursuant to our Bylaws, any vacancy occurring in the Board of directors, including a vacancy created by an increase in the number of directors, may be filled by the stockholders or by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of directors. A director elected to fill a vacancy shall hold office only until the next election of directors by the stockholders. If there are no remaining directors, the vacancy shall be filled by the stockholders.

At a meeting of stockholders, any director or the entire Board of directors may be removed, with or without cause, provided the notice of the meeting states that one of the purposes of the meeting is the removal of the director. A director may be removed only if the number of votes cast to remove him exceeds the number of votes cast against removal.

 
36

 

Our Board of Directors and management are committed to responsible corporate governance to ensure that the Company is managed for the long-term benefit of its shareholders. To that end, the Board of Directors and management periodically review and update, as appropriate, our corporate governance policies and practices. In doing so, the Board and management review published guidelines and recommendations of institutional shareholder organizations and current best practices of similarly situated public companies. The Board of Directors and management also regularly evaluate and, when appropriate, will revise our corporate governance policies and practices in accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and listing standards issued by the SEC.

During the year ended December 31, 2010, the Board held a total of four (4) meetings. All members of the Board attended all meetings of the Board.

Committees

We have no committees of the Board of Directors.

Legal Proceedings

During the past ten years none of our directors, executive officers, promoters or control persons has been:
 
·
the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
 
·
convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
 
·
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
 
·
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law;
 
·
the subject of any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
 
o
Any Federal or State securities or commodities law or regulation; or
 
o
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
 
o
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity.
 
o
any federal or state judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions (excluding settlements between private parties); and
 
o
any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 
37

 

CODE OF ETHICS

We have adopted a Code of Ethics that applies to all of our officers, directors and employees, including its Chief Financial Officer and Chief Executive Officer, which complies with the requirements of the Sarbanes-Oxley Act of 2002 and applicable FINRA listing standards. Accordingly, the Code of Ethics is designed to deter wrongdoing, and to promote, among other things, honest and ethical conduct, full, timely, accurate and clear public disclosures, compliance with all applicable laws, rules and regulations, the prompt internal reporting of violations of the Code of Ethics, and accountability.

CORPORATE GOVERNANCE

We have adopted Corporate Governance Guidelines applicable to its Board of Directors.

Board Leadership Structure

We currently have only two executive officers and three directors. Our Board of Directors has reviewed the Company’s current Board leadership structure — which consists of a Chief Executive Officer a Chief Financial Officer and a Chairman of the Board— in light of the composition of the Board, the Company’s size, the nature of the Company’s business, the regulatory framework under which the Company operates, the Company’s stockholder base, the Company’s peer group and other relevant factors, and has determined that this structure is currently the most appropriate Board leadership structure for our company. Nevertheless, the Board intends to carefully evaluate from time to time whether our Chief Executive Officer and Chairman positions should be combined based on what the Board believes is best for us and our stockholders.

Board Role in Risk Oversight

Risk is inherent in every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including strategic risks, enterprise risks, financial risks, and regulatory risks. While our management is responsible for day to day management of various risks we face, the Board of Directors, as a whole, is responsible for evaluating our exposure to risk and to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board reviews and discusses policies with respect to risk assessment and risk management. The Board also has oversight responsibility with respect to the integrity of the Company’s financial reporting process and systems of internal control regarding finance and accounting, as well as its financial statements.

Director Independence

Our securities are not listed on a U.S. securities exchange and, therefore, we are not subject to the corporate governance requirements of any such exchange, including those related to the independence of directors. However, at this time, after considering all of the relevant facts and circumstances, our Board of Directors has determined that only Mr. Gomez de Segura is independent from our management and qualifies as “independent director” under the standards of independence under the applicable FINRA listing standards. Upon our listing on any national securities exchange or any inter-dealer quotation system, it will elect such independent directors as is necessary under the rules of any such securities exchange.

 
38

 

Certain Relationships

There are no family relationships among or between any of our officers and directors. Our proposed business raises potential conflicts of interests between certain of our officers and directors and us. Certain of our directors are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In appropriate cases, we will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. From time to time, several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, involvement in a greater number of programs and reduction of the financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment.

In determining whether we will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to us, the degree of risk to which we may be exposed and its financial position at that time. Other than as indicated, we have no other procedures or mechanisms to deal with conflicts of interest. We are not aware of the existence of any conflict of interest as described herein.

Compensation of Directors

Our Board of Directors determines the non-employee directors’ compensation for serving on the Board and its committees. In establishing director compensation, the Board is guided by the following goals:

 
·
Compensation should consist of a combination of cash and equity awards that are designed to fairly pay the directors for work required for a company of our size and scope;
 
·
Compensation should align the directors’ interests with the long-term interests of stockholders; and
 
·
Compensation should assist with attracting and retaining qualified directors.

We do not pay director compensation to directors who are also employees. All non-employee directors are paid a director’s fee in the amount of $2,500 per quarter. Directors are entitled to participate in, and have been issued options under, our 2007 Stock Plan. We also reimburse directors for any actual expenses incurred to attend meetings of the Board.

During the years ended December 31, 2010 and 2009, and the subsequent period to September 30, 2011, we paid no fees to our non employee directors.

Standard Arrangements

We do not pay a fee to our outside, non-officer directors. We reimburse our directors for reasonable expenses incurred by them in attending meetings of the Board of Directors. During the years ended December 31, 2009 and 2010, and in 2011 through September 30, 2011, we paid non-officer directors, $0, $0 and $0, respectively, in consulting fees.

 
39

 

Executive Compensation

The responsibility for establishing, administering and interpreting our policies governing the compensation and benefits for our executive officers lies with our Board of Directors. In this connection the Board has not retained the services of any compensation consultants.

The goals of our executive compensation program are to attract, motivate and retain individuals with the skills and qualities necessary to support and develop our business within the framework of our small size and available resources. In 2010, we designed our executive compensation program to achieve the following objectives:

 
·
attract and retain executives experienced in the resource exploration industry;
 
·
motivate and reward executives whose experience and skills are necessary to our ultimate success;
 
·
reward performance as warranted; and
 
·
align the interests of our executive officers and stockholders by motivating executive officers to increase stockholder value.

Summary Compensation Table

The following table summarizes the compensation earned by the Named Executive Officers during the fiscal years ended December 31, 2010, and 2009:

Name and
Principal
position
(a)
 
Year
December
 31,
(b)
 
Salary
($)
(c)
   
Bonus
($)
(d)
   
Stock
awards
($)
(e)
   
Option
awards
($)
(f)
   
Non-equity
incentive
plan
compensation
($)
(g)
   
Non-qualified
deferred
compensation
earnings
($)
(h)
   
All other
Compensation
($)
(i)
   
Total
($)
(j)
 
Lars M. Pearl
 
2010
    181,850       -0-       -0-       -0-       -0-       -0-       -0-       181,850  
President, CEO and Director
 
2009
    86,380       -0-       -0-       -0-       -0-       -0-       -0-       86,380  
                                                                     
Michael Montgomery
 
2010
    157,741       -0-       -0-       -0-       -0-       -0-       -0-       157,741  
COO and Director (1)
 
2009
    -0-       -0-       -0-       -0-       -0-       -0-       -0-       -0-  

(1) Effective as of June 17, 2011, Mr. Michael Montgomery resigned from his position as COO and a director of the Company.

On October 11, 2011, we entered into a services agreement with Global Strategic Synergies Gmbh (“Global Strategic”) pursuant to which Mr. Ross Doyle serves as our Chief Financial Officer. Pursuant to the terms of the services agreement, Global Strategic is paid a monthly consulting fee of 10,000 Swiss Francs. The services agreement may be terminated by either party upon advanced written notice to the other party of 20 business days.

None of our officers or directors is a party to an employment agreement with us. Our entire Board of Directors sets the current year compensation levels of each of the above named Executive Officers. Effective January 1, 2010, Mr. Pearls’ annual salary was $191,945 payable in monthly installments of approximately $15,995. During the fourth quarter of 2010, Mr. Pearls annual salary was revised to $152,868 payable in monthly installments of approximately $12,739. Effective March 1, 2010, Mr. Montgomery’s annual salary was $184,248 payable in monthly installments of approximately $15,774.

 
40

 

Options/SAR Grants Table

In 2007, our Board of Directors approved the 2007 Stock Option Plan (the “Plan”) which was subsequently approved by our shareholders in July 2007, to offer an incentive to obtain services of key employees, directors and consultants of the Company. The Plan provides for the reservation for awards of an aggregate of 10% of the total shares of Common Stock outstanding from time to time. No Plan participant may receive stock options exercisable for more than 1,000,000 shares of Common Stock in any one calendar year. Under the Plan, the exercise price of an incentive stock option must be at least equal to 100% of the fair market value of the common stock on the date of grant (110% of fair market value in the case of options granted to employees who hold more than 10% of our capital stock on the date of grant). The term of stock options granted under the Plan is not to exceed ten years and the stock options vest immediately upon granting.

On October 11, 2011, we awarded 4,200,000 stock purchase options to directors, officers, consultants and employees with an exercise price of $0.12 per share. The term of these options is five years. The options are exercisable at any time from the grant date up to and including the 10th day of October, 2016.

We awarded no stock purchase options, or any other rights, to any of our directors or officers during the years ended December 31, 2010 and 2009.

On August 6, 2007, we awarded 2,300,000 stock purchase options to directors, officers and employees with an exercise price of $0.26 per share. The term of these options is five years. The options are exercisable at any time from the grant date up to and including the 6th day of August 2012.

The following is a summary of stock option activity for the year ended December 31, 2010 and the status of stock options outstanding and exercisable at December 31, 2010:

   
Shares
   
Exercise
price
   
Remaining
Contractual
Life (yrs)
12/31/2010
   
Aggregate
Intrinsic
value at
12/31/2010
 
Outstanding and exercisable at December 31, 2009
    2,300,000     $ 0.26           $ -  
Forfeited
    600,000       -       -       -  
Outstanding and exercisable at December 31, 2010
    1,700,000     $ 0.26       1.60     $ 153,000  

 
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The following is a summary of stock option granted and the status of stock options outstanding and exercisable at December 31, 2010:

Option Awards
  Stock Awards  
Name
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
   
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
 
Option
Exercise
Price ($)
 
Option
Expiration Date
 
Number
Of
Shares
or Units
of
Unvested
Stock (#)
   
Market
Value
of
Shares
or
 Units
of
Stock
That
Have
Not
Vested
($)
   
Equity
Incentive
Plan
Awards:
Number
of
Unearned
 Shares
That
Have
Not
Vested
(#)
   
Equity
Incentive
 Plan
Awards:
 Market
Value
of
Shares
That
Have
Not
Vested
($)
 
                                                 
Michael
Montgomery (1)
    500,000       -0-       -0-  
 
$0.26/share
 
August 6, 2012
    -0-       -0-       -0-       -0-  
                                                               
Lars Pearl (2)
    1,000,000       -0-       -0-  
$0.26/share
 
August 6, 2012
    -0-       -0-       -0-       -0-  
                                                               
Cameron Richardson
    200,000       -0-       -0-  
$0.26/ share
 
August 6, 2012
    -0-       -0-       -0-       -0-  
                                                               
Total
    1,700,000 (3)     -0-       -0-             -0-       -0-       -0-       -0-  

(1) Effective as of June 17, 2011, Mr. Michael Montgomery resigned from his position as COO and a director of the Company.

(2) Does not include 1,000,000 stock purchase options awarded to Mr. Pearl on October 11, 2011. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

(3) Does not include 4,200,000 stock purchase options awarded to directors, officers, consultants and employees on October 11, 2011, with an exercise price of $0.12 per share. The term of these options is five years. The options are exercisable at any time from the grant date up to and including the 10th day of October, 2016.

Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table

At December 31, 2010, we had 1,700,000 (December 31, 2009 - 2,300,000) stock purchase options outstanding.

At no time during the last completed fiscal year did we, while a reporting company pursuant to Section 13(a) of 15(d) of the Exchange Act, adjust or amend the exercise price of the stock options or SARs previously awarded to any of the named executive officers, whether through amendment, cancellation or replacement grants, or any other means.

 
42

 

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

Compensation of Directors

We reimburse our directors for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments, or incurred in connection with attending board meetings in the years ended December 31, 2010 and 2009.

Employment Contracts

On October 11, 2011, we entered into a services agreement with Global Strategic pursuant to which Mr. Ross Doyle serves as our Chief Financial Officer. Pursuant to the terms of the services agreement, Global Strategic is paid a monthly consulting fee of 10,000 Swiss Francs. The services agreement may be terminated by either party upon advanced written notice to the other party of 20 business days.

During the year ended December 31, 2010, consulting fees of $339,591 (year ended December 31, 2009 - $86,380) were paid to directors and officers of the Company and its subsidiary. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

 
43

 

Security Ownership of Certain Beneficial
Owners and Management

The following table sets forth certain information regarding the beneficial ownership of our common stock as of October 19, 2011 by (i) each person who is known by us to own beneficially more than five percent (5%) of our outstanding common stock; (ii) each of the our directors and officers; and (iii) all of our directors and officers as a group. As at September 30, 2011, 90,824,868 shares of our common stock were issued and outstanding.

Name and Address of Beneficial Owner
 
Amount and Nature of
Beneficial Owner
   
Percentage
of Class
 
Global Minerals Ltd
Ste 308, 837 West Hastings Street
Vancouver, B.C., Canada V6N 3N6
    5,000,000       5.5 %
Officers and Directors
               
Lars M. Pearl
Hofnerstrasse 13
6314 Unterageri, Switzerland
    3,738,533 (1)     4.1 %
Ross Doyle
16 Erlibergstrasse
6314 Unteraegeri, Switzerland
    1,250,000 (2)     1.38 %
Agustin Gomez de Segura
c.Kerria 32, 3A Alcobendas
Soto de la Moraleja, E-28109, Madrid, Spain
    2,140,000 (3)     2.36 %
Officers and directors (3 persons)
    7,128,533       7.85 %

(1) Includes 1,000,000 stock purchase options awarded on August 6, 2007. The stock purchase options are exercisable at $0.26 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 6th day of August 2012. Includes 1,000,000 stock purchase options awarded on October 11, 2011. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016. Includes 250,000 of the 1,000,000 stock purchase options awarded on October 11, 2011, to Coresco AG, a consulting group of which Mr. Pearl is a 25% owner. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

(2) Includes 1,000,000 stock purchase options awarded on October 11, 2011. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016. Includes 250,000 of the 1,000,000 stock purchase options awarded on October 11, 2011, to Coresco AG, a consulting group of which Mr. Doyle is a 25% owner. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

(3) Includes 1,000,000 stock purchase options awarded on October 11, 2011. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

Changes in Control

There were no arrangements during the last completed fiscal year or subsequent period to September 30, 2011, which would result in a change in control.

 
44

 
 
Transactions With Related Persons, Promoters
and Certain Control Persons
 
Our proposed business raises potential conflicts of interests between certain of our officers and directors and us. Certain of our directors are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In appropriate cases, we will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. From time to time, several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, involvement in a greater number of programs and reduction of the financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment.

In determining whether we will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to us, the degree of risk to which we may be exposed and its financial position at that time. Other than as indicated, we have no other procedures or mechanisms to deal with conflicts of interest. We are not aware of the existence of any conflict of interest as described herein.

Transactions with Related Persons

Other than as disclosed below, during the fiscal year ended December 31, 2010 and through October 19, 2011, none of our current directors, officers or principal shareholders, nor any family member of the foregoing, nor, to the best of our information and belief, any of our former directors, senior officers or principal shareholders, nor any family member of such former directors, officers or principal shareholders, has or had any material interest, direct or indirect, in any transaction, or in any proposed transaction which has materially affected or will materially affect us.

There have been no transactions or proposed transactions with officers and directors during the last two years to which we are a party except as follows:

During the three and six month periods ended June 30, 2011, consulting fees of $71,706 (2010 - $91,279) and $155,983 (2010 - $153,881), respectively were incurred to directors and officers of the Company. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.

Included in accounts payable and accrued expenses - related parties at June 30, 2011, is $18,581 (December 31, 2010 - $17,264) payable to an officer/director and another director of the Company for consulting fees and various expenses incurred on behalf of the Company

On October 11, 2011, we granted Mr. Lars Pearl, our Chief Executive Officer, 1,000,000 stock purchase options. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

 
45

 

On October 11, 2011, we entered into a consulting agreement with Global Strategic pursuant to which Mr. Ross Doyle serves as our Chief Financial Officer. Pursuant to the terms of the consulting agreement, Global Strategic is paid a monthly consulting fee of 10,000 Swiss Francs.

On October 11, 2011, we granted Mr. Ross Doyle 1,000,000 stock purchase options. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

On October 11, 2011, we granted Mr. Agustine Gomez de Segura 1,000,000 stock purchase options. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016.

On October 11, 2011, we granted Coresco AG 1,000,000 stock purchase. The stock purchase options are exercisable at $0.12 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 10th day of October 2016. Messrs. Lars Pearl and Ross Doyle each own 25% of Coresco AG.

Description of Securities

Our authorized capital stock consists of 300,000,000 shares of common stock, par value $0.001 per share. As of September 30, 2011, we had 90,824,868 shares of common stock outstanding.

Common Stock

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of our common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of our common stock are entitled to receive dividends ratably, if any, as may be declared from time to time by our board of directors out of funds legally available therefor. Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive ratably, our net assets available after the payment of all liabilities.

Holders of our common stock have no preemptive, subscription, redemption or conversion rights, and there are no redemption or sinking fund provisions applicable to the common stock. The outstanding shares of our common stock are, and the shares offered in this offering will be, when issued and paid for, duly authorized, validly issued, fully paid and nonassessable.

Dividends

We have not declared any cash dividends to date. We have no present intention of paying any cash dividends on our common stock in the foreseeable future, as we intend to use earnings, if any, to generate growth. The payment of dividends, if any, in the future, rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and our financial condition, as well as other relevant factors. There are no restrictions in our Certificate of Incorporation or By-laws that restrict us from declaring dividends.

 
46

 

Shares Eligible for Future Sale

           Future sales of a substantial number of shares of our common stock in the public market could adversely affect market prices prevailing from time to time. Under the terms of this offering, the Shares offered may be resold without restriction or further registration under the Securities Act of 1933, except that any shares purchased by our “affiliates,” as that term is defined under the Securities Act, may generally only be sold in compliance with Rule 144 under the Securities Act.

Sale of Restricted Shares

Certain shares of our outstanding common stock were issued and sold by us in private transactions in reliance upon exemptions from registration under the Securities Act and have not been registered for resale. Additional shares may be issued pursuant to outstanding warrants and options. Such shares may be sold only pursuant to an effective registration statement filed by us or an applicable exemption, including the exemption contained in Rule 144 promulgated under the Securities Act.

On September 30, 2011, we had outstanding 90,824,868 shares of common stock. Of these shares, 79,903,324 are freely tradable by persons other than our affiliates, without restriction under the Securities Act; and 10,921,544 shares are restricted securities within the meaning of Rule 144 under the Securities Act and may not be sold unless an exemption from the registration requirements of the Securities Act is available (including 144).

Rule 144

Pursuant to Rule 144 as in effect on the date of this Prospectus a person who has beneficially owned restricted shares of our common stock for at least nine months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale.

Sales under Rule 144 by Affiliates

Persons who have beneficially owned restricted shares of our common stock for at least nine months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

 
·
1% of the number of shares of common stock then outstanding; or
 
·
the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale, provided that the common stock is listed on a national securities exchange or on The NASDAQ Stock Market.

Sales under Rule 144 by our affiliates are further limited under Rule 144, including the provisions thereof relating to the manner of sale, notice requirements and availability of current public information about us.

Sales Pursuant to Rule 144 by Non-Affiliates

Under Rule 144, a person who is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, and who has beneficially owned the restricted ordinary shares proposed to be sold for at least nine (6) months, including the holding period of any prior owner other than an affiliate, is entitled to sell their shares without complying with the manner of sale and volume limitation or notice provisions of Rule 144. We must be current in our public reporting if the non-affiliate is seeking to sell under Rule 144 after holding his shares between 6 months and one year. After one year, non-affiliates do not have to comply with any other Rule 144 requirements.

 
47

 

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Historically, the SEC staff has taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check companies, to their promoters or affiliates despite technical compliance with the requirements of Rule 144. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition, however, if the following conditions are met:

 
·
The issuer of the securities that was formerly a shell company has ceased to be a shell company;
 
·
The issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
 
·
The issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
 
·
At least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.

As we are not a shell company, our restricted shares will be able to be resold pursuant to Rule 144 as described above after we become subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

Legal Proceedings

Although we are not party to nor are we aware of any pending lawsuit, litigation or proceeding, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.
We are currently not aware of any other legal proceedings or claims that we believe will have, individually, or in the aggregate, a material adverse affect on our business, financial condition or operating results.

Plan of Distribution

We are offering up to 50,000,000 Units at a purchase price of $0.10 per Unit ($5,000,000 in the aggregate). Each Unit consists of (i) one (1) share of our common stock and (ii) one Series A Warrant. Each full Series A Warrant entitles the holder to purchase one share of our common stock at a price of $0.20 per share for a period two (2) years commencing on November 1, 2011 and continuing through October 31, 2013.

We are offering the Units directly to the public through our Chief Executive Officer and President on a “best efforts, no minimum,” basis. This means that:

 
·
we have no requirement to sell any specific number of Units;
 
·
we will not return any funds received from investors in the event that we do not sell all of the securities being offered or if the funds received are insufficient for the purposes set forth herein; and

 
48

 

 
·
we will not deposit the proceeds from this offering in an escrow, trust or similar account.

Accordingly, the proceeds from this offering will be immediately available to us for our use.

Offering Price
 
The offering price of $0.10 per Unit was arbitrarily determined by us and does not bear any significant relationship to our assets and is not necessarily reflective of the inherent or current, potential market or resale value, of our shares. Please refer to “Determination of Offering Price.
Number of Shares Outstanding

There were 90,824,868 shares of our common stock issued and outstanding at September 30, 2011. If all of the offered Units are sold, and without giving effect to the exercise of outstanding options or the Series A Warrants there will be 140,824,868 shares issued and outstanding.

Duration of Offering

The Offering will terminate 180 days from the date of this Prospectus. We have the right to extend the Offering, at our sole discretion and without notice, for an additional 90 days.

In order to buy our shares, you must complete and execute the subscription agreement accompanying this Prospectus and make payment of the purchase price for each Unit purchased either in cash, by check payable to the order of the order of “Aurora Gold Corporation.” or by wire transfer pursuant to instruction from us.

Solicitation for purchase of the Units will be made only by means of this Prospectus and communications with Mr. Lars Pearl, our Chief Executive Officer and Director, who:

 
·
will not receive any commission in connection with the sale of any Securities registered in this offering;
 
·
is not and has not been associated persons of a broker dealer within the preceding 12 months;
 
·
does not participate in selling an offering of securities for any issuer more than once every12 months;
 
·
has not been subject to any statutory disqualification as defined in section 3(a)(39) of the Securities Exchange Act; and
 
·
intends to primarily perform, at the end of this offering, substantial duties on behalf of the issuer otherwise than in connection with transactions in securities.

As a result, Mr. Pearl will not register as a broker-dealer with the Securities and Exchange Commission pursuant to Section 15 of the Securities Act in reliance of Rule 3a4-1 of the Exchange Act which sets forth the above mentioned conditions under which a person associated with an issuer may participate in the offering of the issuer’s securities and not be deemed a broker-dealer.

We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for the Units will be accepted or rejected within 48 hours after we receive them.

 
49

 

How To Invest

Subscriptions for purchase of Units offered by this Prospectus can be made by completing, signing and delivering to us, the following:

 
·
an executed copy of the Subscription Agreement; and
 
·
a check payable to the order of “Aurora Gold Corp. in an aggregate amount equal to $0.10 multiplied by the number of Units you want to purchase.

Resale of our Shares

There is presently only a limited public market for our shares of common stock on the OTCQB. Please refer to “Market Price of and Dividends on Our Common Stock and Related Stockholder Matters” and “Risk Factors.”

Legal Matters

The validity of the Shares offered hereby will be passed upon for us by Sierchio & Company, LLP, 430 Park Avenue, 7th Floor, New York, New York 10022. Joseph Sierchio, a member of Sierchio & Company, LLP, is the beneficial owner of 200,000 stock purchase options.

Experts

Our consolidated financial statements at December 31, 2010 and 2009, and for the years then ended, appearing herein have been audited by Peterson Sullivan, LLP, an independent registered public accounting firm, as set forth in its report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

Where You Can Find Additional Information

We file current, quarterly and annual reports with the SEC on forms 8-K, 10-Q and 10-K. Our filings may be inspected and copied at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. Copies of such material can be obtained from the public reference section of the SEC at prescribed rates. For further information with respect to us and the securities being offered hereby, reference is hereby made to the registration statement, including the exhibits thereto and the financial statements, notes, and schedules filed as a part thereto.
 
 
50

 
 
Index to Consolidated Financial Statements

 
Page
Index to Consolidated Financial Statements – June 30, 2011 and 2010 (Unaudited)
 
   
Consolidated Balance Sheets June 30, 2011 (unaudited) and December 31, 2010
  F-1
   
Consolidated Statements of Operations (unaudited) Three and Six months ended June 30, 2011 and 2010; and for the period from October 10, 1995 (Inception) to June 30, 2011
  F-2
   
Consolidated Statements of Cash Flows (unaudited) Six months ended June 30, 2011 and 2010 and for the period from October 10, 1995 (Inception) to June 30, 2011
  F-3
   
Notes to Consolidated Financial Statements (unaudited) Six Months Ended June 30, 2011 and 2010
  F-4
   
Index to Consolidated Financial Statements – December 31, 2010 and 2009 (Audited)
 
   
Report of Independent Registered Public Accounting Firm, dated April 15, 2011
  F-10
   
Consolidated Balance Sheets as of December 31, 2010 and 2009
  F-11
   
Consolidated Statements of Operations from October 10, 1995 (inception) to December 31, 2010 and for the years ended December 31, 2010 and 2009
  F-12
   
Consolidated Statements of Stockholders’ Equity (Deficiency) and Comprehensive Income (Loss) for the period from October 10, 1995 (inception) to December 31, 2010
  F-13
   
Consolidated Statements of Cash Flows for the period from October 10, 1995 (inception) to December 31, 2010 and for the years ended December 31, 2010 and 2009
  F-18
   
Notes to Consolidated Financial Statements Years Ended December 31, 2010 and 2009
  F-19
 
 
51

 
 
AURORA GOLD CORPORATION
(An exploration stage enterprise)

Consolidated Balance Sheets
June 30, 2011 and December 31, 2010
(Expressed in U.S. Dollars)
 
June 30
   
December 31
 
(Unaudited)
 
2011
   
2010
 
             
ASSETS
           
Current assets
           
Cash
  $ 38,913     $ 579,191  
Prepaid expenses and other assets
    33,548       20,154  
Total current assets
    72,461       599,345  
                 
Mineral property reclamation bonds
    245,221       325,221  
Buildings and equipment, net
    86,255       849,445  
Participating interest in mineral property
    -       1,758,685  
Total assets
  $ 403,937     $ 3,532,696  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY  (DEFICIENCY)
               
Current liabilities
               
Accounts payable and accrued expenses
  $ 346,363     $ 354,755  
Accounts payable and accrued expenses - related parties
    18,581       17,264  
Advances payable
    212,100       -  
Total current liabilities
    577,044       372,019  
                 
Stockholders' Equity (Deficiency)
               
Common stock
               
Authorized:
               
300,000,000 common shares, (December 31, 2010 - 300,000,000) with par value $0.001 each
               
Issued and outstanding:
               
89,153,868 (December 31, 2010 - 88,703,868) common shares
    89,154       88,704  
Additional paid-in capital
    20,937,842       20,938,292  
Accumulated deficit during the exploration stage
    (21,108,965 )     (17,773,262 )
Accumulated other comprehensive income (loss)
    (91,138 )     (93,057 )
Stockholders' equity (deficiency)
    (173,107 )     3,160,677  
Total liabilities and stockholders' equity (deficiency)
  $ 403,937     $ 3,532,696  

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

 
 
AURORA GOLD CORPORATION
                             
(An exploration stage enterprise)
                             
   
Cumulative
                         
Consolidated Statements of Operations
 
October 10
   
Three months
   
Three months
   
Six months
   
Six months
 
(Expressed in U.S. Dollars)
 
1995 (inception)
   
Ended
   
Ended
   
Ended
   
Ended
 
(Unaudited)
 
to June 30
   
June 30
   
June 30
   
June 30
   
June 30
 
   
2011
   
2011
   
2010
   
2011
   
2010
 
                               
Expenses
                             
Administrative and general
  $ 1,871,414     $ 30,417     $ 113,711     $ 85,155     $ 169,500  
Depreciation and amortization
    132,692       10,362       3,620       15,463       7,244  
Imputed interest on loan payable - related party
    1,560       -       -       -       -  
Interest and bank charges
    391,469       2,329       (3,201 )     5,079       17,279  
Foreign exchange loss (gain)
    (9,518 )     3,594       1,034       4,188       2,734  
Professional fees - accounting and legal
    1,730,890       128,021       181,437       163,979       330,125  
Property search and negotiation
    479,695       -       -       -       -  
Salaries, management and consulting fees
    3,113,547       195,291       93,756       311,300       170,939  
      7,711,749       370,014       390,357       585,164       697,821  
Exploration expenses
    9,661,975       68,698       150,059       238,249       232,720  
Write-off of mineral property costs
    172,981       -       -       -       -  
      17,546,705       438,712       540,416       823,413       930,541  
                                         
Other income (loss)
                                       
Gain (loss) on disposition of subsidiary
    (2,295,816 )     (2,512,290 )     -       (2,512,290 )     -  
Interest income
    22,353       -       -       -       -  
Gain on sale of rights to the Matupa agreement, net of expenses of $138,065
    80,237       -       -       -       -  
Loss on investments
    (37,971 )     -       -       -       -  
Loss on spun-off operations
    (316,598 )     -       -       -       -  
Loss on debt extinguishment
    (1,014,465 )     -       -       -       -  
      (3,562,260 )     (2,512,290 )     -       (2,512,290 )     -  
Net loss for the period
  $ (21,108,965 )   $ (2,951,002 )   $ (540,416 )   $ (3,335,703 )   $ (930,541 )
Loss per share
                                       
- basic and diluted
          $ (0.03 )   $ (0.01 )   $ (0.04 )   $ (0.01 )
                                         
Weighted average number of common shares outstanding
                                       
- basic and diluted
            88,855,553       80,072,968       88,778,868       74,240,745  

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

 
 
AURORA GOLD CORPORATION 
 
Cumulative
             
(An exploration stage enterprise)
 
October 10
   
Six months
   
Six months
 
Consolidated Statements of Cash Flows
 
1995 (inception)
   
Ended
   
Ended
 
(Expressed in U.S. Dollars)
 
to June 30
   
June 30
   
June 30
 
(Unaudited)
 
2011
   
2011
   
2010
 
                   
Cash flows from operating activities
                 
Net loss for the period
  $ (21,108,965 )   $ (3,335,703 )   $ (930,541 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
- depreciation and amortization
    132,692       15,463       7,244  
- stock compensation expense on stock option grants
    1,174,795       -       -  
- expenses satisfied with issuance of common stock
    958,800       -       -  
- expenses satisfied with transfer of marketable securities
    33,903       -       -  
- imputed interest on loan payable - related party
    1,560       -       -  
- write-off of mineral property costs
    172,981       -       -  
- adjustment for spin-off of subsidiaries
    316,498       -       -  
- loss on disposition of subsidiary
    2,512,290       2,512,290       -  
- realized loss on investments
    37,971       -       -  
- gain on sale of rights to Matupa agreement, net of expenses
    (80,237 )     -       -  
- realized loss on debt extinguishment
    1,014,465       -       -  
- foreign exchange (gain) loss  related to notes payable
    (24,534 )     -       -  
Changes in assets and liabilities:
                       
- (increase) in receivables
    (206,978 )     -       -  
- (increase) decrease in prepaid expenses and other assets
    (51,869 )     (11,066 )     (15,917 )
- increase (decrease) in accounts payable and accrued expenses (including related party)
    1,036,741       (14,967 )     (37,595 )
Net cash provided by (used in) operating activities
    (14,079,887 )     (833,983 )     (976,809 )
                         
Cash flows from investing activities
                       
Purchase of equipment
    (205,348 )     -       -  
Proceeds on disposal of equipment
    16,761       -       -  
Purchases (reimbursements) of Mineral Property Reclamation Bonds
    (245,221 )     80,000       -  
Proceeds from disposition of marketable securities
    32,850       -       -  
Acquisition of mineral property costs
    (672,981 )     -       (500,000 )
Payment for incorporation cost
    (11,511 )     -       -  
Net cash used in investing activities
    (1,085,450 )     80,000       (500,000 )
                         
Cash flows from financing activities
                       
Proceeds from common stock less issuance costs
    13,537,339       -       3,895,000  
Loan proceeds from related party
    289,000       -       -  
Net proceeds from (payments on) convertible notes and loans
    969,252       -       (250,000 )
Net proceeds from (payments on) advances payable
    212,100       212,100       (50,000 )
Net proceeds from (payments on) advances payable -related party
    -       -       (50,000 )
Net cash provided by financing activities
    15,007,691       212,100       3,545,000  
                         
Effect of exchange rate changes on cash
    196,559       1,605       (1,964 )
Increase (decrease) in cash
    38,913       (540,278 )     2,066,227  
Cash, beginning of year
    -       579,191       556,957  
Cash, end of period
  $ 38,913     $ 38,913     $ 2,623,184  

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

 
 
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
June 30, 2011 (Unaudited)

 
1.
Nature of Business and Going Concern

Aurora Gold Corporation ("the Company") was formed on October 10, 1995 under the laws of the State of Delaware and is in the business of location, acquisition, exploration and, if warranted, development of mineral properties. The Company’s focus is on the exploration and development of its exploration properties located in the Tapajos Gold Province, State of Pará, Brazil. The Company has not yet determined whether its properties contain mineral reserves that may be economically recoverable and has not generated any operating revenues to date.

These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The general business strategy of the Company is to acquire mineral properties either directly or through the acquisition of operating entities.  The Company has incurred recurring operating losses since inception, has not generated any operating revenues to date and used cash of $833,983 from operating activities in 2011 through June 30. The Company requires additional funds to meet its obligations and maintain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in this regard are to raise equity financing through private or public equity investment in order to support existing operations and expand its business. There is no assurance that such additional funds will be available to the Company when required or on terms acceptable to the Company. In the event that we cannot obtain additional funds, on a timely basis or our operations do not generate sufficient cash flow, we may be forced to curtail our development or cease our activities.These consolidated financial statements do not include any adjustments that might result from this uncertainty.

 
2.
Significant Accounting Policies

 
(a)
Principles of Accounting

The Company follows accounting standards set by the Financial Accounting Standards Board, referred to as the “FASB”. The FASB sets accounting principles generally accepted in the United States (“GAAP”) that the Company follows to ensure they consistently report their financial condition, results of operations, and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification, referred to as Codification or “ASC”.

These consolidated financial statements have been prepared in accordance with GAAP and include the accounts of the Company and its wholly-owned subsidiaries, Aurora Gold Mineração Ltda (“Aurora Gold Mineracao”) and AGC Resources LLC (“AGC”) (through date of disposition of AGC, June 14, 2011. See note 4). Collectively, they are referred to herein as “the Company.” Significant inter-company accounts and transactions have been eliminated. Aurora Gold Mineração was incorporated on October 27, 2005. AGC was formed as a Limited Liability company on April 21, 2010 under the law of Colorado USA to hold the assets purchased from Global Minerals Ltd as discussed in Note 3.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules and regulations. The interim period consolidated financial statements should be read together with the audited consolidated financial statements and accompanying notes included in the Company’s audited consolidated financial statements for the year ended December 31, 2010. In the opinion of management of the Company, the unaudited consolidated financial statements contained herein contain all adjustments (consisting of a normal recurring nature) necessary to present a fair statement of the results of the interim periods presented.

In preparing the accompanying consolidated financial statements, the Company has evaluated information about subsequent events that became available to them through the date the financial statements were issued. This information relates to events, transactions or changes in circumstances that would require us to adjust the amounts reported in the financial statements or to disclose information about those events, transactions or changes in circumstances.
 
 
F-4

 
 
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
June 30, 2011 (Unaudited)

 
(b)
Accounting Estimates

The preparation of financial statements in conformity with GAAP 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 revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

 
(c)
Comprehensive income (loss)

The Company has adopted ASC 220, Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. Comprehensive income (loss) is as follows for the three and six months ended June 30, 2011 and 2010:

   
Three Months Ended
   
Six Months Ended
 
Components of comprehensive income (loss)
 
June 30
   
June 30
   
June 30
   
June 30
 
   
2011
   
2010
   
2011
   
2010
 
   
$
   
$
   
$
   
$
 
Net (loss) for the period
    (2,951,002 )     (540,416 )     (3,335,703 )     (930,541 )
Foreign currency translation adjustments
    1,499       617       1,919       7,011  
Total comprehensive (loss)
    (2,949,503 )     (539,799 )     (3,333,784 )     (923,530 )

Accumulated other comprehensive income consists entirely of foreign currency translation adjustments at June 30, 2011 and December 31, 2010.

 
(d)
Earnings (Loss) Per Share

Earnings (loss) per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding during the year including common stock issued effective the date committed. Common stock issuable is considered outstanding as of the original approval date for the purposes of earnings per share computations. Diluted loss per common share is computed by dividing net loss by the sum of (a) the basic weighted average number of shares of common stock outstanding during the period and (b) additional shares that would have been issued and potentially dilutive securities and is equivalent to basic loss per share for the six months ended June 30, 2011 and 2010 because potentially dilutive securities were anti-dilutive due to the net losses incurred in each period. Potentially dilutive securities outstanding consist of 1,700,000 stock options in 2011 (2010 – 2,300,000).

 
(e)
Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
The carrying value of cash, accounts payable and accrued expenses, accounts payable and accrued expenses – related parties, and advances payable approximate their fair value because of the short-term nature of these instruments.
 
 
F-5

 
 
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
June 30, 2011 (Unaudited)

 
(f)
Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2011-05, Comprehensive Income or ASU 2011-05. The guidance in ASU 2011-05 revises the manner in which entities present comprehensive income in their financial statements. An entity is required to report the components of comprehensive income in either one or two consecutive financial statements:

 
A single, continuous statement must present the components of net income and total net income, the components of other comprehensive income and total other comprehensive income, and a total for comprehensive income.
 
In a two-statement approach, an entity must present the components of net income and total net income in the first statement. That statement must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income.

ASU 2011-05 does not change the items that must be reported in other comprehensive income. The amendments in ASU 2011-05 are effective for fiscal years beginning after December 15, 2011. The Company does not believe the adoption of ASU 2011-05 will have a material impact on the presentation of information in its financial statements.

 
3.
Joint Venture Agreements

 
(a)
Samba Minerals Limited

In May 2008, the Company signed an agreement with Samba Minerals Limited (“Samba”), which was subsequently amended in August 2008, whereby Samba can earn up to an 80% participating interest in the São João and/or the Commandante Araras projects by funding exploration expenditures on each of the projects to completion of a feasibility study on each property. The Company is currently negotiating with Samba a Supplement and Amendment to the Farm-in Agreement amending the terms of the agreement. The properties are located in the Municipality of Itaituba, State of Pará, Brazil. Upon completion of a feasibility study on either property, the Company will immediately transfer an 80% participation interest in the relevant property to Samba and enter into a formal joint venture agreement to govern the development and production of minerals from the property. Samba can terminate its participation in either of the projects by providing the Company 30 days notice in writing. Upon withdrawal from its participation in either property, Samba would forfeit to the Company all of its rights in relation to the projects and would be free of any and all payment commitments yet to be due. Samba will be the manager of the São João and the Commandante Araras projects. The Company has also granted Samba a right of first refusal to acquire an interest in, or enter into a joint venture or farm-in agreement on the Company’s São Domingos and Bigode (since dropped) projects.

Samba did not exercise the right of first refusal and the term of the first right of refusal expired on August 1, 2010. Feasibility studies have not been completed as of June 30, 2011, and thus no joint venture has been formed as of that date.

 
(b)
Front Range Gold Property Joint Venture

On June 15, 2010, pursuant to the Asset Purchase Agreement between Global Minerals Ltd. (“GML”) and Mount Royale Ventures, LLC (“MRV”), as Sellers, and the Company and AGC Resources LLC, the Company’s wholly-owned subsidiary(“AGC”), as Buyers, AGC acquired 50% interest in the Front Range Gold Project joint venture (“JV”), and title to the Gold Hill Mill, and became a joint venture partner with Gold Reef Mining Company, Mi Vida Enterprises, Inc., Gold Hill Mines, Inc. and Southern Cross Prospecting Company (“Property Owners”).

On March 10, 2011, Mi Vida Enterprises, Inc., Gold Hill Mines, Inc. and Southern Cross Prospecting Company intervened in a preexisting lawsuit commenced by MRV against Gold Reef Mining Company in Boulder County

 
F-6

 

AURORA GOLD CORPORATION
Notes to the consolidated financial statements
June 30, 2011 (Unaudited)

District Court (the “Action”). Among other things, they have alleged that GML was in material default of the JV agreement prior to the assignment by GML of its rights in the JV to AGC in June of 2010, that GML wrongfully assigned its rights in the JV without permission of the Property Owners, and have asked the court to declare the JV terminated. The Property Owners also alleged that the transfer of title to the Gold Hill Mill was subject to a right of first refusal in favor of Gold Hill Mines, Inc., and that MRV conveyed its title to the Gold Hill Mill to AGC without giving proper notice to Gold Hill Mines Inc. and in violation of a right of first refusal in favor of Gold Hill Mines, Inc., and requested the court to enter an order granting Gold Hill Mines Inc. an option to purchase the Gold Hill Mill for $10,000, the amount set in the right of first refusal.

A court decision in favor of the Property Owners may have a material adverse affect on the Company’s ability to collect the purchase price, plus royalty from the sale of AGC to Devtec Management Ltd. since an unfavorable court decision may result in AGC losing its 50% interest in the JV as well as its interest in and to the Gold Hill Mill.

 
4.
Sale of AGC Resources LLC

On June 14, 2011, the Company, entered into an Asset Purchase Agreement with Devtec Management Ltd. (“Devtec”), pursuant to which the Company sold its subsidiary, AGC, which owns certain properties in Boulder, Colorado (see note 3(b) for a discussion of the specific assets purchased by AGC in June 2010), to Devtec for a total of $2 million, plus royalty. Under the terms of the agreement, Devtec will pay the Company $1 million upon production of the cumulative total of 1,000 ounces of gold and/or silver, and a further $1 million on the six month anniversary of the payment of the first $ 1 million. Additionally, Devtec will pay the Company a 5% royalty from the start of production.

The Company is unable to reasonably estimate the amount of minerals the properties will produce, if any, and thus there is uncertainty as to whether the purchase price will be collected. Further, the collection of any purchase price is also contingent on the outcome of the court case described in note 3(b). Given these factors, collection of the purchase price is not considered reasonably possible at the time of these consolidated financial statements given the current uncertain status of exploration work on the Boulder ,Colorado properties and the uncertainties of the related legal action and thus no purchase price has been recorded as of June 30, 2011. Therefore, the Company is recognizing a loss on the sale of its subsidiary of $2,512,290 for the three and six months ended June 30, 2011, which represents the net book value of the assets transferred to Devtec on June 14, 2011 (no liabilities were assumed by Devtec) as follows:

Buildings and equipment
  $ 753,605  
Participating interest in mineral property
    1,758,685  
    $ 2,512,290  

5.           Advances Payable

The Company has advances payable with an individual and a company totaling $212,100 at June 30, 2011. The advances are non-interest bearing, due on demand and are unsecured.

6.           Common Stock

In April 2010, the Company completed a private placement of 12,983,335 common shares, which were authorized for issuance at $0.30 per share for net cash proceeds of $3,895,000. Of the $3,895,000 in proceeds, $1,350,000 was received during the first quarter of 2010 prior to completion of formal signed private placement agreements, which occurred in April 2010. The shares were physically issued in April 2010 to individuals and companies who reside outside the United States of America. A finders’ fee of 1,126,111 common shares were authorized in connection with the private placement. The shares were issued in September 2010 to an individual and a company who reside outside the United States of America. When the shares for the finders’ fee were issued, there was no impact on the total Stockholders’ equity or results of operations.

 
F-7

 

AURORA GOLD CORPORATION
Notes to the consolidated financial statements
June 30, 2011 (Unaudited)

In March 2011, the Company filed a Post-Effective Amendment to its Registration Statement on Form S-1 filed on December 21, 2010 offering up to a maximum of 10,000,000 units of the Company's securities at an offering
price of $0.30 per Unit in a direct public offering, without any involvement of underwriters or broker-dealers. Each Unit consists of:

(i)                      one (1) share of our common stock, $0.001 par value per share; and,
(ii)                     one (1) Series A Stock Purchase Warrant.

Each full Series A Warrant entitles the holder to purchase one additional share of our common stock at a price of $0.40 for a period of one year commencing on April 1, 2011 through March 31, 2012.

In April 2011, as an incentive to assist with future private placements, the Company authorized the payment of a non cash finders fee of 450,000 shares of common stock of the Company in connection with the private placement completed in April 2010. The shares were issued in May 2011. The issuance of these shares had no net effect on total shareholders' equity or results of operations as they related to fees associated with issuance of shares.

7.           Stock Options

In 2007, the Company's Board of Directors approved the 2007 Stock Option Plan (“the Plan”) to offer an incentive to obtain services of key employees, directors and consultants of the Company. The Plan provides for the reservation for awards of an aggregate of 10% of the total shares of Common Stock outstanding from time to time. No Plan participant may receive stock options exercisable for more than 2,500,000 shares of Common Stock in any one calendar year. Under the Plan, the exercise price of an incentive stock option must be at least equal to 100% of the fair market value of the common stock on the date of grant (110% of fair market value in the case of options granted to employees who hold more than 10% of the Company's capital stock on the date of grant). The term of stock options granted under the Plan is not to exceed ten years and the stock options vest immediately upon granting.
The following is a summary of stock option activity for the six month period ended June 30, 2011 and the status of stock options outstanding and exercisable at June 30, 2011:

               
Remaining
   
Aggregate
 
   
 
   
 
   
Contractual
   
Intrinsic
 
         
Exercise
   
Life (yrs) at
   
value at
 
   
Shares
   
price
   
30-Jun-11
   
30-Jun-11
 
                         
Outstanding at December 31, 2010
    1,700,000     $ 0.26       -     $ -  
Granted
    -       -       -       -  
Forfeited
    -       -       -       -  
Outstanding and exercisable at June 30, 2011
    1,700,000     $ 0.26       1.10     $ -  

The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on June 30, 2011 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on June 30, 2011.

 
F-8

 

AURORA GOLD CORPORATION
Notes to the consolidated financial statements
June 30, 2011 (Unaudited)
 
8.           Related Party Transactions

Related party transactions not disclosed elsewhere in these consolidated financial statements include:
 
During the three and six month periods ended June 30, 2011, consulting fees of $71,706 (2010 - $91,279) and $155,983 (2010 - $153,881), respectively were incurred to directors and officers of the Company. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.

Included in accounts payable and accrued expenses - related parties at June 30, 2011 is $18,581 (December 31, 2010 - $17,264) payable to an officer/director and another director of the Company for consulting fees and various expenses incurred on behalf of the Company.

9.           Non-cash Investing and Financing Activities

In April 2011, as an incentive to assist with future private placements, the Company authorized the payment of a non cash finders fee of 450,000 shares of common stock of the Company in connection with the private placement completed in April 2010. The shares were issued in May 2011. The issuance of these shares had no net effect on total shareholders' equity or results of operations as they related to fees associated with issuance of shares.

In June 2010, pursuant to an Asset Purchase Agreement, the Company issued 5 million shares of its common stock, which were authorized for issuance at $0.40 per share for the acquisition of assets further discussed in Note 3, and acquired Global Minerals Ltd. 50% participating interest in the joint venture agreement dated December 18, 2002 between Consolidated Global Minerals Ltd. and the property owners of the Front Range Gold JV property.
 
 
F-9

 
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Aurora Gold Corporation

We have audited the accompanying consolidated balance sheets of Aurora Gold Corporation (an exploration stage company) and Subsidiary (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity (deficiency) and comprehensive income (loss), and cash flows for the years then ended, and for the period from October 10, 1995 (date of inception) to December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aurora Gold Corporation (an exploration stage company) and Subsidiary as of December 31, 2010 and 2009, and the results of their operations and their cash flows for the years then ended, and for the period from October 10, 1995 (date of inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred operating losses since inception, has not been able to generate any operating revenues to date, and used cash from operations of $2,423,112 in 2010. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/S/ PETERSON SULLIVAN LLP

Seattle, Washington
April 15, 2011