The financial statements of the Company have been prepared
in accordance with US GAAP. Because a precise determination of many assets and liabilities is dependent upon future
events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using
careful judgment. Actual results may vary from these estimates. The financial statements have, in managements
opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting
policies summarized below.
a) Exploration Stage Enterprise
The Companys financial statements are prepared using
the accrual method of accounting and according to the provisions of ASC 915 Accounting and Reporting for Development Stage
Enterprises, as it devotes substantially all of its efforts to acquiring and exploring mineral properties. Until
such properties are acquired and developed, the Company will continue to prepare its financial statements and related disclosures
in accordance with entities in the exploration stage.
The Company considers all highly liquid
instruments with maturity of three months or less at the time of issuance to be cash equivalents. There is no cash equivalents
as at September 30, 2012 (June 30, 2012: $Nil).
c) Mineral Property Acquisition
The Company expenses all costs incurred on mineral properties
to which it has secured exploration rights prior to the establishment of proven and probable reserves. If and when proven
and probable reserves are determined for a property and a feasibility study prepared with respect to the property, then subsequent
exploration and development costs of the property will be capitalized.
The Company regularly performs evaluations of any investment
in mineral properties to assess the recoverability and/or the residual value of its investments in these assets. All
long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an
asset may not be recoverable.
d) Exploration Expenditures
The Company follows a policy of expensing exploration expenditures
until a production decision in respect of the project and the Company is reasonably assured that it will receive regulatory approval
to permit mining operations, which may include the receipt of a legally binding project approval certificate.
e) Asset Retirement Obligations
The Company has adopted ASC 410, Accounting for Asset
Retirement Obligations, which requires that an asset retirement obligation (ARO) associated with the retirement
of a tangible long-lived asset be recognized as a liability in the period which it is incurred and becomes determinable, with an
offsetting increase in the carrying amount of the associated asset.
The cost of the tangible asset, including the initially recognized
ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded
at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement
value. The fair value of the ARO is measured using expected future cash flow, discounted at the Companys credit-adjusted
risk-free interest rate. To date, no significant asset retirement obligation exists due to the early stage of exploration. Accordingly,
no liability has been recorded.
f) Use of Estimates and
The preparation of financial statements in conformity with
United States generally accepted accounting principles 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.
g) Financial Instruments
ASC 820, Fair Value Measurements and Disclosures
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to
measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level
of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to
measure fair value:
Level 1 - Quoted prices in active markets
for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within
Level 1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little
or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants
would use in pricing.
The Companys financial instruments consist principally
of cash, bank indebtedness, accounts payable and accrued liabilities and loan payable. Pursuant to ASC 820, the fair value of our
cash and bank indebtedness are determined based on Level 1 inputs, which consist of quoted prices in active markets
for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their
current fair values because of their nature and respective maturity dates or durations.
The Companys operations are in Canada, which results
in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Companys operations
that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does
not use derivative instruments to reduce its exposure to foreign currency risk.
h) Environmental Costs
Environmental expenditures that relate to current operations
are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations,
and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or the Companys commitments to plan of action based on the
then known facts.
i) Income Taxes
The Company accounts for income taxes in accordance with ASC
740, Accounting for Income Taxes and ASC 740 Accounting for Uncertainty in Income Taxes, which require the
liability method of accounting for income taxes. The liability method requires the recognition of deferred tax assets and liabilities
for future tax consequences of temporary differences between the financial statement basis and the tax basis of assets and liabilities.
j) Basic and Diluted Net
Loss Per Share
The Company reports basic loss per share in accordance with
ASC 260 Earnings Per Share. Basic loss per share is computed using the weighted average number
of common stock outstanding during the period. Diluted loss per share is computed using the weighted average number
of common and potentially dilutive common stock outstanding during the period. Diluted loss per share is equal to basic
loss per share because there are no potential dilutive securities.
k) Foreign Currency Translation
The Companys functional currency is the U.S. dollar. Transactions
in foreign currencies are translated into U.S. dollars at the rate of exchange prevailing at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated into U.S. dollars at the rate prevailing at the balance sheet date. Non-monetary
items are translated at the historical rate unless such items are carried at market value, in which case they are translated using
exchange rates that existed when the value were determined. Any resulting exchange rate differences are recorded in
the statement of operations.