||Significant Accounting Policies|
The following is a summary
of significant accounting policies used in the preparation of these consolidated financial statements.
Principles of consolidation
All inter-company transactions
and balances have been eliminated in these consolidated financial statements.
Cash and cash equivalents
Cash and cash equivalents include
highly liquid investments with original maturities of three months or less.
Mineral property costs
The Company has been in the
development stage since its formation on 5 December 2003 and has not yet realized any revenues from its planned operations. It
is primarily engaged in the acquisition and exploration of mining properties.
Mineral property acquisition
costs are initially capitalized as tangible assets when purchased. At the end of each fiscal quarter end, the Company assesses
the carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that
a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated
life of the probable reserve.
Mineral property exploration
costs are expensed as incurred.
Estimated future removal and
site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs,
which include production equipment removal and environmental remediation, are estimated each period by management based on current
regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or
the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated
provision amounts as incurred.
As of the date of these consolidated
financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only
acquisition and exploration costs (Note 5).
Although the Company has taken
steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage
of exploration of such properties, these procedures do not guarantee the Companys title. Such properties may be subject
to prior agreements or transfers and title may be affected by undetected defects.
The Companys policy for recording
reclamation costs is to record a liability for the estimated costs to reclaim mined land by recording charges to production costs
for each tonne of ore mined over the life of the mine. The amount charged is based on managements estimation of reclamation
costs to be incurred. The accrued liability is reduced as reclamation expenditures are made. Certain reclamation work is performed
concurrently with mining and these expenditures are charged to operations at that time.
Long-term assets of the Company are
reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant
to guidance established in ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.
Management considers assets to be
impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest
charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using
a discounted cash flow analysis
The carrying value of cash and cash
equivalents, accounts payable and accrued liabilities and convertible debentures approximates their fair value because of the short
maturity of these instruments. The Companys operations are in Nevada and virtually all of its assets and liabilities are
giving rise to significant exposure to market risks from changes in foreign currency rates. The Companys financial risk
is the risk that arises 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.
Derivative financial instruments
The Company has not, to the date of
these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Website development costs
The costs of computer software developed
or obtained for internal use, during the preliminary project phase, as defined under ASC 350-40, Internal-Use Software,
will be expensed as incurred. The costs of website development during the planning stage, as defined under ASC 350-50, Website
Development Costs, will also be expensed as incurred.
Computer software, website development
incurred during the application and infrastructure development stage, including external direct costs of materials and services
consumed in developing the software and creating graphics and website content, will be capitalized and amortized over the estimated
useful life, beginning when the software is ready for use and after all substantial testing is completed and the website is operational.
Deferred income taxes are reported
for timing differences between items of income or expense reported in the consolidated financial statements and those reported
for income tax purposes in accordance with SFAS No. 109, Accounting for Income Taxes, which requires the use
of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future
tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary
differences and carry-forwards when realization is more likely than not.
Basic and diluted net loss per
The Company computes net loss per
share in accordance with SFAS No. 128, Earnings per Share. SFAS No. 128 requires presentation of both basic
and diluted earnings per share (EPS) on the face of the consolidated income statement. Basic EPS is computed by dividing
net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during
the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury
stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for
the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
SFAS No. 130, Reporting
Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in
the financial statements. As at 30 June 2009, the Company has no items that represent a comprehensive loss and, therefore, has
not included a schedule of comprehensive loss in the consolidated financial statements.
Segments of an enterprise and related
SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information, supersedes SFAS No. 14, Financial Reporting for Segments
of a Business Enterprise. SFAS No. 131 establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic
areas and major customers. SFAS No. 131 defines operating segments as components of a company about which separate financial information
is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this SFAS and does not believe it is applicable at this time.
The Company has adopted Statement
of Position No. 98-5, Reporting the Costs of Start-up Activities, which requires that costs associated with
start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Companys formation have been
included in the Companys general and administrative expenses for the period from the date of inception on 5 December 2003
to 30 June 2009.
Foreign currency translation
The Companys functional and
reporting currency is in U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance
with SFAS No. 52, Foreign Currency Translation. Monetary assets and liabilities denominated in foreign currencies
are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement
of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the
date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Use of estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenditures during the reporting period. Actual results could differ from these estimates.
Certain comparative figures have been adjusted to conform
to the current years presentation.
Changes in Accounting Policy
In January 2010, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-02, Accounting and
Reporting for Decreases in Ownership of a Subsidiary - a Scope Clarification. ASU No. 2010-02 addresses implementation
issues related to the changes in ownership provisions in the Consolidation - Overall Subtopic (Subtopic 810-10) of the FASB ASC,
originally issued as Statement of Financial Accounting Standards (SFAS) No. 160, Non-controlling Interests
in Consolidated Financial Statements. Subtopic 810-10 establishes the accounting and reporting guidance for non-controlling
interests and changes in ownership interests of a subsidiary. An entity is required to deconsolidate a subsidiary when the entity
ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes a
gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. The gain or loss includes
any gain or loss associated with the difference between the fair value of the retained investment in the subsidiary and its carrying
amount at the date the subsidiary is deconsolidated. In contrast, an entity is required to account for a decrease in ownership
interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. ASU No. 2010-02
was effective for the Company starting 1 January 2010. The Companys adoption of ASU No. 2010-02 did not have a material
impact on the Companys consolidated financial statements.
In January 2010, the FASB issued ASU
No. 2010-01, Equity (ASC Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash,
which clarifies that the stock portion of a distribution to shareholders that allow them to elect to receive cash or stock with
a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a
share issuance that is reflected prospectively in earnings per share and is not considered a stock dividend for purposes of ASC
Topic 505 and ASC Topic 260. ASU No. 2010-01 was effective for the Company starting 1 January 2010. The adoption of the ASU
No. 2010-01 did not have a material impact on the Companys consolidated financial statements.
In August 2009, the FASB issued ASU
No. 2009-05, Fair Value Measurement and Disclosure (Topic 820) Measuring Liabilities at Fair Value,
which provides valuation techniques to measure fair value in circumstances in which a quoted price in an active market for the
identical liability is not available. The guidance provided in this update is effective 1 October 2009. The adoption of this guidance
did not have a material impact on the Companys consolidated financial statements.
In June 2009, the FASB issued SFAS
No. 167, Amendments to FASB Interpretation No. 46(R). SFAS No. 167, which amends ASC 810-10, Consolidation,
prescribes a qualitative model for identifying whether a company has a controlling financial interest in a variable interest entity
(VIE) and eliminates the quantitative model. The new model identifies two primary characteristics of a controlling
financial interest: (1) provides a company with the power to direct significant activities of the VIE, and (2) obligates a company
to absorb losses of and/or provides rights to receive benefits from the VIE. SFAS No. 167 requires a company to reassess on an
ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling financial interest
is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. SFAS No. 167, which is referenced in
ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative. SFAS No. 167 was effective 1 January 2010.
The adoption of SFAS No. 167 did not have a material impact on the Companys consolidated financial statements.
In June 2009, the FASB issued SFAS
No. 166, Accounting for Transfer of Financial Assets an amendment of FASB Statement. SFAS No. 166
removes the concept of a qualifying special-purpose entity from ASC 860-10, Transfers and Servicing, and removes
the exception from applying ASC 810-10, Consolidation. This statement also clarifies the requirements for
isolation and limitations on portions of financial assets that are eligible for sale accounting. SFAS No. 166, which is referenced
in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative. This statement was effective 1 January
2010. The adoption of SFAS No. 166 did not have a material impact on the Companys consolidated financial statements.
In April 2008, the FASB issued new
guidance for determining the useful life of an intangible asset, which is now part of ASC 350, Intangibles Goodwill
and Other. In determining the useful life of intangible assets, ASC 350 removes the requirement to consider whether
an intangible asset can be renewed without substantial cost of material modifications to the existing terms and conditions and,
instead, requires an entity to consider its own historical experience in renewing similar arrangements. ASC 350 also requires expanded
disclosure related to the determination of intangible asset useful lives. The new guidance was effective for financial statements
issued for fiscal years beginning after 15 December 2008. The adoption of this guidance did not have a material impact on the Companys
consolidated financial statements.
Recent accounting pronouncements
In February 2010, the FASB
issued ASU No. 2010-11, Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.
ASU No. 2010-11 clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements.
Specifically, only one form of embedded credit derivative qualifies for the exemption one that is related only to the subordination
of one financial instrument to another. As a result, entities that have contracts containing an embedded credit derivative feature
in a form other than such subordination may need to separately account for the embedded credit derivative feature. The amendments
in ASU No. 2010-11 are effective for each reporting entity at the beginning of its first fiscal quarter beginning after 15 June
2010. Early adoption is permitted at the beginning of each entitys first fiscal quarter beginning after 5 March 2010. The
adoption of ASC No. 2010-11 is not expected to have a material impact on the Companys consolidated financial statements.
In February 2010, the FASB
issued ASU No. 2010-09, Amendments to Certain Recognition and Disclosure Requirements, which eliminates the
requirement for Securities and Exchange Commission (SEC) filers to disclose the date through which an entity has
evaluated subsequent events. ASU No. 2010-09 is effective for its fiscal quarter beginning after 15 December 2010. The adoption
of ASU No. 2010-09 is not expected to have a material impact on the Companys consolidated financial statements.
In January 2010, the FASB
issued ASC No. 2010-06, Fair Value Measurement and Disclosures (Topic 820): Improving Disclosure and Fair Value Measurements,
which requires that purchases, sales, issuances, and settlements for Level 3 measurements be disclosed. ASU No. 2010-06 is effective
for its fiscal quarter beginning after 15 December 2010. The adoption of ASU No. 2010-06 is not expected to have a material impact
on the Companys consolidated financial statements.