UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest event Reported): September 1, 2013
NEVADA GOLD CORP.
(Exact name of registrant as specified in its charter)
Delaware 000-53724 N/A
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2683 Via de la Valle, Suite G418, Del Mar, CA, 92014
(Address of principal executive offices)
(858) 367-9008
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 8-K and other reports filed by us from time to time with the
Securities and Exchange Commission (collectively the "Filings") contain or may
contain forward-looking statements and information that are based upon beliefs
of, and information currently available to, our management as well as estimates
and assumptions made by our management. When used in the filings the words
"anticipate", "believe", "estimate", "expect", "future", "intend", "plan" or the
negative of these terms and similar expressions as they relate to us or our
management identify forward looking statements. Such statements reflect the
current view of our management with respect to future events and are subject to
risks, uncertainties, assumptions and other factors (including the risks
contained in the section of this report entitled "Risk Factors") as they relate
to our industry, our operations and results of operations, and any businesses
that we may acquire. Should one or more of the events described in these risk
factors materialize, or should our underlying assumptions prove incorrect,
actual results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned.
Although we believe that the expectations reflected in the forward looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the U.S. federal securities laws, we do not intend to update any of
the forward-looking statements to conform them to actual results. The following
discussion should be read in conjunction with our pro forma financial statements
and the related notes that will be filed herein.
In this Form 8-K, references to "we," "our," "us," "our company," "the Company,"
"Nevada Gold" or the "Registrant" refer to Nevada Gold Corp., a Delaware
corporation.
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As more fully described in Item 2.01 below, effective September 1, 2013 we
entered into an Option Agreement with Western States Silver, LLC. Pursuant to
the terms of the agreement our company has the option to acquire a 75% undivided
interest in a former producing high grade silver, lead and gold mine known as
the Diamond Jim Property in Elko County, Nevada. The property consists of 35
claims and is located in northeastern Nevada, 20 miles south of the Idaho
border, 69 miles north of the city of Elko and 260 miles northeast of the city
of Reno.
In order for our company to acquire the 75% interest in the property, our
company has the following obligations:
* $5,000 payment to Western States Silver, LLC on September 30, 2013;
* a minimum work expenditure of $120,000 in the first year of the Option
Agreement;
* a minimum work expenditure of $250,000 in the second year of the
Option Agreement;
* a minimum work expenditure of $350,000 in the third year of the Option
Agreement; and
* a minimum work expenditure of $1,250,000 in the fourth year of the
Option Agreement.
A full description of the Diamond Jim Property is available further in this
Current Report, under the heading "Description of Property". A full copy of the
Option Agreement is attached as Exhibit 10.1 to our current report on Form 8-K
dated September 1, 2013 and is incorporated by reference herein.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF MINERAL RIGHTS
As described in Item 1.01 above, effective September 1, 2012, we entered into an
Option Agreement with Western States Silver, LLC.
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CORPORATE HISTORY AND STRUCTURE
OUR CORPORATE HISTORY AND BACKGROUND
We were incorporated under the laws of the State of Nevada on January 22, 2007.
Our company was formed to engage in the acquisition, exploration and development
of natural resource properties.
On July 8, 2011 we merged with our wholly-owned subsidiary, Massey Exploration
Corp. for the purpose of re-domiciling to the state of Delaware.
Effective July 20, 2012, Michael Hawitt resigned as president, secretary,
treasurer, chief executive officer, chief financial officer and as director of
our company. Mr. Hawitt's resignation was not the result of any disagreements
with our company regarding our operations, policies, practices or otherwise.
Concurrently with Mr. Hawitt's resignation, we appointed Merrill W. Moses as
president, secretary, treasurer, chief executive officer, chief financial
officer and as director of our company, effective July 20, 2012. In addition, we
also appointed Charles C. Hooper as vice president of our company. Also
effective July 20, 2012, we increased the number of directors on our board of
directors to two (2) and appointed Charles C. Hooper as a member to our
company's board of directors.
Effective July 27, 2012, we changed our name from Massey Exploration Corp. to
Nevada Gold Corp. and effected a forward split of our issued and outstanding
shares of common stock on the basis of 8.5 new for one (1) old. As a result, our
issued and outstanding shares of common stock increased from 6,300,000 to
53,550,000 shares of common stock, par value of $0.001.
On August 8, 2012, our company entered into an option agreement with Development
Resources LLC, a Utah LLC, to acquire an interest in four sections (2,560
acres), consisting of approximately 120 BLM mineral lease claims from
Development Resources for the purpose of exploration for gold, silver and other
mineralization deposits.
In order to exercise the option, we were required to pay $125,000 to Development
Resources LLC by July 1, 2013 and issue an aggregate of 3,000,000 restricted
shares of common stock after the property payment of $125,000 is made. We did
not pay make this property payment or issue the shares. As a result the option
agreement with Development Resources LLC has been terminated.
On March 6, 2103, our company entered into an option agreement with National
Energy Development LLC to acquire a 51% controlling interest in four mineral
lease sections located in the Long Canyon Gold Trend area of Northeast Nevada.
In order to remain eligible to exercise the option, we are required to pay
$25,000 to National Energy Development LLC on or before September 30, 2013 .
SOURCES OF AVAILABLE LAND FOR MINING AND EXPLORATION
There are at least five sources of land available for exploration, development
and mining: public lands, private fee lands, unpatented mining claims, patented
mining claims, and tribal lands. The primary sources for acquisition of these
lands are the United States government, through the Bureau of Land Management
and the United States Forest Service, state and Canadian Provincial governments,
tribal governments, and individuals or entities who currently hold title to or
lease government and private lands.
There are numerous levels of government regulation associated with the
activities of exploration and mining companies. Permits, which we, or the
current operators of the mining properties we have an interest in, are
maintaining and amending include "Notice of Intent" to explore, "Plan of
Operations" to explore, "Plan of Operations" to mine, "Reclamation Permit," "Air
Quality Permit," "Water Quality Permit," "Industrial Artificial Pond Permit,"
and several other health and safety permits. These permits are subject to
amendment or renewal during our operations. Although there is no guarantee that
the regulatory agencies will timely approve, if at all, the necessary permits
for our current or anticipated operations, we have no reason to believe that
necessary permits will not be issued in due course. The total cost and effects
on our operations of the permitting and bonding process cannot be estimated at
this time. The cost will vary for each project when initiated and could be
material.
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The Federal government owns public lands that are administered by the Bureau of
Land Management or the United States Forest Service. Ownership of the subsurface
mineral estate can be acquired by staking a twenty (20) acre mining claim
granted under the General Mining Law of 1872, as amended (the "General Mining
Law"). The Federal government still owns the surface estate even though the
subsurface can be controlled with a right to extract through claim staking.
Private fee lands are lands that are controlled by fee-simple title by private
individuals or corporations. These lands can be controlled for mining and
exploration activities by either leasing or purchasing the surface and
subsurface rights from the private owner. Unpatented mining claims located on
public land owned by another entity can be controlled by leasing or purchasing
the claims outright from the owners. Patented mining claims are claims that were
staked under the General Mining Law, and through application and approval the
owners were granted full private ownership of the surface and subsurface estate
by the Federal government. These lands can be acquired for exploration and
mining through lease or purchase from the owners. Tribal lands are those lands
that are under control by sovereign Native American tribes. Areas that show
promise for exploration and mining can be leased or joint ventured with the
tribe controlling the land.
COMPETITION
We are a mineral resource exploration company. We compete with other mineral
resource exploration companies for financing and for the acquisition of new
mineral properties. Many of the mineral resource exploration companies with whom
we compete have greater financial and technical resources than those available
to us. Accordingly, these competitors may be able to spend greater amounts on
acquisitions of mineral properties of merit, on exploration of their mineral
properties and on development of their mineral properties. In addition, they may
be able to afford more geological expertise in the targeting and exploration of
mineral properties. This competition could result in competitors having mineral
properties of greater quality and interest to prospective investors who may
finance additional exploration. This competition could adversely impact on our
ability to finance further exploration and to achieve the financing necessary
for us to develop our mineral properties.
COMPLIANCE WITH GOVERNMENT REGULATION
The operation of mines is governed by both federal and state laws. The Diamond
Jim Property is administered by the United States Department of Interior, Bureau
of Land Management ("BLM") in Nevada. In general, the federal laws that govern
mining claim location and maintenance and mining operations on Federal Lands,
including the Diamond Jim Property, are administered by the BLM. Additional
federal laws, such as those governing the purchase, transport or storage of
explosives, and those governing mine safety and health, also apply.
The State of Nevada likewise requires various permits and approvals before
mining operations can begin, although the state and federal regulatory agencies
usually cooperate to minimize duplication of permitting efforts. Among other
things, a detailed reclamation plan must be prepared and approved, with bonding
in the amount of projected reclamation costs. The bond is used to ensure that
proper reclamation takes place, and the bond will not be released until that
time. The Nevada Division of Environmental Protection (NDEP) is the state agency
that administers the reclamation permits, mine permits and related closure plans
on the project. Local jurisdictions may also impose permitting requirements,
such as conditional use permits or zoning approvals.
Mining activities at the Diamond Jim Property are also subject to various
environmental laws, both federal and state, including but not limited to the
federal NATIONAL ENVIRONMENTAL POLICY ACT, CERCLA (as defined below), the
RESOURCE RECOVERY AND CONSERVATION ACT, the CLEAN WATER ACT, the CLEAN AIR ACT
and the ENDANGERED SPECIES ACT, and certain Nevada state laws governing the
discharge of pollutants and the use and discharge of water. Various permits from
federal and state agencies are required under many of these laws. Local laws and
ordinances may also apply to such activities as waste disposal, road use and
noise levels.
We are committed to fulfilling our requirements under applicable environmental
laws and regulations. These laws and regulations are continually changing and,
as a general matter, are becoming more restrictive. Our policy is to conduct our
business in a manner that safeguards public health and mitigates the
environmental effects of our business activities. To comply with these laws and
regulations, we have made, and in the future may be required to make, capital
and operating expenditures.
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The COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF
1980, as amended (CERCLA), imposes strict, joint, and several liability on
parties associated with releases or threats of releases of hazardous substances.
Liable parties include, among others, the current owners and operators of
facilities at which hazardous substances were disposed or released into the
environment and past owners and operators of properties who owned such
properties at the time of such disposal or release. This liability could include
response costs for removing or remediating the release and damages to natural
resources. We are unaware of any reason why our properties would currently give
rise to any potential liability under CERCLA. We cannot predict the likelihood
of future liability under CERCLA with respect to our property or surrounding
areas that have been affected by historic mining operations.
Under the RESOURCE CONSERVATION AND RECOVERY ACT (RCRA) and related state laws,
mining companies may incur costs for generating, transporting, treating,
storing, or disposing of hazardous or solid wastes associated with certain
mining-related activities. RCRA costs may also include corrective action or
clean up costs.
Mining operations may produce air emissions, including fugitive dust and other
air pollutants, from stationary equipment, such as crushers and storage
facilities, and from mobile sources such as trucks and heavy construction
equipment. All of these sources are subject to review, monitoring, permitting,
and/or control requirements under the federal CLEAN AIR ACT and related state
air quality laws. Air quality permitting rules may impose limitations on our
production levels or create additional capital expenditures in order to comply
with the permitting conditions. Under the federal CLEAN WATER ACT and delegated
state water-quality programs, point-source discharges into "Waters of the State"
are regulated by the National Pollution Discharge Elimination System (NPDES)
program. Section 404 of the CLEAN WATER ACT regulates the discharge of dredge
and fill material into "Waters of the United States," including wetlands.
Stormwater discharges also are regulated and permitted under that statute. All
of those programs may impose permitting and other requirements on our
operations.
The NATIONAL ENVIRONMENTAL POLICY ACT (NEPA) requires an assessment of the
environmental impacts of "major" federal actions. The "federal action"
requirement can be satisfied if the project involves federal land or if the
federal government provides financing or permitting approvals. NEPA does not
establish any substantive standards. It merely requires the analysis of any
potential impact. The scope of the assessment process depends on the size of the
project. An "Environmental Assessment" (EA) may be adequate for smaller
projects. An "Environmental Impact Statement" (EIS), which is much more detailed
and broader in scope than an EA, is required for larger projects. NEPA
compliance requirements for any of our proposed projects could result in
additional costs or delays.
The ENDANGERED SPECIES ACT (ESA) is administered by the U.S. Fish and Wildlife
Service of the U.S. Department of Interior. The purpose of the ESA is to
conserve and recover listed endangered and threatened species and their habitat.
Under the ESA, "endangered" means that a species is in danger of extinction
throughout all or a significant portion of its range. The term "threatened"
under such statute means that a species is likely to become endangered within
the foreseeable future. Under the ESA, it is unlawful to "take" a listed
species, which can include harassing or harming members of such species or
significantly modifying their habitat. We currently are unaware of any
endangered species issues at our project that would have a material adverse
effect on our operations. Future identification of endangered species or habitat
in our project areas may delay or adversely affect our operations.
U.S. federal and state reclamation requirements often mandate concurrent
reclamation and require permitting in addition to the posting of reclamation
bonds, letters of credit or other financial assurance sufficient to guarantee
the cost of reclamation. If reclamation obligations are not met, the designated
agency could draw on these bonds or letters of credit to fund expenditures for
reclamation requirements. Reclamation requirements generally include
stabilizing, contouring and re-vegetating disturbed lands, controlling drainage
from portals and waste rock dumps, removing roads and structures, neutralizing
or removing process solutions, monitoring groundwater at the mining site, and
maintaining visual aesthetics. We are committed to maintaining all of our
financial assurance and reclamation obligations.
5
We believe that we are currently in compliance with the statutory and regulatory
provisions governing our operations. We hold or will hold all necessary permits
and other authorizations to the extent that our current or future claims and the
associated operations require them. During the initial phases of our exploration
program there will not be any significant disturbances to the land or
environment and hence, no government approval is required.
However, we may do business and own properties in a number of different
geographical areas and are therefore subject to the jurisdictions of a large
number of different authorities at different countries. We plan to comply with
all statutory and regulatory provisions governing our current and future
operations. However, these regulations may increase significant costs of
compliance to us, and regulatory authorities also could impose administrative,
civil and criminal penalties for non-compliance. At this time, it is not
possible to accurately estimate how laws or regulations would impact our future
business. We also can give no assurance that we will be able to comply with
future changes in the statutes and regulations.
As we do not know the extent of the exploration program that we will be
undertaking, we can not estimate the cost of the remediation and reclamation
that will be required. Hence, it is impossible at this time to assess the impact
of any capital expenditures on earnings or our competitive position in the event
that a potentially economic deposit is discovered.
If we are successful in identifying a commercially viable ore body and we are
able to enter into commercial production, due to the increased environmental
impact, the cost of complying with permit and environmental laws will be greater
than in the previous phases.
ENVIRONMENTAL REGULATIONS
We are not aware of any material violations of environmental permits, licenses
or approvals that have been issued with respect to our operations. We expect to
comply with all applicable laws, rules and regulations relating to our business,
and at this time, we do not anticipate incurring any material capital
expenditures to comply with any environmental regulations or other requirements.
While our intended projects and business activities do not currently violate any
laws, any regulatory changes that impose additional restrictions or requirements
on us or on our potential customers could adversely affect us by increasing our
operating costs or decreasing demand for our products or services, which could
have a material adverse effect on our results of operations.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research and development expenditures over the past two
fiscal years.
EMPLOYEES
Merrill W. Moses serves as president, secretary, treasurer, chief executive
officer, chief financial officer and as director of our company, effective July
20, 2012. In addition Charles C. Hooper serves as vice president of our company.
Mr. Moses currently devotes 12 hours per week to company matters and he plans to
devote as much time as the board of directors determines is necessary to manage
the affairs of the company in the future. Mr. Hooper currently devotes 1 hour
per week to company matters and he plans to devote as much time as the board of
directors determines is necessary to manage the affairs of the company in the
future. There are no formal employment agreements between the company and our
current employees.
We do not expect any material changes in the number of employees over the next
12 month period. We do and will continue to outsource contract employment as
needed.
We engage contractors from time to time to consult with us on specific corporate
affairs or to perform specific tasks in connection with our exploration
programs.
SUBSIDIARIES
We do not have any subsidiaries.
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INTELLECTUAL PROPERTY
We do not own, either legally or beneficially, any patent or trademark.
DESCRIPTION OF PROPERTY
HEADQUARTERS AND ADMINISTRATION OFFICES
We do not currently own any property. Our principal executive offices are
located at 2683 Via de la Valle, Suite G418, Del Mar, CA 92014, which are the
offices of our president and are provided to us free of charge.
THE DIAMOND JIM PROPERTY
Effective September 1, 2013 we entered into an Option Agreement with Western
States Silver, LLC. Pursuant to the terms of the agreement our company has the
option to acquire a 75% undivided interest in the Diamond Jim Property.
LOCATION AND ACCESS
The Diamond Jim Property is located in the Island Mountain Mining District of
northern Elko County, Nevada. Access is by Nevada state highway 225 north from
Elko then east on the county-maintained Gold Creek road (USFA road #745) for a
total distance of approximately 63 miles from Elko. The property is detailed in
the Rosebud Mountain quadrangle (section 34 of Township 45 north and Range 56
east). The mean elevation of the property is approximately 7,800 feet (2,400
meters) above sea level.
OWNERSHIP INTEREST
Effective September 1, 2013 we entered into an Option Agreement with Western
States Silver, LLC, referred to as "Western". Pursuant to the terms of the
agreement our company has the option to acquire a 75% undivided interest in the
Diamond Jim Property. In order for our company to acquire the 75% interest in
the property, our company has the following obligations:
* $5,000 payment to Western States Silver, LLC on September 30, 2013;
* a minimum work expenditure of $120,000 in the first year of the Option
Agreement;
* a minimum work expenditure of $250,000 in the second year of the
Option Agreement;
* a minimum work expenditure of $350,000 in the third year of the Option
Agreement; and
* a minimum work expenditure of $1,250,000 in the fourth year of the
Option Agreement.
The optionor under the underlying option agreement to which Western is a party,
will also retain a 3% net smelter royalty in the event that we entere mineral
production on the Diamon Jim Property. If we are unable to fulfil any of the
commitments set out above, the Option Agreement will terminate and all property
rights will revert back to Western.
A full copy of the Option Agreement is attached as Exhibit 10.1 to our current
report on Form 8-K dated September 1, 2013 and is incorporated by reference
herein.
HISTORY OF OPERATIONS
Silver-copper-antimony bearing quartz veins were first discovered on the Diamond
Jim Property in 1869. Serious production started in 1954 and was relatively
steady through the 1970's with sporadic production continuing through 1985. The
recorded production from the Diamond Jim Property is; 23,108 ounces of silver,
335,870 pounds of lead, 24,311 pounds of zinc, 2,200 pounds of copper and 28
ounces of gold. The reported production between 1966 and 1967 was 347.3 wet tons
averaging 19.9 oz/t silver, 15.9% lead, 3.5% zinc, 0.035 oz/t gold and 0.30%
copper. This was increased for a fifteen month period from 1979 - 1981 when the
production was reported as 353 dry tons averaging 39.08 oz/.t silver, 28.82%
lead, 0.93% zinc, 0.05 oz/t gold and 0.11% copper.
7
Numerous exploration companies have held the rights to the Diamond Jim Property
as part of a larger claim block between 1981 and 2006. However, little work has
been done on this property with the vast majority of the exploration efforts
being directed at the gold potential to the southeast and southwest. In 1985
Columbus Mines Inc. drilled ten holes totaling 1,585 feet (483 meters) of
reverse-circulation. With this drilling, they defined a bulk-tonnage resource of
4.25 million tons averaging 2 oz/t silver. It must be noted here, that this
drilling was both shallow (90 to 310 feet) and vertical; two factors that we
believe may not have properly fully tested the mineral potential. Initial
geological mapping by Goodsprings Development Corp. (GDC) in 2006 extended the
silicified mineralizing structure for at least 6,800 feet (2073 meters). Based
on this mapping, GDC applied for, and was granted, drilling permits to test the
extension of the mineralization. Unfortunately, the drilling program was never
initiated and this target remains untested.
PRESENT CONDITION AND PLAN OF EXPLORATION
Although there has been some minimal and sporadic exploration of the Diamond Jim
Property, the majority of the modern exploration efforts in the area have been
focused on the more gold-rich areas to the southeast and southwest. We have
commenced exploration activities on the Diamond Jim Property which will be
carried out in accordance with the following work program:
Nature of Work Cost
-------------- ----
Project Preparation $ 3,500
Mobilization and demobilization (expecting to make two field trips) $ 5,000
Map Preparation $ 1,000
Permitting and Reclamation Bond (estimated) $ 10,000
Rehabilitation and access to underground $ 10,000
Surface and U/G geological mapping and sampling $ 10,000
U/G sampling assay costs - 50 samples $ 2,500
Soil Geochem survey - 700 samples, $30/sample $ 21,000
Soil Geochem assay costs - $35/sample $ 24,500
Reconnaissance prospecting $ 2,500
NI 43-101 compliant report $ 7,500
Contingencies @ 10% $ 9,000
Project Administration @ 15% $ 13,500
--------
PROJECT TOTAL $120,000
========
GEOLOGY
REGIONAL GEOLOGY
The regional geology of the Diamond Jim Property area is summarized by
predominantly metamorphosed Paleozoic-aged clastic and calcareous sediments that
have been intruded locally by Cretaceous-aged granitic rocks. These units are
both covered and surrounded by Cenozoic-aged volcanic and volcaniclastic rocks.
The Paleozoic sedimentary units have been complexly faulted into a series of
imbricate thrust sheets. These have then in turn been broken and displaced by
northeast, north, and northwest trending high-angle extensional faults.
This region lies along the northern flank of the Midas Trough Metallogenic Trend
which is a part of the crustal-scale Humboldt Structural Zone. This structural
zone comprises a series of northeast-trending lateral and extensional faults.
The Midas Trough is one of Nevada's most prolific mineral belts. Midas - Ken
Snyder and Jarbidge are both among those districts located along the northern
edge of the trough, while Ivanhoe and Jerritt Canyon are among those located
along the southern edge.
DISTRICT GEOLOGY
The Island Mountain Mining District, which hosts the Diamond Jim Property, is
comprised of two major tectonically-bounded stratigraphic sequences. The lower
sequence is an autochthon comprised of three different steeply-dipping units.
This is overlain by an allochthon consisting of a "chaotic assemblage of
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imbricate thrust plates" (Columbus Mines Inc. internal report, 1985). This has
in turn then been broken and displaced by northeasterly, northerly, and
northwesterly trending high-angle extensional faulting.
There are several Cretaceous-aged granitic plutons that intrude the above
mentioned sedimentary and metamorphic packages within this district. The largest
of these is the Coffeepot Stock which is located several miles north of the
Diamond Jim Property. There are several occurrences of skarn-type mineralization
associated with the contact metamorphism to the south of this stock. This
skarn-type alteration, along with the wide variety of mineralization and
alteration within the area, implies a possible systematic district-scale
zonation that may grade outward from the stock into the lower temperature types
of alteration that is associated with the silver-lead-zinc mineralization that
occurs at the Diamond Jim Property.
GEOLOGY OF DIAMOND JIM PROPERTY
Locally, the Diamond Jim Property is situated in an area of structurally and
stratigraphically controlled silver-lead mineralization hosted predominantly in
the phyllite. This area is very structurally complex and poorly understood. The
main structure is a northeast trending strongly silicified and brecciated vein
that dips steeply to the west. Initial mapping indicates that this structure has
a strike length of a least 6800 feet (2073 m). The high-grade epithermal
mineralization is reported to be predominantly along imbricate thrust faults
that occur at right angles to the main contact vein. That is, northeast striking
with dips of 20 to 30 degree to the southeast. The silver mineralization occurs
as argentiferous galena, sphalerite and tennantite as cavity filling, minor
replacement pockets, stringers and replacement lenses.
INDEX OF GEOLOGIC TERMS
INDEX
TERM DEFINITION
---- ----------
Aplite a light-colored fine-grained igneous rock
Basalt basalt is a dark gray to black, dense to finely grained
igneous rock that is the result of lava eruptions. Basalt
flows are noneruptive, voluminous, and characterized by
relatively low viscosity.
Breccias a coarse-grained sedimentary rock made of sharp fragments of
rock and stone cemented together by finer material. Breccia
is produced by volcanic activity or erosion, including frost
shattering.
Biotite a black, dark brown, or green silicate mineral of the mica
group.
Equigranular a material composed chiefly of crystals of similar orders of
magnitude to one another.
Hornfels a fine-grained metamorphic rock composed of silicate minerals
and formed through the action of heat and pressure on shale.
Igneous describes rock formed under conditions of intense heat or
produced by the solidification of volcanic magma on or below
the Earth's surface.
Lithologic the gross physical character of a rock or rock formation
Monzonite a visibly crystalline, granular igneous rock composed chiefly
of equal amounts of two feldspar minerals, plagioclase and
orthoclase, and small amounts of a variety of colored
minerals.
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Plutonic a mass of intrusive igneous rock that has solidified
underground by the crystallization of magma.
Quartz a common, hard, usually colorless, transparent crystalline
mineral with colored varieties. Use: electronics, gems.
Silica silicon dioxide found naturally in various crystalline and
amorphous forms, e.g. quartz, opal, sand, flint, and agate.
Use: manufacture of glass, abrasives, concrete.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW TOGETHER WITH ALL OF THE
OTHER INFORMATION INCLUDED IN THIS REPORT BEFORE MAKING AN INVESTMENT DECISION
WITH REGARD TO OUR SECURITIES. THE STATEMENTS CONTAINED IN OR INCORPORATED INTO
THIS OFFERING THAT ARE NOT HISTORIC FACTS ARE FORWARD-LOOKING STATEMENTS THAT
ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE SET FORTH IN OR IMPLIED BY FORWARD-LOOKING STATEMENTS. IF
ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS COULD BE HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATED TO OUR OVERALL BUSINESS OPERATIONS
WE HAVE A LIMITED OPERATING HISTORY WITH SIGNIFICANT LOSSES AND EXPECT LOSSES TO
CONTINUE FOR THE FORESEEABLE FUTURE.
We have yet to establish any history of profitable operations. We have incurred
net losses of $72,007 and $129,381 for the fiscal years ended February 28, 2013
and February 29, 2012, respectively. As a result, at February 28, 2013, we had
an accumulated deficit of $232,662 and a total stockholders' deficiency of
$257,373. We have not generated any revenues since our inception and do not
anticipate that we will generate revenues which will be sufficient to sustain
our operations. We expect that our revenues will not be sufficient to sustain
our operations for the foreseeable future. Our profitability will require the
successful commercialization of our mining properties. We may not be able to
successfully commercialize our mines or ever become profitable.
THERE IS DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO RECURRING
LOSSES FROM OPERATIONS, ACCUMULATED DEFICIT AND INSUFFICIENT CASH RESOURCES TO
MEET OUR BUSINESS OBJECTIVES, ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO
CONTINUE OPERATIONS.
Our independent auditors have added an explanatory paragraph to their audit
opinion issued in connection with the financial statements for the years ended
February 28, 2013 and February 29, 2012, respectively, with respect to their
doubt about our ability to continue as a going concern. As discussed in Note 1
to our financial statements for the year ended February 28, 2013, we have
generated operating losses since inception, and our cash resources are
insufficient to meet our planned business objectives, which together raises
doubt about our ability to continue as a going concern.
WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL
NEEDS DUE TO CHANGES IN GENERAL ECONOMIC CONDITIONS.
We anticipate needing significant capital to conduct further exploration and
development needed to bring our existing mining properties into production
and/or to continue to seek out appropriate joint venture partners or buyers for
certain mining properties. We may use capital more rapidly than currently
anticipated and incur higher operating expenses than currently expected, and we
may be required to depend on external financing to satisfy our operating and
capital needs. We may need new or additional financing in the future to conduct
our operations or expand our business. Any sustained weakness in the general
economic conditions and/or financial markets in the United States or globally
could adversely affect our ability to raise capital on favorable terms or at
all. From time to time we have relied, and may also rely in the future, on
access to financial markets as a source of liquidity to satisfy working capital
requirements and for general corporate purposes. We may be unable to secure debt
or equity financing on terms acceptable to us, or at all, at the time when we
10
need such funding. If we do raise funds by issuing additional equity or
convertible debt securities, the ownership percentages of existing stockholders
would be reduced, and the securities that we issue may have rights, preferences
or privileges senior to those of the holders of our common stock or may be
issued at a discount to the market price of our common stock which would result
in dilution to our existing stockholders. If we raise additional funds by
issuing debt, we may be subject to debt covenants, which could place limitations
on our operations including our ability to declare and pay dividends. Our
inability to raise additional funds on a timely basis would make it difficult
for us to achieve our business objectives and would have a negative impact on
our business, financial condition and results of operations.
OUR BUSINESS AND OPERATING RESULTS COULD BE HARMED IF WE FAIL TO MANAGE OUR
GROWTH OR CHANGE.
Our business may experience periods of rapid change and/or growth that could
place significant demands on our personnel and financial resources. To manage
possible growth and change, we must continue to try to locate skilled
geologists, mappers, drillers, engineers, technical personnel and adequate funds
in a timely manner.
WE MAY NOT HAVE ACCESS TO THE SUPPLIES AND MATERIALS NEEDED FOR EXPLORATION,
WHICH COULD CAUSE DELAYS OR SUSPENSION OF OUR OPERATIONS.
Competitive demands for contractors and unforeseen shortages of supplies and/or
equipment could result in the disruption of planned exploration activities.
Current demand for exploration drilling services, equipment and supplies is
robust and could result in suitable equipment and skilled manpower being
unavailable at scheduled times in our exploration programs. Furthermore, fuel
prices are rising. We will attempt to locate suitable equipment, materials,
manpower and fuel if sufficient funds are available. If we cannot find the
equipment and supplies needed for our various exploration programs, we may have
to suspend some or all of them until equipment, supplies, funds and/or skilled
manpower can be obtained.
ATTRACTION AND RETENTION OF QUALIFIED PERSONNEL IS NECESSARY TO IMPLEMENT AND
CONDUCT OUR MINERAL EXPLORATION PROGRAMS.
Our future success will depend largely upon the continued services of our Board
members, executive officers and other key personnel. Our success will also
depend on our ability to continue to attract and retain qualified personnel with
mining experience. Key personnel represent a significant asset for us, and the
competition for qualified personnel is intense in the mineral exploration
industry.
We may have particular difficulty attracting and retaining key personnel in the
initial phases of our exploration programs. We do not have key-person life
insurance coverage on any of our personnel. The loss of one or more of our key
people or our inability to attract, retain and motivate other qualified
personnel could negatively impact our ability to complete our exploration
programs.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
SUBSTANTIAL RISK THAT NO COMMERCIALLY EXPLOITABLE MINERALS WILL BE FOUND AND OUR
BUSINESS WILL FAIL, AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
We are only in the very early stages of exploration of the Diamond Jim Property,
and thus have no way to evaluate the likelihood that we will be successful in
establishing commercially exploitable reserves of gold or other valuable
minerals on the Diamond Jim Property. You should be aware of the difficulties
normally encountered by new mineral exploration companies and the high rate of
failure of such enterprises. The search for valuable minerals as a business is
extremely risky. We may not find commercially exploitable reserves of gold or
other minerals in any our mineral claim. In such a case, we may be unable to
continue operations, and you could lose your entire investment.
11
IF WE DISCOVER COMMERCIAL RESERVES OF GOLD ON OUR MINERAL PROPERTY, WE CAN
PROVIDE NO ASSURANCE THAT WE WILL BE ABLE TO SUCCESSFULLY ADVANCE THE MINERAL
CLAIM INTO COMMERCIAL PRODUCTION. IF WE CANNOT COMMENCE COMMERCIAL PRODUCTION,
WE MAY NOT BE ABLE TO ACHIEVE REVENUES.
The Diamond Jim Property does not contain any known bodies of ore. If our
exploration program is successful in establishing ore of commercial tonnage and
grade on our mineral claim, we will require additional funds in order to advance
the mineral claim into commercial production. In such an event, we may be unable
to obtain any such funds, or to obtain such funds on terms that we consider
economically feasible, and we may be unable to generate revenues.
RISKS ASSOCIATED WITH OUR INDUSTRY
THE DEVELOPMENT AND OPERATION OF OUR MINING PROJECTS INVOLVE NUMEROUS
UNCERTAINTIES.
Mine development projects, including our planned projects, typically require a
number of years and significant expenditures during the development phase before
production is possible.
Development projects are subject to the completion of successful feasibility
studies, issuance of necessary governmental permits and receipt of adequate
financing. The economic feasibility of development projects is based on many
factors such as:
* estimation of reserves;
* anticipated metallurgical recoveries;
* future gold and silver prices; and
* anticipated capital and operating costs of such projects.
Our mine development projects may have limited relevant operating history upon
which to base estimates of future operating costs and capital requirements.
Estimates of proven and probable reserves and operating costs determined in
feasibility studies are based on geologic and engineering analyses.
Any of the following events, among others, could affect the profitability or
economic feasibility of a project:
* unanticipated changes in grade and tonnage of material to be mined and
processed;
* unanticipated adverse geotechnical conditions;
* incorrect data on which engineering assumptions are made;
* costs of constructing and operating a mine in a specific environment;
* availability and cost of processing and refining facilities;
* availability of economic sources of power;
* adequacy of water supply;
* adequate access to the site;
* unanticipated transportation costs;
* government regulations (including regulations relating to prices,
royalties, duties, taxes, restrictions on production, quotas on
exportation of minerals, as well as the costs of protection of the
environment and agricultural lands);
* fluctuations in metal prices; and
* accidents, labor actions and force majeure events.
12
Any of the above referenced events may necessitate significant capital outlays
or delays, may materially and adversely affect the economics of a given
property, or may cause material changes or delays in our intended exploration,
development and production activities. Any of these results could force us to
curtail or cease our business operations.
MINERAL EXPLORATION IS HIGHLY SPECULATIVE, INVOLVES SUBSTANTIAL EXPENDITURES,
AND IS FREQUENTLY NON-PRODUCTIVE.
Mineral exploration involves a high degree of risk and exploration projects are
frequently unsuccessful. Few prospects that are explored end up being ultimately
developed into producing mines. To the extent that we continue to be involved in
mineral exploration, the long-term success of our operations will be related to
the cost and success of our exploration programs. We cannot assure you that our
mineral exploration efforts will be successful. The risks associated with
mineral exploration include:
* The identification of potential economic mineralization based on
superficial analysis;
* the quality of our management and our geological and technical
expertise; and
* the capital available for exploration and development.
Substantial expenditures are required to determine if a project has economically
mineable mineralization. It may take several years to establish proven and
probable reserves and to develop and construct mining and processing facilities.
Because of these uncertainties, our current and future exploration programs may
not result in the discovery of reserves, the expansion of our existing reserves
or the further development of our mines.
THE PRICE OF GOLD AND SILVER ARE HIGHLY VOLATILE AND A DECREASE IN THE PRICE OF
GOLD OR SILVER WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
The profitability of mining operations is directly related to the market prices
of metals. The market prices of metals fluctuate significantly and are affected
by a number of factors beyond our control, including, but not limited to, the
rate of inflation, the exchange rate of the dollar to other currencies, interest
rates, and global economic and political conditions. Price fluctuations of
metals from the time development of a mine is undertaken to the time production
can commence can significantly affect the profitability of a mine. Accordingly,
we may begin to develop one or more of our mining properties at a time when the
price of metals makes such exploration economically feasible and, subsequently,
incur losses because the price of metals decreases. Adverse fluctuations of the
market prices of metals may force us to curtail or cease our business
operations.
MINING RISKS AND INSURANCE COULD HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY.
Our operations are subject to all of the operating hazards and risks normally
incident to exploring for and developing mineral properties, such as unusual or
unexpected geological formations, environmental pollution, personal injuries,
flooding, cave-ins, changes in technology or mining techniques, periodic
interruptions because of inclement weather and industrial accidents. Although
maintenance of insurance to ameliorate some of these risks is part of our
proposed exploration program associated with those mining properties we have an
interest in, such insurance may not be available at economically feasible rates
or in the future be adequate to cover the risks and potential liabilities
associated with exploring, owning and operating our properties. Either of these
events could cause us to curtail or cease our business operations.
WE FACE SIGNIFICANT COMPETITION IN THE MINERAL EXPLORATION INDUSTRY.
We compete with other mining and exploration companies possessing greater
financial resources and technical facilities than we do in connection with the
acquisition of exploration properties and leases on prospects and properties and
in connection with the recruitment and retention of qualified personnel. Such
competition may result in our being unable to acquire interests in economically
viable gold and silver exploration properties or qualified personnel.
13
OUR APPLICATIONS FOR EXPLORATION PERMITS MAY BE DELAYED OR MAY BE DENIED IN THE
FUTURE.
Exploration activities usually require the granting of permits from various
governmental agencies. For exploration drilling on unpatented mineral claims, a
drilling plan must be filed with the Bureau of Land Management or the United
States Forest Service, which may then take several months or more to grant the
requested permit. Depending on the size, location and scope of the exploration
program, additional permits may also be required before exploration activities
can be undertaken. Prehistoric or Indian grave yards, threatened or endangered
species, archeological sites or the possibility thereof, difficult access,
excessive dust and important nearby water resources may all result in the need
for additional permits before exploration activities can commence. With all
permitting processes, there is the risk that unexpected delays and excessive
costs may be experienced in obtaining required permits or the refusal to grant
required permits may not be granted at all, all of which may cause delays and
unanticipated costs in conducting planned exploration activities. Any such
delays or unexpected costs in the permitting process could result in serious
adverse consequences to the price of our stock and to the value of your
investment.
RISKS RELATED TO THE MARKET FOR OUR STOCK
THE MARKET PRICE OF OUR COMMON STOCK CAN BECOME VOLATILE, LEADING TO THE
POSSIBILITY OF ITS VALUE BEING DEPRESSED AT A TIME WHEN YOU MAY WANT TO SELL
YOUR HOLDINGS.
The market price of our common stock can become volatile. Numerous factors, many
of which are beyond our control, may cause the market price of our common stock
to fluctuate significantly. These factors include: our earnings releases, actual
or anticipated changes in our earnings, fluctuations in our operating results or
our failure to meet the expectations of financial market analysts and investors;
changes in financial estimates by us or by any securities analysts who might
cover our stock; speculation about our business in the press or the investment
community; significant developments relating to our relationships with our
customers or suppliers; stock market price and volume fluctuations of other
publicly traded companies and, in particular, those that are in our industry;
customer demand for our products; investor perceptions of our industry in
general and our Company in particular; the operating and stock performance of
comparable companies; general economic conditions and trends; announcements by
us or our competitors of new products, significant acquisitions, strategic
partnerships or divestitures; changes in accounting standards, policies,
guidance, interpretation or principles; loss of external funding sources; sales
of our common stock, including sales by our directors, officers or significant
stockholders; and additions or departures of key personnel. Securities class
action litigation is often instituted against companies following periods of
volatility in their stock price. Should this type of litigation be instituted
against us, it could result in substantial costs to us and divert our
management's attention and resources.
Moreover, securities markets may from time to time experience significant price
and volume fluctuations for reasons unrelated to the operating performance of
particular companies. These market fluctuations may adversely affect the price
of our common stock and other interests in our Company at a time when you want
to sell your interest in us. We do not intend to pay dividends on shares of our
common stock for the foreseeable future.
WE HAVE NEVER DECLARED OR PAID ANY CASH DIVIDENDS ON SHARES OF OUR COMMON STOCK.
We intend to retain any future earnings to fund the operation and expansion of
our business and, therefore, we do not anticipate paying cash dividends on
shares of our common stock in the foreseeable future.
WE MAY BE SUBJECT TO PENNY STOCK REGULATIONS AND RESTRICTIONS AND YOU MAY HAVE
DIFFICULTY SELLING SHARES OF OUR COMMON STOCK.
The SEC has adopted regulations which generally define so-called "penny stocks"
to be an equity security that has a market price less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exemptions. If
our common stock becomes a "penny stock," we may become subject to Rule 15g-9
under the Exchange Act, or the Penny Stock Rule. This rule imposes additional
sales practice requirements on broker-dealers that sell such securities to
persons other than established customers and "accredited investors" (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
14
$200,000, or $300,000 together with their spouses). For transactions covered by
the Penny Stock Rule, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. As a result, this rule may affect the
ability of broker-dealers to sell our securities and may affect the ability of
purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the SEC relating to the penny stock market. Disclosure is also
required to be made about sales commissions payable to both the broker-dealer
and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stock.
There can be no assurance that our common stock will qualify for exemption from
the Penny Stock Rule. In any event, even if our common stock were exempt from
the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the
Exchange Act, which gives the SEC the authority to restrict any person from
participating in a distribution of penny stock, if the SEC finds that such a
restriction would be in the public interest.
WE ARE NOT LIKELY TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
We intend to retain any future earnings for use in the operation and expansion
of our business. We do not expect to pay any cash dividends in the foreseeable
future but will review this policy as circumstances dictate. Should we decide in
the future to do so, as a holding company, our ability to pay dividends and meet
other obligations depends upon the receipt of dividends or other payments from
our operating subsidiaries. In addition, our operating subsidiaries, from time
to time, may be subject to restrictions on their ability to make distributions
to us, including restrictions on the conversion of local currency into U.S.
dollars or other hard currency and other regulatory restrictions.
OUR COMMON STOCK IS ILLIQUID AND SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR
OPERATIONS.
If a market for our common stock does develop, its market price could fluctuate
substantially due to a variety of factors, including market perception of our
ability to achieve our planned growth, quarterly operating results of other
companies in the same industry, trading volume in our common stock, changes in
general conditions in the economy and the financial markets or other
developments affecting us or our competitors. In addition, the stock market
itself is subject to extreme price and volume fluctuations. This volatility has
had a significant effect on the market price of securities issued by many
companies for reasons unrelated to their operating performance and could have
the same effect on our common stock.
A LARGE NUMBER OF SHARES MAY BE ELIGIBLE FOR FUTURE SALE AND MAY DEPRESS OUR
STOCK PRICE.
We may be required, under terms of future financing arrangements, to offer a
large number of common shares to the public, or to register for sale by future
private investors a large number of shares sold in private sales to them.
Sales of substantial amounts of common stock, or a perception that such sales
could occur, and the existence of options or warrants to purchase shares of
common stock at prices that may be below the then-current market price of our
common stock, could adversely affect the market price of our common stock and
could impair our ability to raise capital through the sale of our equity
securities, either of which would decrease the value of any earlier investment
in our common stock.
FINANCIAL STATEMENTS AND EXHIBITS
Our audited financial statements for the years ended February 28, 2013 and
February 29, 2012, are incorporated herein by reference to our amended Annual
Report on Form 10-K filed on June 13, 2013. Our unaudited financial statements
for the period ended May 31, 2013 are incorporated herein by reference to our
Quarterly Report on Form 10-Q filed on July 15, 2013.
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with our consolidated
financial statements and the notes thereto which appear elsewhere in this
report. The results shown herein are not necessarily indicative of the results
to be expected in any future periods. This discussion contains forward-looking
statements based on current expectations, which involve uncertainties. In some
cases, you can identify forward-looking statements by terminology such as
"anticipate," "estimate," "plan," "project," "predict," "potential," "continue,"
"ongoing," "expect," "believe," "intend," "may," "will," "should," "could," or
the negative of these terms or other comparable terminology. All forward-looking
statements included in this document are based on information available to the
management on the date hereof. Actual results and the timing of events could
differ materially from the forward-looking statements as a result of a number of
factors. Readers should also carefully review factors set forth in other reports
or documents that we file from time to time with the Securities and Exchange
Commission.
COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED MAY 31, 2013 AND MAY 31, 2012
For the three-month period ended May 31, 2013, we incurred a net loss of $270
compared with a net loss of $4,622 for the three-month period ended May 31,
2012. As we did not generate any revenue during either the three-month periods
ended May 31, 2013 and 2012, the net losses were comprised of primarily general
and administrative expenses, and professional fees.
Since inception to date, we have earned revenues of $7. Our net loss from
inception through May 31, 2013, was $257,643.
LIQUIDITY AND CAPITAL RESOURCES FOR THE THREE MONTHS ENDED MAY 31, 2013
As of May 31, 2013, our total assets were $Nil, our total liabilities were
$183,748, and stockholders' deficiency was $179,643.
CASH FLOWS FROM OPERATING ACTIVITIES
We have not generated positive cash flows from operating activities. For the
three-month period ended May 31, 2013, net cash flows used in operating
activities was $750 compared to using cash of $203 in three-month period ended
May 31, 2012.
CASH FLOWS FROM FINANCING ACTIVITIES
We have financed our operations primarily from either advancements or the
issuance of equity and debt instruments. For the three-month period ended May
31, 2013, net cash flows provided from financing activities totaled $4,600 made
up of $4,600 loan from a related party. For the three-month period ended May 31,
2012, net cash flows provided from financing activities was $188 comprised of a
loan.
We expect that working capital requirements will continue to be funded through a
combination of our existing funds and further issuances of securities. Our
working capital requirements are expected to increase in line with the growth of
our business. We expect to earn revenues from the one machine we have already
placed but there is no guaranty that this will occur.
COMPARISON OF RESULTS FOR THE YEARS ENDED FEBRUARY 28, 2013 AND FEBRUARY 29,
2012
For the fiscal year ended February 28, 2013, we incurred a net loss of $72,007
compared with a net loss of $129,381 for the fiscal year ended February 29,
2012. As we did not generate any revenue during the years ended February 28,
2013 and February 29, 2012, the net losses were comprised of property
expenditures, general and administrative expenses, professional fees and
interest expense.
16
Since inception to date, we have earned revenues of $7. Our net loss from
inception through February 28, 2013 was $257,373.
As of February 28, 2013, our total assets were $254, our total liabilities were
$179,627, and stockholders' deficiency was $179,373.
At February 29, 2012 we had total assets of $365, our total liabilities were
$107,731, and stockholders' deficiency was $107,366.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue the exploration of our property interests. For these reasons
our auditors believe that there is substantial doubt that we will be able to
continue as a going concern.
PLAN OF OPERATIONS
Since we entered into the Option Agreement, we have changed our plan of
operations to focus on the exploration of the Diamond Jim Property. Our
exploration plan is detailed in the "Description of Property" section of this
Current Report, under the subheading "Plan of Exploration".
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the small business issuer's
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.
SIGNIFICANT ACCOUNTING POLICIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations is based upon our financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. On an on-going basis,
we evaluate our estimates, including those related to the reported amounts of
revenues and expenses, bad debt, investments, intangible assets, income taxes,
and contingencies and litigation. We base our estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from these estimates under different
assumptions or conditions. We consider the following accounting policies to be
critical because the nature of the estimates or assumptions is material due to
the levels of subjectivity and judgment necessary to account for highly
uncertain matters or the susceptibility of such matters to change or because the
impact of the estimates and assumptions on financial condition or operating
performance is material.
BASIS OF PRESENTATION
The accounting and reporting policies of our company conform to U.S. generally
accepted accounting principles (US GAAP) applicable to development stage
companies.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with 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. In accordance with ASC No. 250
all adjustments are normal and recurring.
17
CASH AND CASH EQUIVALENTS
Our company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. The Company had $254 in
cash and cash equivalents at February 28, 2013 (February 29, 2012 - $365).
INCOME TAXES
Income taxes are provided in accordance with ASC No. 740, Accounting for Income
Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss
carryforwards. Deferred tax expense (benefit) results from the net change during
the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
REVENUE RECOGNITION
Our company records revenue on the accrual basis when all goods and services
have been performed and delivered, the amounts are readily determinable, and
collection is reasonably assured. The Company has not generated any revenue
since its inception.
RECENT ACCOUNTING PRONOUNCEMENTS
Our company has evaluated all the recent accounting pronouncements through the
date the financial statements were issued and filed with the Securities and
Exchange Commission and believe that none of them will have a material effect on
the company's financial statements.
REPORTS TO SECURITY HOLDERS
We intend to furnish our shareholders with annual reports containing financial
statements audited by our independent auditors and to make available quarterly
reports containing unaudited financial statements for each of the first three
quarters of each year.
The public may read and copy any materials that we file with the SEC at the
SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of that
site is www.sec.gov.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of our
common stock as of September 16, 2013 (i) by each person who is known by us to
beneficially own more than 5% of our common stock; (ii) by each of our officers
and directors; and (iii) by all of our officers and directors as a group. Unless
otherwise specified, the address of each of the persons set forth below is in
care of our company.
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Amount and
Nature of
Name and Address Beneficial Percent of
of Beneficial Owner Office, If Any Title of Class Ownership(1) Class(2)
------------------- -------------- -------------- ------------ --------
Merrill Moses President, CEO, CFO, Common stock, 13,000,000 24.28%
Treasurer, Secretary $0.001 par value
and Director
Charles C. Hooper Vice-President and Director Common stock, 6,500,000 12.14%
$0.001 par value
All officers and directors Common stock,
as a group $0.001 par value 19,500,000 36.41%
Michael Hawitt N/A Common stock, 6,000,000 11.20%
$0.001 par value
----------
(1) Beneficial Ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Each of the beneficial owners listed above has direct ownership
of and sole voting power and investment power with respect to the shares of
our common stock.
(2) A total of 53,550,000 shares of our common stock are considered to be
outstanding pursuant to SEC Rule 13d-3(d)(1) as of September 16, 2013. For
each beneficial owner above, any options exercisable within 60 days have
been included in the denominator.
CHANGES IN CONTROL
We do not currently have any arrangements which if consummated may result in a
change of control of our company.
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth information about our directors and executive officers
as of the date of this report:
Name Age Position
---- --- --------
Merrill W. Moses 59 CEO, CFO, President, Secretary, Treasuer and Director
Charles C. Hooper 65 Vice-President and Director
MERRILL MOSES
Mr. Moses has been the President, Secretary, Treasurer and a Director of Nevada
Gold Corp. since July 20, 2012. Mr. Moses was an originator of Jiffy Lube, a
major automobile franchise, and was the president and chief executive officer of
M&M Foods. In 1980, after participating in the establishment and operation of
several public and private resource companies, Mr. Moses founded
Intercontinental Oil and Research (ICOR), an independent oil and gas company he
operated for a decade. ICOR ultimately arranged for the purchase of more than
$100 million in developed and undeveloped oil and gas properties throughout the
central and western United States, resulting in more than 100 billion cubic feet
of natural gas and 20 million barrels of oil in the ground.
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From 1994 to 2009, Mr. Moses founded and was the chief executive officer and
bank president of Cambridge Financial Services, a mortgage banking firm in San
Diego, California. Cambridge Financial Services employed more than 1,000
individuals and managed successful financing of more than $300 million dollars
per year in mortgage financing for residential, construction and commercial
projects in 47 states and two countries.
Since 1999, Mr. Moses has served as the chief executive officer and president of
both Energy Pro Inc. and Dynamic Energy & Petroleum Inc., two oil and gas
companies with a number of oil and gas leases in Montana and Oklahoma. His
primary responsibility as the chief executive officer and president is making
the company's overall strategic decisions and managing all aspects of the
company.
Since 2002, he has been a member to the board of directors of Goldnev Resource
Inc., a gas and oil shale public company whose shares trade on the TSX Venture
Exchange under the symbol "GNZ". His duties and responsibilities as a director
are to analyze, review, and develop business strategies. Mr. Moses attended
Brigham Young University, majoring in finance and business through 1976.
CHARLES C. HOOPER
Charles C. Hooper began his career in 1968 with Litton Industries as a
reliability systems engineer when he helped design and build missile guidance
systems for the U.S. Army ground to air combat installations. He was an officer
in the U.S. Navy during the Vietnam War, received the Gold Medal from the
American Society of Military Engineers, became an instructor at the Naval War
College, and a major developer of the Navy's Human Resource Management Program.
Mr. Hooper served two (2) tours in Vietnam with Navy Seals, receiving numerous
medals and cabinet level commendations by the end of his career. From 1974 until
1986, he was the owner of Organizational Diagnostics Associates in San Diego,
California, a private financial and business consulting firm to Fortune 500 and
local companies pioneering the development of business, financial and legal
software systems.
From 1986 to 1997, Mr. Hooper was the chief executive officer of Mojave Natural
Resources, a company that specializes in producing building materials in
Temecula, California. His responsibility as chief executive officer was to
manage and oversee the day-to-day operations of the company. Since 1978, he has\
owned and operated Old Town Financial, a company that specializes in financing
for developer of shopping centers, office buildings, resorts, master planned
communities, condominiums, apartments, health clubs, single family homes and
ranch estates valued over $500 million, arranging over an additional $3.3
Billion in project financing for clients, in La Jolla, California.
Mr. Hooper graduated from the University of California in Los Angeles as a
systems engineer with high honors. He earned a Master of Science Degree in
Management from the U.S. Naval Post Graduate School and did his doctorate work
in Finance.
FAMILY RELATIONSHIPS
There are no family relationships among any of our officers or directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of our knowledge, our directors or executive officer has not, during
the past ten years:
* been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
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* had any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or business
association of which he was a general partner or executive officer,
either at the time of the bankruptcy filing or within two years prior
to that time;
* been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type
of business, securities, futures, commodities, investment, banking,
savings and loan, or insurance activities, or to be associated with
persons engaged in any such activity;
* been found by a court of competent jurisdiction in a civil action or
by the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated;
* been the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, 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 any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or
* been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15
U.S.C. 78c(a)(26))), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
Except as set forth in our discussion below in "Certain Relationships and
Related Transactions, and Director Independence - Transactions with Related
Persons," none of our directors, director nominees or executive officers has
been involved in any transactions with us or any of our directors, executive
officers, affiliates or associates which are required to be disclosed pursuant
to the rules and regulations of the SEC.
COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors does not maintain a separately-designated standing audit
committee. As a result, our entire Board of Directors acts as our audit
committee. Our Board of Directors has determined that we do not presently have a
director who meets the definition of an "audit committee financial expert." We
believe that the cost related to appointing a financial expert to our Board of
Directors at this time is prohibitive. Our Board of Directors presently do not
have a compensation committee, nominating committee, an executive committee of
our board of directors, stock plan committee or any other committees.
TERMS OF OFFICE
Our directors are appointed for one-year terms to hold office until the next
annual general meeting of the holders of our common stock or until removed from
office in accordance with our by-laws. Our officers are appointed by our Board
of Directors and hold office until removed by our Board of Directors.
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CODE OF ETHICS
We do not currently have a code of ethics, because we have only limited business
operations and one officer and director, we believe a code of ethics would have
limited utility. We intend to adopt such a code of ethics as our business
operations expand and we have more directors, officers and employees.
CONFLICTS OF INTEREST
We believe that our officer and director may be subject to conflicts of
interest. The conflicts of interest arise from his being unable to devote full
time to our operations.
No policy has been implemented or will be implemented to address conflicts
ofinterest.
In the event our officer and director resigns from his position, there may be no
one to run our operations and our operations may be suspended or cease entirely.
EXECUTIVE COMPENSATION
The following Executive Compensation Chart highlights the compensation of our
executive officer. Our current officers receive no compensation. No other
executive officers received salary and bonus in excess of $100,000 for the prior
two fiscal years.
COMPENSATION OF EXECUTIVE MEMBERS
Annual Compensation Long Term Compensation
------------------------------------- --------------------------------------
Awards Payouts
------------------------- ----------
Name and Other Restricted Securities
Principal Annual Stock Underlying LTIP
Position Year Salary($) Bonus($) Compensation($) Award(s)($) Options/SARs Payouts($) Total($)
-------- ---- --------- -------- --------------- ----------- ------------ ---------- --------
Merrill Moses 2013 $0 $0 $0 N/A N/A N/A $0
President, CEO, 2012 $0 $0 $0 N/A N/A N/A $0
CFO and Treasurer
Charles Hooper 2013 $0 $0 $0 N/A N/A N/A $0
Vice-President 2012 $0 $0 $0 N/A N/A N/A $0
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
For the year ended February 28, 2013, no director or executive officer has
received compensation from us pursuant to any compensatory or benefit plan.
There is no plan or understanding, express or implied, to pay any compensation
to any director or executive officer pursuant to any compensatory or benefit
plan.
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COMPENSATION OF DIRECTORS
The current Board of Directors is comprised of Merrill Moses and Charles Hooper.
Neither Mr. Moses nor Mr. Hooper received any compensation for his services as a
director during the year ended February 28, 2013.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
TRANSACTIONS WITH RELATED PERSONS
On May 23, 2013, in a private transaction, Merrill Moses purchased 13,000,000
shares of common stock from Michael Hawitt, a former officer and director, for
US$10.00. The transaction resulted in Mr. Moses holding approximately 24% of the
Company's issued and outstanding common stock.
On May 23, 2013, in a private transaction, Charles C. Hooper purchased 6,500,000
shares of common stock from Michael Hawitt, a former officer and director, for
US $10.00. The transaction resulted in Mr. Hooper holding approximately 12% of
the Company's issued and outstanding common stock.
The transactions noted above resulted in Mr. Hawitt holding 6,000,000 shares, or
11%, of the Company's issued and outstanding common stock.
Our offices, located at 2683 Via de la Valle, Suite G418, Del Mar, CA 92014, are
also the offices of our president, Merrill Moses, and are provided to us free of
charge.
We have not had any transactions since the beginning of the 2013 fiscal year, or
any currently proposed transactions, in which we were or are to be a participant
and the amount involved exceeded or exceeds the lesser of $120,000 or one
percent of the average of our total assets at year end for the last two
completed fiscal years, and in which any related person had or will have a
direct or indirect material interest (other than compensation described under
"Executive Compensation").
PROMOTERS AND CERTAIN CONTROL PERSONS
Merrill Moses is a promoter of our company as that term is defined in the rules
and regulations promulgated under the Securities Act of 1933, as ameded,
referred to as the "Securities Act".
DIRECTOR INDEPENDENCE
Our common shares are listed on the OTC Bulletin Board which does not have
requirements on independence of directors. However, our Board of Directors has
adopted the definitions, standards and exceptions to the standards for
evaluating director independence provided in the NASDAQ Stock Market rules, and
determined that we do not have any "independent directors" as defined under the
rules of the NASDAQ Stock Market as Merrill Moses, our President, CEO, CFO and
Treasurer, is the sole director.
LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties and an adverse result in these or other
matters may arise from time to time that may harm our business. We are currently
not aware of any such legal proceedings or claims that we believe will have a
material adverse effect on our business, financial condition or operating
results.
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MARKET PRICE AND DIVIDENDS ON OUR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our common stock is quoted on the OTCBB Market and trades under the symbol
"NVGC." To be eligible for quotation on the OTCBB, issuers must remain current
in their filings with the SEC or applicable regulatory authority.
OTCBB securities are not listed and traded on the floor of an organized national
or regional stock exchange. Instead, OTCBB securities transactions are conducted
through a telephone and computer network connecting dealers. OTCBB issuers are
traditionally smaller companies that do not meet the financial and other listing
requirements of a national or regional stock exchange.
Trading in our common stock commenced in September 2013. The high and low bid
prices for our common stock since commencement of trading were $0.21 per share
of common stock and $0.12 per share of common stock, respectively.
HOLDERS
As of the date of this report, there were 5 stockholders of record of our common
stock. This number does not include shares held by brokerage clearing houses,
depositories or others in unregistered form.
DIVIDENDS
Any decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the
board of directors may deem relevant.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have in effect any compensation plans under which our equity
securities are authorized for issuance and we do not have any outstanding stock
options.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue up to 125,000,000 shares of common stock, par value
$0.0001 per share. Each outstanding share of common stock entitles the holder
thereof to one vote per share on all matters. Our bylaws provide that any
vacancy occurring in the board of directors may be filled by the affirmative
vote of a majority of the remaining directors though less than a quorum of the
board of directors. Stockholders do not have pre-emptive rights to purchase
shares in any future issuance of our common stock.
The holders of shares of our common stock are entitled to dividends out of funds
legally available when and as declared by our board of directors. Our board of
directors has never declared a dividend and does not anticipate declaring a
dividend in the foreseeable future. Should we decide in the future to pay
dividends, as a holding company, our ability to do so and meet other obligations
depends upon the receipt of dividends or other payments from our operating
subsidiary and other holdings and investments. In the event of our liquidation,
dissolution or winding up, holders of our common stock are entitled to receive,
ratably, the net assets available to stockholders after payment of all
creditors.
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All of the issued and outstanding shares of our common stock are duly
authorized, validly issued, fully paid and non-assessable. To the extent that
additional shares of our common stock are issued, the relative interests of
existing stockholders will be diluted.
ANTI-TAKEOVER EFFECTS OF OUR ARTICLES OF INCORPORATION AND BY-LAWS
Our articles of incorporation and bylaws contain certain provisions that may
have anti-takeover effects, making it more difficult for or preventing a third
party from acquiring control of the Company or changing its board of directors
and management. According to our bylaws and articles of incorporation, the
holders of the Company's common stock do not have cumulative voting rights in
the election of our directors. The combination of the present ownership by a few
stockholders of a significant portion of the Company's issued and outstanding
common stock and lack of cumulative voting makes it more difficult for other
stockholders to replace the Company's board of directors or for a third party to
obtain control of the Company by replacing its board of directors.
TRANSFER AGENT AND REGISTRAR
Our stock transfer agent is Holladay Stock Transfer of 2939 North 67th Place,
Suite C, Scottsdale, Arizona as transfer agent.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company indemnifies its directors and officers to the maximum extent
permitted under the laws of the State of Delaware.
Insofar as indemnification by us for liabilities arising under the Securities
Act may be permitted to our directors, officers or persons controlling the
company pursuant to provisions of our articles of incorporation and bylaws, or
otherwise, we have been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification by
such director, officer or controlling person of us in the successful defense of
any action, suit or proceeding is asserted by such director, officer or
controlling person in connection with the securities being offered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
At the present time, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of ours in which indemnification
would be required or permitted. We are not aware of any threatened litigation or
proceeding, which may result in a claim for such indemnification.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
We have not had any changes in, or disagreements with, our accountants since our
inception.
ITEM 5.01 CHANGES IN CONTROL OF THE REGISTRANT
On May 23, 2013, in a private transaction, Merrill Moses purchased 13,000,000
shares of common stock from Michael Hawitt, a former officer and director, for
US$10.00. The transaction resulted in Mr. Moses holding approximately 24% of the
Company's issued and outstanding common stock.
On May 23, 2013, in a private transaction, Charles C. Hooper purchased 6,500,000
shares of common stock from Michael Hawitt, a former officer and director, for
US $10.00. The transaction resulted in Mr. Hooper holding approximately 12% of
the Company's issued and outstanding common stock.
24
The transactions noted above resulted in Mr. Hawitt holding 6,000,000 shares, or
11%, of the Company's issued and outstanding common stock.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS
As a result of the increase in operations in the form of exploration activities
on the Diamond Jim Property, we believe that we are no longer a "shell company",
as that term is defined in Rule 405 under the Securities Act and Rule 12b-2
under the Exchange Act.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation [incorporated by reference to the
Registration Statement on Form S-1 filed on May 12, 2008]
3.2 Articles of Merger filed July 8, 2011 [incorporated by reference to
Exhibit 3.1 to the Company's Current Report on Form 8-K filed on
July 13, 2011]
_._ Certificate of Merger? Agreement and Plan of Merger
3.3 Bylaws [incorporated by reference to Exhibit 3.3 to the Company's
Current Report on Form 8-K filed on July 13, 2011]
10.1 Option Agreement with Western States Silver, LLC dated September 1,
2013 [incorporated by reference to the Current Report on Form 8-K
filed with the SEC on September 6, 2013 File No. 000-53724]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
NEVADA GOLD CORP.
Date: September 17, 2013 By: /s/ Merrill Moses
----------------------------------------
Merrill Moses
Chief Executive Officer, Chief Financial
Officer, President & Treasurer
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