SOUTH AMERICAN GOLD CORP. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - SOUTH AMERICAN GOLD CORP.	Financial_Report.xls
EX-31.1 - EXHIBIT311 - SOUTH AMERICAN GOLD CORP.	exhibit311.htm
EX-32.1 - EXHIBIT321 - SOUTH AMERICAN GOLD CORP.	exhibit321.htm
EX-31.2 - EXHIBIT312 - SOUTH AMERICAN GOLD CORP.	exhibit312.htm
EX-32.2 - EXHIBIT322 - SOUTH AMERICAN GOLD CORP.	exhibit322.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2013

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

For the transition period from ________ to ________

Commission File Number: 000-52156

South American Gold Corp.

(Exact name of registrant as specified in its charter)

Nevada	98-0486676
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3645 E. Main Street, Suite 119, Richmond, IN 47374

(Address of principal executive offices)

(765) 356-9726

(Registrant’s telephone number, including area code)

______________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

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

Large accelerated filer o Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding Shares as of September 30, 2013

Common Stock, $0.001 par value		289,062,039

Table of Contents

	FORM 10-Q SOUTH AMERICAN GOLD CORP. September 30, 2013 TABLE OF CONTENTS	Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	19

Item 4.	Controls and Procedures.	19

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	21

Item 1A.	Risk Factors.	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	21

Item 3.	Defaults Upon Senior Securities.	21

Item 4.	Mine Safety Disclosures.	21

Item 5.	Other Information.	21

Item 6.	Exhibits.	22

	Signatures	23

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Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited financial statements included in this Form 10-Q are as follows:

F-1	Unaudited Balance Sheet as of September 30, 20123 and Audited as of June 30, 2013

F-2	Unaudited Statements of Operations for the three months ended September 30, 2013 and 2012 and from inception on May 25, 2005 to September 30, 2013.

F-3	Unaudited Statements of Cash Flows for the three months ended September 30, 2013 and 2012 and from inception on May 25, 2005 to September 30, 2013.

F-4	Notes to Unaudited Financial Statements.

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the interim period ended September 30, 2013 are not necessarily indicative of the results that can be expected for the full year.

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Table of Contents

SOUTH AMERICAN GOLD CORP. AND SUBSIDIARIES
(An Exploration Stage Company)
Condensed Consolidated Balance Sheets


	September 30,			June 30,
	2013			2013
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	53		$	118
Other Receivable		1,000			-
Total current assets		1,053			118

Equipment net of depreciation		1,000			1,063
Investments		10,500			-

Total Assets	$	12,553		$	1,181

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable and accrued expenses
(including related party amounts of $87,862 and $72,827)	$	306,686		$	264,557
Convertible Notes Payable, net of discount of $23,329		36,758			39,938
Notes payable		9,500
Derivative Liability		97,261			142,609
Current Liabilities		450,205			447,104

Notes Payable		18,500			18,500

Total Liabilities		468,705			465,604

Stockholders' Equity (Deficit)
Common stock, $0.001 par value, 450,000,000 shares
authorized, 289,062,039 & 221,123,407 issued & outstanding
as of September 30, 2013 & June 30, 2013, respectively		289,062			221,123
Additional paid-in capital		4,126,627			4,110,421
Accumulated other comprehensive income		355			(2,665	)
Deficit accumulated during the exploration stage		(4,872,196	)		(4,793,302	)

Total Stockholders' Equity (Deficit)		(456,152	)		(464,423	)

Total liabilities and stockholders' equity (deficit)	$	12,553		$	1,181


The accompanying notes are an integral part of these condensed consolidated financial statements

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SOUTH AMERICAN GOLD CORP. AND SUBSIDIARIES
(Exploration Stage Company)
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)

	For the three months ended September 30,						For the Period May 25, 2005 (Inception) to
	2013			2012			September 30, 2013


Revenues	$	-		$	-		$	-

Operating Expenses
Exploration Expense		6,000			15,272			741,034
Stock Based Compensation		-			-			1,566,348
Impairment loss on Goodwill		-			-			1,285,710
Impairment loss on Mining Lease		-			29,000			29,000
Depreciation		63			-			1,908
General & Administrative Expense		44,088			38,355			1,273,548
Total Operating Expense		50,151			82,627			4,897,548

Income (loss) from operations		(50,151	)		(82,627	)		(4,897,548	)

Other Income (Expense)
Gain (Loss) on derivative liability		(5,054	)		(20,323	)		23,348
Gain on sale of mining lease		8,500			-			8,500
Interest Expense		(32,189	)		(22,082	)		(264,742	)
Interest income		-			-			12,713
Total Other Income		(28,743	)		(42,405	)		(220,181	)

Net Loss		(78,894	)		(125,032	)		(5,117,729	)

Net loss attributable to non-controlling interest		-			-			(245,532	)

Net loss attributable to South American Gold Corp.	$	(78,894	)	$	(125,032	)	$	(4,872,197	)

Net Loss	$	(78,894	)	$	(125,032	)	$	(5,117,729	)

Other comprehensive income (loss)
Unrealized gain on Investments		3,000			-			3,000
Foreign currency translation adjustment		20			(22	)		5,694
Foreign currency translation adjustment attributable to non-controlling interest attributable to non-controlling interest		-			-			(8,339	)
Total other comprehensive income (loss)		3,020			(22	)		355

Comprehensive income (loss)	$	(75,874	)	$	(125,054	)	$	(5,117,374	)

Net loss per common share outstanding,
basic and diluted	$	(0.00	)	$	(0.00	)

Weighted average shares outstanding of common
stock, basic and diluted		282,687,758			82,146,673


The accompanying notes are an integral part of these condensed consolidated financial statements

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SOUTH AMERICAN GOLD CORP. AND SUBSIDIARIES
(Exploration Stage Company)
Condensed Consolidated Statement of Cash Flows

							For the period
	For the three months ended						May 25, 2005
	September 30,						(inception) to
	2013			2012			September 30, 2013


Cash Flows Used in Operating Activities:
Net Loss	$	(78,894	)	$	(125,032	)	$	(5,117,729	)
Adjustments to reconcile net loss to net cash used in operations								-
Expenses paid by shareholders		-			-			39,000
Stock Based Compensation		-			-			1,566,348
Impairment loss on goodwill		-			-			1,285,710
Impairment loss on Mining Lease		-			29,000			29,000
(Gain) Loss on derivative liability		5,054			20,323			(23,348	)
Gain on sale of mining lease		(8,500	)		-			(8,500	)
Amortization of debt discount and interest expense		29,320			21,530			244,136
Depreciation		63			-			1,908
Changes in operating assets and liabilities
Prepaid Expenses		-			(5,487	)		-
Accounts Payable and accrued expenses		43,372			13,384			531,525

Net Cash Used In Operating Activities		(9,585	)		(46,282	)		(1,451,950	)


Net Cash Used In Investing Activities
Acquisition of Equipment		-			(1,250	)		(2,907	)
Proceeds from Business Acquisition		-			-			(200,343	)

Net Cash Used In Investing Activities		-			(1,250	)		(203,250	)

Cash Flows From Financing Activities:
Proceeds from convertible note payable		-			47,500			167,500
Proceeds from loans		9,500			-			9,500
Proceeds from issuance of common stock		-			-			1,506,450

Net Cash Provided by Financing Activities		9,500			47,500			1,683,450

Effect of Foreign Currency on Cash		20			(22	)		(28,197	)

Net Increase (Decrease) in Cash		(65	)		(54	)		53

Cash at Beginning of Period		118			87			-

Cash at End of Period	$	53		$	33		$	53

Supplemental disclosure of cash flow information:

Expenses paid by shareholders	$	-		$	-		$	39,000
Shares issued for debt	$	33,800		$	-		$	237,394
Shares issued for Property Acquisition	$	-		$	29,000		$	29,000
Shares issued for accounts payable	$	-		$	-		$	79,500
Derivative liability extinguished due to debt conversions	$	50,344		$	59,875		$	143,713


The accompanying notes are an integral part of these condensed consolidated financial statements

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SOUTH AMERICAN GOLD CORP. AND SUBSIDIARIES

(Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

1. ORGANIZATION

The Company, South American Gold Corp., was incorporated under the laws of the State of Nevada on May 25, 2005 with the authorized capital stock of 75,000,000 shares at $0.001 par value. In January 2008, a majority of the shareholders agreed to an increase in the authorized capital stock to 450,000,000 shares at $0.001 par value.

The Company was organized for the purpose of acquiring and developing mineral properties. The Company has not established the existence of a commercially minable ore deposit and therefore is considered to be in the exploration stage.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The interim financial statements for the three months ended September 30, 2013 and 2012 are unaudited. These financial statements were prepared in accordance with requirements for unaudited interim periods, and consequently do not include all disclosures required to be in conformity with accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for all periods presented have been made. The information for the consolidated balance sheet as of June 30, 2013 was derived from audited financial statements. The results of operations for the three months ended September 30, 2013 are not necessarily indicative of the results to be expected for the year ending June 30, 2014.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

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.

Cash and Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

Revenue Recognition

The Company recognizes revenue based on FASB Account Standards Codification (“ASC”) 605 “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. Revenues from service contracts are recognized on a monthly, quarterly or semiannual basis as specified in the terms of a given contract. Revenues from additional services are recognized currently as the work is performed.

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Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260 “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential 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 excluded all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2013 and 2012, there were 172,908,676 and 22,727,273 potential common shares outstanding, respectively. The stock options are anti-dilutive having an exercise price of $.59, and the convertible debt is at varying prices.

Property and Equipment

Property and equipment is stated at the historical cost. Maintenance and repairs of property and equipment are charged to operations as incurred. Depreciation is computed using the straight-line method over estimated useful lives of 3-5 years.

Evaluation of Long-Lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

Foreign Currency Translation

The Company’s functional and reporting currency is the U.S. dollar. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters.” 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 financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax

assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

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Goodwill

Goodwill consists of the excess of cost of acquired enterprises over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. Goodwill is reviewed for impairment annually at the beginning of the Company’s fourth fiscal quarter, or more frequently if there are indicators that the fair value of the related reporting unit is less than the carrying value of the Goodwill. We compare our fair value, which is determined utilizing both a market value method and discounted projected future cash flows, to our carrying value for the purpose of identifying impairment. Our annual impairment review requires extensive use of accounting judgment and financial estimates.

Mineral Property Acquisition and Exploration Costs

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 financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs.

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 Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Fair Value Measurements

Topic 820 in the Accounting Standards Codification (ASC 820) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, ASC 820 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:

·	Level 1 inputs — Unadjusted quoted process in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.
·	Level 2 inputs — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
·	Level 3 inputs — Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

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Investments

Investments on the balance sheet are classified as available-for-sale as they have readily determinable fair values and are not considered trading or held-to-maturity securities. Available-for-sale investments are reported at fair value with the unrealized holding gain or loss reported in other comprehensive income.

Environmental Requirements

At the report date environmental requirements related to the mineral claim acquired are unknown and therefore any estimate of any future cost cannot be made.

Stock-based compensation

The Company follows the provisions of ASC 718, whereby stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite services period (generally the vesting period of the equity grant).

Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

3. MINERAL PROPERTIES

Kon Tum

In February 2008, the Company purchased the Kon Tum Gold Claim located in Vietnam for $5,000. The Company had not established the existence of a commercially minable ore deposit on the Kon Tum Gold Claim. The claim has no expiry date and only if the Company decides to abandon them will it no longer have an interest in the minerals thereon. The acquisition costs have been impaired and expensed because there has been no exploration activity nor have there been any reserves established and we cannot currently project any future cash flows or salvage value for the coming years and the acquisition costs might not be recoverable. The company has elected to not pursue further activities on these claims nor maintain ownership.

GB Project

On December 14, 2011 the company signed an agreement to purchase one unpatented mining claim and lease nine unpatented mining claims in Yavapai County, Arizona covering approximately two hundred acres. The purchased unpatented claims were for $1,000 and the vendor retained a two percent net smelter return from any future production. The leased claims are for a period of fifteen (15) years; any production subject to a two percent net smelter return to the vendor, and annual lease payments of $750.The company subsequently acquired an additional two unpatented mining claims as part of the GB project by location.

Lucky Boy Silver Project

In December 2011 the company staked five unpatented mining claims in Hawthorne, Nevada covering approximately one hundred acres. The company abandoned this property in the three month period ending September 30,2013.

Baltimore Silver Mine Project

On August 6, 2012, the Company signed an agreement to lease, with an option to purchase, the Baltimore Mine located in Western Montana. The lease payment will be $10,000 per year, plus $500 per quarter; or, $2,000 per year in restricted stock at SAGD’s option, provided such restricted stock has a market bid price in excess of $20,000 for the twenty days prior to payment. Payment will be on July 31 of each year beginning July 31, 2013. SAGD may terminate the lease with ninety days’ notice; however, such determination has no bearing on cash payments or issuance of stock to Western prior to the termination of the lease option. The term of the lease is ten years and may be extended for an additional 15 years with a payment of one hundred thousand dollars ($100,000) at any time.

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SAGD will have an option to purchase the property free and clear of any lien or encumbrance, for the term of this agreement, in the amount of five hundred thousand dollars ($500,000), at which time the lease would terminate and no royalty would be due afterwards from the property.

Should SAGD cause to be issued a property report meeting the industry guidelines indicating probable or proven reserves in excess of two million ounces of silver on the property, Western shall receive an additional thirty thousand dollars in cash or restricted shares value determined as (3) above, within thirty days of publication of such report.

The acquisition price of this option was 10,000,000 shares of SAGD restricted stock, based on the contractually stated value of $29,000, using the closing market price of the Company’s common stock on August 17, 2012, plus an additional $25,000 payable in the form of cash or restricted common stock, at SAGD’s option, valued at the ten day average bid price for the company’s common stock. This additional $25,000 is payable during the period January 1, 2013 to July 1, 2013. As of September 30, 2012, the Company identified there were indicators of impairment. As such, it conducted a cash flow assessment on this mining lease, and based on that assessment, the Company recorded an impairment loss of $29,000 in its statement of operations.

New Light Mine Project

On January 16, 2013 the Company signed a mining lease agreement for two unpatented mining claims in Whatcom County, Washington. The lease is for fifteen years and is subject to a net smelter return of two percent and annual advance royalty payments of $500 in the first year and $750 thereafter. The advance royalty payment of $500 was paid in May 2013.

In addition, the Company is to perform a minimum of $500 in assessment work for the benefit of the property for the assessment year ended September 1, 2013 (which has been done), and a cumulative minimum of $500 for every assessment year thereafter in which the Company continues this lease beyond July 1 of the assessment year.

4. INVESTMENTS

On September 19, 2013 the Company assigned the New Light Mine Project lease to Kalahari Greentech, Inc. (“Kalahari”) in exchange for $1,000 in cash (not received as of the date of these financial statements) and 5,000,000 shares of restricted common stock of Kalahari. Additionally, on October 14, 2013, the Company signed a Letter of Intent with Kalahari to acquire a 40% interest in the lease by spending or incurring $200,000 in exploration expenditures, including associated overhead, within 24 months of the signing of a definitive agreement.

The shares of Kalahari were valued using the closing price of its common stock on September 19, 2013 ($0.0015). As the Company had a zero cost basis in the lease, a gain of $8,500 was recorded in the statement of operations. Also, as these shares are considered available-for-sale securities, the Company remeasured these shares at September 30, 2013, and recorded an unrealized gain of $3,000 in other comprehensive income.

5. CONVERTIBLE NOTE PAYABLE AND DERIVATIVE LIABILITY

Convertible Note Payable

Convertible Note #3

On December 18, 2012, the Company entered into a securities purchase agreement and convertible note agreement, for $32,500 in cash. The note has a maturity date of September 20, 2013, and carries an interest rate of 8%, per annum. Principal and interest is due on September 20, 2013, and any amount of principal or interest not paid by this date, will accrue interest at 22% per annum. This note, plus accrued interest, is convertible 180 days from the date of the Note, at a variable conversion price of 45% of the lowest three trading prices for the common stock of the Company during the thirty trading day period ending on the latest complete trading day prior to the conversion date.

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Pursuant to the conversion option, in the month of July 2013, the third party converted $32,500 of related debt ( plus $1,300 of accrued interest) to 67,938,632 shares of common stock, fully extinguishing this note

Convertible Note #4

On March 28, 2013, the Company entered into a securities purchase agreement and convertible note agreement, for $32,500 in cash. The note has a maturity date of January 2, 2014, and carries an interest rate of 8%, per annum. Principal and interest is due on January 2, 2014, and any amount of principal or interest not paid by this date, will accrue interest at 22% per annum. This note, plus accrued interest, is convertible 180 days from the date of the Note, at a variable conversion price of 45% of the lowest three trading prices for the common stock of the Company during the thirty trading day period ending on the latest complete trading day prior to the conversion date. Accrued interest on this note, as of September 30, 2013, was $1,324.

Convertible Note #5

On April 30, 2013, the Company entered into a securities purchase agreement and convertible note agreement, for $27,500 in cash. The note has a maturity date of February 3, 2014, and carries an interest rate of 8%, per annum. Principal and interest is due on January 30, 2014, and any amount of principal or interest not paid by this date, will accrue interest at 22% per annum. This note, plus accrued interest, is convertible 180 days from the date of the Note, at a variable conversion price of 45% of the lowest three trading prices for the common stock of the Company during the thirty trading day period ending on the latest complete trading day prior to the conversion date. Accrued interest on this note, as of September 30, 2013, was $923.

Derivative Liabilities

Convertible Note #3

The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from 0.02% to 0.16%; Dividend rate of 0%; and, historical volatility rates ranging from 145.97% to 346.31%. Based on this calculation, the Company recorded a derivative liability of $52,817 and interest expense of $20,317. This derivative is remeasured at each reporting period, with the change in fair value being recorded to the statement of operations. The calculated fair values of the derivative liability at December 31, 2012, March 31, 2013, and June 30, 2013 were $52,817, $47,848, and $44,109, respectively, and $0 at July 18, 2013, when the final note balance was converted to equity. From its initial valuation on December 18, 2012 to July 18, 2013, the Company has recorded a net gain on derivative liability of $2,472, in the statement of operations.

Based on the above calculations, the Company also recorded a discount on debt of $32,500. This discount has been fully amortized due to the note being converted to equity. Total amortization expense for the three months ended September 30, 2013 was $9,573, which includes discount amortization of $8,545 related to the conversion of $32,500 to equity.

Convertible Note #4

The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from 0.02% to 0.13%; Dividend rate of 0%; and, historical volatility rates ranging from 134.59% to 260.56%. Based on this calculation, the Company recorded a derivative liability of $57,988 and interest expense of $25,488. This derivative is remeasured at each reporting period, with the change in fair value being recorded to the statement of operations. The calculated fair value of the derivative liability at March 31, 2013 and June 30, 2013 was $57,474 and $52,932 respectively, and $52,200 at September 30, 2013. From its initial valuation on March 28, 2013 to September 30, 2013, the Company has recorded a related net gain on derivative liability of $5,788 in the statement of operations.

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Based on the above calculations, the Company also recorded a discount on debt of $32,500. This discount will be amortized to interest expense over the 9 month term of the convertible note. Total amortization for the three months ended September 30, 2013 was $10,911.Total amortization expense for the three month period ended September 30, 2013 was $10,679.

Convertible Note #5

The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from 0.03% to 0.13%; Dividend rate of 0%; and, historical volatility rates ranging from 251.38% to 285.31%. Based on this calculation, the Company recorded a derivative liability of $55,053 and interest expense of $27,553. This derivative is remeasured at each reporting period, with the change in fair value being recorded to the statement of operations. The calculated fair value of the derivative liability at June 30, 2013 and September 30, 2013 was $45,568 and $45,060, respectively. From its initial valuation on April 30, 2013 to September 30, 2013, the Company has recorded a related net gain on derivative liability of $9,993 in the statement of operations.

Based on the above calculations, the Company also recorded a discount on debt of $27,500. This discount will be amortized to interest expense over the 9 month term of the convertible note. Total amortization expense for the three months ended September 30, 2013 was $9,068.

6. Notes Payable

The Company has issued long term notes payable in settlement of account payable. Each note has a duration of twenty four months and bears simple interest of five per cent per annum, payable quarterly beginning June 30, 2013

The Company has issued a short term note for funds borrowed with a duration of ninety days that carries a simple interest of five per cent per annum, payable upon maturity.

Issue Date	Maturity

September 30,2013	12/29/2103	$	9,500
March 28, 2013	3/28/15		11,500
March 31, 2013	3/31/15		7,000

Sub Total			28,000
Less : Short term notes payable			( 9,500	)
Long term notes payable			18,500

7. RELATED PARTY TRANSACTIONS

As of September 30, 2013 and 2012, the current officers were owed $87,862 and $72,827 for management fees and expenses, which are recorded in accounts payable on the balance sheet. Officers-directors also have made contributions to capital of $39,000, since inception, in the form of expenses paid for the Company.

8. STOCKHOLDERS’ DEFICIT

Issuance of Stock

On August 17, 2012, the Company issued 10,000,000 shares of SAGD restricted common stock, valued at $29,000, based on the market value of the stock on the date of issuance, for the acquisition of a lease option on mineral properties.

In January 2013, the Company issued 26,500,000 shares of common stock in settlement of $79,500 in accounts payable, based on the market value at the date of issuance.

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During March 2013, the Company issued 17,527,337 shares of common stock upon conversion of $15,100 in notes payable.

During the period April 1, 2013 through June 30, 2013, the Company issued 87,884,190 shares of common stock upon conversion of $62,900 in notes payable (including $3,000 in accrued interest).

During the three month period ended September 30, 2013, the Company issued 67,938,632 shares of common stock upon conversion of $33,800 in notes payable (including $1,300 in accrued interest).

Stock Options

During the year ended 30 June 2011, the Company granted 2,900,000 stock options to employees and directors of the Company, entitling the holders to purchase common shares of the Company for proceeds of $0.59 per common share expiring March 21, 2021, of which 1,200,000 were granted to employees and 1,700,000 were granted to non-employees of the Company. The fair value of the portion of the options which vested in the period, estimated using Black-Scholes model, was $1,566,378. This amount has been expensed as stock-based compensation.

The following incentive stock options were outstanding at September 30, 2013:

	Exercise Price		Number of options		Remaining contractual life (years)

Options	$	0.59		2,900,000		7.3

				2,900,000

The following is a summary of stock option activities during the three months ended September 30, 2013:

	Number of options		Weighted average exercise price

Outstanding and exercisable at June 30, 2013		2,900,000		0.59

Granted		-		-
Exercised		-		-
Cancelled		-		-

Outstanding and exercisable at September 30, 2013		2,900,000		0.59

The aggregate intrinsic value of all warrants and stock options outstanding and exercisable at September 30, 2013 was $0.

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9. FAIR VALUE MEASUREMENTS

Our financial assets and (liabilities) carried at fair value measured on a recurring basis as of September 30, 2013 consisted of the following:

				Fair Value Measurements Using
	Total Fair			Quoted prices in		Significant other			Significant
	Value at			active markets		observable inputs			Unobservable inputs
Description	September 30, 2013			(Level 1)		(Level 2)			(Level 3)

Derivative liability	$	(97,261	)	$	—	$	(97,261	)	$	—

10. GOING CONCERN

Our financial statements have been prepared on the basis of accounting principles applicable to a going concern. As a result, they do not include adjustments that would be necessary if we were unable to continue as a going concern and would therefore be obligated to realize assets and discharge our liabilities other than in the normal course of operations. The Company does not have sufficient working capital to service its debt or for its planned activity, which raises substantial doubt about its ability to continue as a going concern. The Company’s plans are to seek additional debt and equity investment to sustain operations.

11. SUBSEQUENT EVENTS

On October 9, 2013, the Company entered into a securities purchase agreement and convertible note agreement for $7,500 in cash. The note has a maturity date of July 18 2014, and carries an interest rate of 8%, per annum. Principal and interest is due on July 18,2014 and any amount of principal or interest not paid by this date, will accrue interest at 22% per annum. This note, plus accrued interest, is convertible 180 days from the date of the Note, at a variable conversion price of 45% of the lowest three trading prices for the common stock of the Company during the thirty trading day period ending on the latest complete trading day prior to the conversion date.

For the period October 1 through November 14, 2013 common shares of 142,466,666 were issued upon conversion of $31,100 in convertible debt.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.

Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:

●	risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our contemplated acquisition and exploration and development projects;

●	risk that Federal and State permissions required for exploration on our properties are not available, or conflicting property interests preclude exploration and production on unpatented mining claims:

●	risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations;

●	Risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;

●	results f initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;

●	mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;

●	the potential for delays in exploration or development activities or the completion of feasibility studies;
●	risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;

●	risks related to commodity price fluctuations;

●	the uncertainty of profitability based upon our history of losses;

●	risks related to environmental regulation and liability;

●	risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;

●	risks related to tax assessments;

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●	political and regulatory risks associated with mining development and exploration; and other risks and uncertainties related to our prospects, properties and business strategy;

●	risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our contemplated acquisition and exploration and development projects;

●	risk that Federal and State permissions required for exploration on our properties are not available, or conflicting property interests preclude exploration and production on unpatented mining claims;

●	risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations ;

●	risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;

●	results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;

●	mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;

●	the potential for delays in exploration or development activities or the completion of feasibility studies;

●	risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;

●	risks related to commodity price fluctuations;

●	the uncertainty of profitability based upon our history of losses;

●	risks related to environmental regulation and liability;

●	risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;

●	risks related to tax assessments; and

●	political and regulatory risks associated with mining development and exploration; and other risks and uncertainties related to our prospects, properties and business strategy.

The forgoing list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

As used in this Quarterly Report, the terms “we,” “us,” “our,” and “Company” mean South American Gold Corp., unless otherwise indicated.

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Overview

The Company’s current focus is on the acquisition, exploration, and potential development of mining properties in in the United States, though we are also seeking mineral property interests in Colombia, Mexico, and southeastern Europe. Though no such interests for acquisition have been identified at this time. Our common stock is currently quoted over-the-counter (the “OTC QB”) under the trading symbol “SAGD”.

As a part of our business plan, we intend to seek out and acquire interests in other mineral exploration properties which, in the opinion of our management, offer attractive mineral exploration opportunities. During the fiscal years ending June 30, 2013 and a 2102 acquired mineral property interests in Arizona, Nevada and Montana; we have also begun due diligence activities with the objective of additional properties in the United States and Southeastern Europe. In the fiscal year ending June 30, 2013, we continued exploration of properties including sampling, geologic mapping and beginning to review bonding requirements for forecast exploration activities. We actively reviewed several projects presented to us. We also signed a Memorandum of Understanding in regards to a Montana property interest which as of the end of the quarter ended September 30, 2013 had not been finalized.

We are an exploration stage mining company and while our objective is to develop profitable mining operations, currently we produce no cash flow from operations. Junior exploration stage mining companies generally seek to acquire mineral properties and mineral property interests, to explore, develop or joint-venture. Value is added through exploration and discovery of the potential for commercial mineralization on properties, and by joint venturing, selling or leasing properties. Companies at our stage generally use equity or equity-type financing, with pure debt financing generally only available from producing operations or upon completion of a bankable feasibility study. We have relied in the last year on convertible debt financing, which can be highly dilutive to shareholders, in absence of other funding availability.

Our business plan is highly contingent on our ability to secure financing under acceptable terms which is not assured.

Substantially, all of our assets will be put into commercializing mining rights and mineral claims located within a limited geographical area. Accordingly, any adverse circumstances that affect these areas would affect us financially. If any adverse circumstances were to arise, we would need to consider alternatives, both in terms of our prospective operations and for the financing of our activities. Management cannot provide assurance that we will ultimately achieve profitable operations or become cash-flow positive, or raise additional debt and/or equity capital. If we are unable to raise additional capital, we will continue to experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures including ceasing operations. We may also consider entering into a joint venture arrangement to provide the required funding to acquire and explore any mineral property interests. We have not undertaken any efforts to locate a joint venture participant. Even if we determine to pursue a joint venture participant, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund the acquisition and exploration of mineral property interests. If we enter into a joint venture arrangement, we would likely have to assign a percentage of any mineral property interest we may hold to the joint venture participant.

North American Exploration and Acquisition Activities

We have commenced regular activities to locate and evaluate potential projects in North America. Initial projects under review have been in Mexico (Zactaecas region) and the United States (principally projects in Nevada, Arizona and Montana). These activities included site visits to the lease mining claims in Arizona and the Lucky Boy Silver project in Nevada, and the Baltimore Silver Mine project in Montana, which are discussed below. These efforts include reviewing historical literature, contacting property owners, compiling and reviewing information on properties, and where merited site visits and negotiations with property owners, and in addition exploration preparation for our GB Claims in Arizona. The lucky boy Silver project the company has elected tonot pursue, and the relevant mining claims were dropped.

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GB Claims – Arizona

GB 2 Gold

Leased Claims

The nine unpatented mining claims underlying the GB2 Lease cover approximately 180 acres and are located in the Black Rock Mining District of Yavapai County, Arizona. Set forth below are the claim reference numbers.

Claim Reference Numbers

BLM Recording Number			County Recording Number

GB 1	AMC	393641	8 4608	P 313
GB 3		393643	8 4608	P 315
GB 4		393644	8 4608	P 316
GB 5		393645	8 4608	P 317
GB 6		393646	8 4608	P 318
GB 7		393647	8 4608	P 319
GB 8		393648	8 4608	P 320
GB 23		393931	8 4608	P 983
GB 25		393930	8 4608	P 984

Owned Claims

The single Claim acquired by the Company has a BLM recording number of AMC 3993932 and county recording number of 84608P-982.

Location

The Black Rock Mining District is located in the southeast part of Yavapai County between the east foothills of the Bradshaw Mountains and the Agua Fria River. The following map shows the general location of the leased and owned unpatented mining claims we acquired in Yavapai County, Arizona:

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Access

The Property is readily accessed from Wickenberg, Arizona (approximately sixty five miles northwest of Phoenix, Arizona), which lies on Federal Highway 93. Wickenberg is the nearest large town that has services necessary for mineral exploration and mining. From Wickenberg, paved Constellation Highway is followed about two miles, thence sixteen miles of dirt road lead to the Property. Unimproved tracks provide access to the claim group. Road access to the east side of the Property is limited.

History

The Yavapai County area of Arizona is an area of historic gold prospecting and production activities. However, the Company is not aware of any recorded history of production from the Property underlying the Lease or the Claim.

Climate, Local resources, Infrastructure, Physiography

Climate

The climate is semi-arid with roughly 12.2 inches/year precipitation, mostly in late winter. The Property can be accessed year-round because of the mild climate, good road access, and low elevation of about 1200 meters above mean sea level.

Water Rights, Power, and Mining Personnel

The status of water rights at the Property is uncertain. The amount of water in the vicinity of the Property is adequate for exploratory drilling in the winter, but may not be adequate for mineral processing. The nearest power lines are about 16 miles distant. Mining personnel are not available locally.

The most important natural feature on the Property is tertiary sandstones on the north end of the property.

Tailings Storage Areas, Waste Disposal Areas, and Plant Sites

The Company has not identified private land adjacent to the Property or within close proximity that could be used for potential storage areas, waste disposal or processing sites. There is public land in the vicinity, but it is unknown whether permits would be granted for such uses. There is evidence of old tailings on the project which have not been sampled.

Permitting

Preliminary geological mapping, sampling, and geophysical surveys can be conducted without any permits. A Plan of Operations (“POO”) will have to be filed and approved by the Bureau of Land Management before mechanized work such as access work or drilling can be undertaken on the Property. There is no cost to file a POO with the Bureau of Land Management. Water for drilling would need to be hauled into the property according to initial site visits. Permits are often granted in a short period of time as long as they do not significantly impact existing water rights or unduly degrade riparian areas.

Further mining exploration and exploitation activities are subject to federal, state and local laws, regulations and policies, including laws regulating surface disturbance, water discharge, and the removal of natural resources from the ground and the discharge of materials into the environment. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Exploration and exploitation activities are also subject to federal, state and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of exploration methods and equipment. The Company is unable to quantify at this time the potential cost of such regulations and permitting. (see also “Risk Factors).

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Infrastructure

There is no ascertainable infrastructure on the Property at present.

No adits or trenches have been identified on the property.

Regional Geology

The Property lies on the southern margin of Arizona’s Transition Zone physiographic province. The majority of the area is underlain by Precambrian gneiss, and at the north end of district Tertiary sandstone predominate. Historical information refers to complex igneous and metamorphic host rocks in the general area.

Geology and Mineralization

The Property is characterized by the Precambrian gneiss, with the westerly part exposed hornblende diorite porphyry-type mineralization identified form initial examination of the breccias pipes #4, #5 and #6. The host rock is mostly composed of Proterozoic formations intruded by younger igneous rocks.

Metallurgical

No metallurgical testing has been conducted.

Reserves

There are no established probable or proven reserves on the Property. Our due diligence activities have been limited, and to a great extent, have relied upon information provided to us by third parties. We have not established and cannot provide any assurance that any of the properties underlying the Lease or the Claim contain adequate, if any, amounts of gold or other mineral reserves to make mining economically feasible to recover that gold or other mineral reserves, or to make a profit in doing so.

Project Exploration Plan

The project area is an early stage prospect with potential identified to date from reconnaissance exploration. The initial objective is to identify the presence of and extent of breccia pipes on the Property. This will require an initial work plan of geologic mapping, surface sampling and soil analysis, after which a more comprehensive plan would be developed with an objective of identifying drill targets and developing a Plan of Operation to be filed with the BLM for permission to conduct such an exploration program.

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During 2013, exploration efforts have focused on the area adjacent to the identified breccias pipes, evaluating nearby properties for acquisition or lease, and considering potential bonding requirements for a drilling plan. Initial summary maps were prepared, and some surface sampling was conducted on a limited basis. Surface sampling was conducted and results considered positive to merit further exploration. However bonding requirements may preclude the Company drilling until additional financing is put in place.

We estimate the initial work plan described above to require an estimated five thousand dollars ($5,000) for geological consulting, travel expenses, and sampling analysis costs. The Company is reviewing the cost of providing necessary bonding for the project, and due to limited finances will consider in the upcoming fiscal year seeking a joint venture partner or selling the project while retaining a net smelter return. The Company is actively considering joint-ventures or a sale of the project while retaining a Net Smelter Return and looking upon effecting such a transaction while looking for additional land position in the area.

Lucky Boy Silver Project - Nevada

In December 2011, we staked five unpatented mining claims in the Walker Lane Mineral Belt in western Nevada which we are referring to as the “Lucky Boy Silver Project”.

In connection with our consideration of whether to stake these unpatented mining claims, we conducted a diligence review of the Lucky Boy Silver Project. The description of the Lucky Boy Silver Project contained herein is the product of our due diligence from an initial site visits conducted in December 2011 and certain historical information publicly available which we have not been able to independently verify. Further description of the project may be found in our Annual Report on Form 10-K for the year ended June 30, 2013.

Land Status

We staked the following five unpatented mining claims in December 2011 covering approximately 100 acres of the Lucky Boy Silver Project:

Claim	BLM Recording No.

LB#1	NMC 1062491
LB#2	NMC 1062492
LB#3	NMC 1062493
LB#4	NMC1062494
LB#5	NMC 1062495

The Company was unsuccessful at acquiring mineral property rights to adjacent patented land in the fiscal year ending June 30, 2013. The Company forfeited these claims in the quarter ended September 30, 2013.

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Baltimore Silver Mine

On August 6, 2012, the Company entered into a binding Memorandum of Understanding (the “Agreement”) with Western Continental, Inc. (“Western”) to lease with option to purchase three patented mining claims ( the “Baltimore Silver Mine”) subject to a definitive agreement to be signed within ninety days, with an effective lease date of August 3, 2012. Our Current Report on Form 8-K filed August 9, 2012 provided property information and is incorporated herein by reference, as is our recently filed 10k report for the period ending June 30, 2013.

Western and the Company agreed to a Definitive Agreement (“the Agreement”) to Lease with Option to Purchase the Baltimore Silver Mine. The Company effected the Agreement September 5, 2012. The lease will be for a term of ten years beginning August 2, 2012, and may be extended for an additional 15 years with a payment of $100,000 at any time. During the term of this lease, the Company will be responsible for the payment of any property taxes, indemnify Western for any and all activities the Company conducts on the property, and secure all required permits and operating licenses for the Company activities on the property. The lease payment will be $10,000 per year in cash payments, which may be paid in restricted stock as the Company’s option provided such restricted stock has a market bid price in excess of $20,000 for the 20 days average bid price for the stock prior to payment, and a quarterly cash payment of $500 per quarter. Payment will be on July 31st of each year beginning in 2013.

The Company will pay a production royalty of all minerals mined from the property in the form of a Net Smelter Return to Western of 3%. The Company will have for the term of this agreement an option to purchase the property free and clear of any lien or encumbrance in the amount of $500,000 at which time the lease would terminate and no royalty would be due afterwards from the property. Should the Company cause to be issued a property report meeting standard industry guidelines indicating probable or proven reserves in excess of two million ounces of silver on the property, Western shall receive an additional $30,000 in cash or restricted shares valued as described above, within 30 days of publication of such report. The Company has issued 10,000,000 shares of its restricted common stock to Western. The Company will also pay $25,000 in cash or restricted stock, valued at the ten day average bid price for the stock, between January 1, 2013 and July 1, 2013. The Company is currently negotiating and amendment and has not received notification of default as a result of these discussions.

Description of Property

Land Status

The property consists of three patented mining claims covering approximately 60 acres.

Name of Claim	Mineral Survey #

Last Hope	9689
Baltimore	1540
Mona	9689

The Company has also staked two unpatented claims as part of the project, thus the project as a whole contains approximately 100 acres.

Location

The Baltimore Mine property is located in Jefferson County Montana, approximately twenty two miles northeast of Butte, MT and four miles northwest of Boulder, MT. Coordinates are Section 7, Township 6 N, Range 4W, Jefferson County, Montana. The Company is collating information and preparing general maps on the project.

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Access

Access is generally from Boulder by four miles of unimproved county road thence along the Boomerang Creek Road.

Climate and Physiography

The climate is relatively temperate allowing work generally all year around. The mine is on the eastern slope area of Sugarloaf Mountain, with ridges one thousand foot above the main valley. Elevations on the property range from 6,250 feet on ridge top to 5,800 feet above sea level near the Baltimore Mine. Vegetation consists of mostly sage but stands of conifers are common on the north slopes.

Local Resources

There are sufficient local resources for general material and supplies, and general labor. Electric power lines are within a mile of the property and water supply appears adequate for the property, though an assessment will be required for water supply for expanded drilling programs and future potential milling requirements.

Geology

The geology of the area is dominated by the monzonites of the Butte Batholith intruding into the older Elkhorn volcanics, consisting of green-gray welded tuffs and sites. East-westerly striking pyrite-galena bearing quartz veins have been deposited along or near to fault or shear zones with some Scricitic alteration. The Baltimore shear or alteration zone can be traced can be traced over five thousand feet on the surface.

Metallurgy

The Company has no metallurgical tests relating to the property, or historical information as to recoveries of metal from ore formerly produced.

Reserves and Mineralized Material

There are no established reserves or mineralized material on the property according to available information on the project.

History and Historical Information on the Property

The following information has been provided by independent sources not been independently verified by the Company but provided for general informational purposes, and it should not be assumed that prior production results are an indication of potential future results.

The mine apparently was discovered in the nineteenth century with regular shipments ore reported in 1903 by lessees, and two thousand feet of workings. In 1907, it was reported the mine had six adits and a 140 foot shaft. In 1912, 60 men were employed at the mine, and it was extended an additional six hundred feet. By 1935 the underground workings were estimated at three thousand feet of crosscuts and drifts, and with tunnels. In 1960 it was reported that the mine had produced 18,148 tons of ore which yielded 1,734 ounces of gold, 275,489 ounces of silver, and 271,266 pounds of copper, 1,273,965 pounds of lead and 280,750 pounds of zinc. Past production is no indicator of future production potential which can only be determined through additional information on the property.

Limited sampling was conducted on the property in 1966, 1979, and in 1989, a 4,985 foot drilling program was conducted on the property. The Company is reviewing assays from these programs and working to correlate to available assay maps and considers that data contained as encouraging further exploration.

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Development Work on the Property

The underground workings of the property include six tunnels reported by 1960 and a shaft at a vertical interval of four hundred feet, and three thousand feet of underground workings. Prior operator reports indicates that four of these tunnels the Hope Tunnel, Tunnel No. 4, 5, and 6,were evidently designed to explore the northeastern vein structure of the property.

The Company is considering a budget for rehabilitation of the Portals to gain further underground access.

Exploration Plan

The Company’s initial plans include compiling and reviewing all historical information on the property, and conducting initial site visits to determine costs and schedules for geological mapping, and status of the underground workings, and determining the optimum exploration plan based on this initial work. Our exploration plan will focus on confirming historic grades, and targeting areas that may yield commercial grades and sufficient tonnages to justify rehabilitation of underground workings and drilling to delineate potential ore reserves. This preliminary assessment will consider initial approximate cost estimates including the availability of any regional milling facilities. The Company estimates a budget of $5,000 to $50,000 may be required in initial stages of exploration.

We have begun our Phase I exploration which has included a thorough review of the current status of access to the tunnels ad underground workings, having a professional geologist and a mining engineer work on the property. We have completed an initial survey of the dump material, and review of the historical literature. Exploration objectives include (a) further determination of the economics of processing the dump material (b) rehabilitation work to gain access further underground to conduct channel sampling and determining drill targets (c) detailed geologic mapping. We believe that while some potential is in identifying mineralized areas former mining with limited technology may have missed that there may be much deeper exploration targets to be tested form underground or surface drilling. We also intent to prepare the necessary plan of operations for the unpatented portion of the project, and consider applications for any state mining permits.

Summary Exploration Plans

Exploration work continues to advance knowledge of the areas, conduct surveying and geologic mapping activities, determine prime areas for soil sediment sampling and re-sampling prospects pits we believe present. Our primary objective during Phase I exploration is identifying drill targets, preparing logistical arrangements for a drilling plan, begin assembling data necessary for a Plan of Operations to be submitted to the BLM, which has been submitted and preparation for data to support our subsequent applications for regulatory approval of exploration activities, and review data of prior exploration in the area along with field work to verify historical data. We plan in the second quarter to expand these activities. Our Phase II exploration phase, subject to results and timing of the completion Phase I exploration and regulatory approvals. We are forecasting subject to capital availability and timing of regulatory approvals required to explore in the area, a company budget of approximately $240,000 for our projects over the next 18 months. We also are actively considering projects for acquisition in Mexico in addition to the United States and Colombia, and expect general due diligence, exploration and initial acquisition expenses over the next 18 months at $120,000, for a total operating budget of $360,000 over 18 months, subject to availability of capital, permits and recommendations of our technical staff and consultants.

Based on initial field work at the Baltimore Silver Mine has been sufficiently positive to date that management has designated this project as our main project for the current period. The Company is also conducting due diligence to acquire new mineral property interests in its area of geographic focus.

Our current cash on hand is insufficient to complete any of the planned exploration activities and the full implementation of our planned exploration program is dependent on our ability to secure sufficient financing and the necessary permits. We can provide no assurance that we will secure sufficient financing or that any required permits will be approved. We are currently in negotiations with the property owner about a modification of terms, and considering various options to finance the next steps in our exploration process.

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New Light Project

New Light Mine - Description of the Property

Land Status

Effective January 22, 2012, the Company leased from a private party two unpatented claims covering a significant portion of the former New Light Mine. The lease covers:

BLM recording numbers OMC 169670 and 169671

County recording numbers 2121100607 and 2121100608

Location

The property is situated in the Slate Creek Mining District, Section 27, T38N, R17E, in Whatcom County, Washington.

We have not finished detailed mapping on the property.

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Access and Elevation

The elevation of the New Light property area ranges from 5,300 to 6,900 feet.

The Slate Creek Mining District is approximately 16 miles west of Mazama. From Mazama on SR 20, proceed northwest past the Lost River Resort Airport to USFS road 5400, which climbs approximately 6 miles to Harts Pass; it then proceeds downgrade on Slate Creek Road approximately 2.4 miles to the intersection with a road following Benson Creek northerly past a locked gate. The SR 20 road may be closed in winter due to weather conditions.

Climate and Physiography

Heavy snowfall can often preclude exploration work on the property. We expect there will be periods of each year during the exploration stage it may not be cost-effective to work on the property.

Local Resources

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Regional Geology

Rocks in the vicinity of the New Light mine are argillite, quartzite, conglomerate, and shale of the Earl Cretaceous Harts Pass Formation The ore was reported localized in quartz shear zones up to 5 feet wide and in a quartz-cemented breccia pipe approximately 200 feet by 100 feet wide and 3,000 feet long. The breccia is offset by a major east-northeast-trending fault and several minor faults that cause considerable difficulty in tracing its continuity underground and on the surface. Contact metamorphism attributed to a diorite stock on the mine site recrystallized sandstones and shales to a hornfels-like material and played a role in formation of the breccia pipe. The breccia contains sharply angular fragments of quartzite and hornfels in the range of 1 to 4 inches long. These fragments make up about 80 percent of the rock mass; the remainder is composed of quartz-cemented veinlets 0.5 to 1 inch thick. The quartz cementation contains argentite, chalcopyrite, pyrite, galena, and free gold.

The state of Washington report indicates extensive sampling of the breccias by prior operators gave indications of gold and silver, and analysis of mill concentrate samples showed finely divided sooty grains of platinum. This information is included as historical in nature and which the Company has not been verified through sampling and assays by the Company.

Metallurgy

Flotation concentrates were reported shipped to the Cominco Ltd. smelter at Trail, B.C. It has been reported that a grab sample taken from the tailings exceeded maximum levels listed in the Model Toxics Control Act; additional metallurgical tests will be necessary to determine whether potential compliance issues may exist.

The Company has not conducted metallurgical tests and there are no estimates of percentage recoveries in from prior production.

Permitting

We have not reviewed permitting requirements but the Company expects permitting the property may be time-consuming and costly.

Reserves and Mineralized Material

We have not established reserves or mineralized material on the property.

History and Historical Information on the Property

The above and following information has been provided by outside sources has not been independently verified by the Company but is provided for general informational purposes, and it should not be assumed that prior production results are an indication of potential future results. The state of Washington has published through its department of geology a report on the mine.

The New Light Mine was a former producing mine from the Slate Creek Mining District. All of the former production in the area occurred on what is now unpatented land administered by the U.S. Forest Service lying within the Wenatchee-Okanogan National Forest, in which the claims we lease are located.

During the years 1895 through 1935 the mine was owned by several mining companies which mined gold, developed 8000 feet of underground workings, and constructed a ten-stamp mill. In 1935 a 50 ton per day mill was constructed at the site, and underground development work had reached 13,150 feet of underground workings. During the period 1942 to 1965 mill capacity was increased to 120 tons per day and diamond drilling was conducted. In the 1980s an avalanche destroyed much of the above-ground infrastructure.

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Development Work on the Property

It has been reported that 13,150 feet of underground workings were developed on the property

Exploration Plan

The Company had begun a review of historical material on the property, which will include compiling the information, and reviewing guidance on developing an exploration plan. The exploration plan will include geologic mapping, surveying, review of environmental and permitting requirements, determining manner and cost of access to underground workings, determining whether our area of interest needs to be expanded, and review where available of former production records. It is apparent bonding requirements may be significant which is under consideration, and the company may seek a partner or sale of the project.

Southeastern Europe

The company has no mineral property interests in southeastern Europe, but has retained an exploration geologist who has been conducting due diligence to identify target prospects for potential acquisition

Results of Operations for the Three Months Ended September 30, 2013 and 2012

Revenues

We have not generated any revenues from operations since our inception. We do not anticipate earning revenues until such time that we are able, if at all, to locate a commercially exploitable mineral deposit and either enter into commercial production or sell any mineral properties we may acquire.

Operating Expenses

We incurred operating expenses in the amount of $50,151 for the three months ended September 30, 2013, as compared to operating expenses of $82,627 for the three months ended September 30, 2012. The decrease in our operating expenses relates to decreased expenditures associated with a reduction in an impairment loss recorded in the prior year associated with a mining lease.

We incurred exploration costs of $6,000 during the three months ended September 30, 2013, as compared to $15,272 for the three months ended September 30, 2012. The decrease in our exploration costs relates to decreased expenditures associated with performing initial diligence of the property underlying the Mining Concessions that was the subject of the IKE-10421 concession application for which Kata, through its subsidiary, had entered into an agreement to acquire 85% interest, and reduced site work as company evaluated results from the first six months of 2013.

We incurred general and administrative expenses of $44,088 for the three months ended September 30, 2013, compared to $38,355 for the three months ended September 30, 2012. The increase relates to increases in accounting, consulting, and legal fees.

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Other Income (Expenses)

For the three months ended September 30, 2013, the Company recorded interest expense of $32,189 compared to $22,082 for the three month period ended September 30, 2012 which was comprised of accrued interest on the convertible note payable as the balance of convertible notes payable increased compared to the prior year. For the three months ended September 30, 2013, the Company recorded a loss on derivative liability of $5,054, as compared to a loss on derivative liability of $20,323 for the three months ended September 30,2012. These amounts are the result of remeasuring the derivative liabilities at September 30, 2013 and at September 30, 2012.

Net Loss

As a result of the above, for the three months ended September 30, 2013, we reported a net loss of $78,894, as compared to a net loss of $125,032 for the three months ended September 30, 2012. The decrease in our net losses was primarily attributable to decreased operating expenses incurred during the reporting period, which is described above.

Liquidity and Capital Resources

At September 30, 2013, we had cash of $53 (June 30, 2013 $118) and a working capital deficit $449,152 (June 30, 2013 – $446,986).

We anticipate spending approximately $10,000 in general and administrative expenses per month for the next twelve months, for a total anticipated general and administrative expenditures $120,000. These anticipated expenditures are closely related to the level of activities we have contemplated in our business plan. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees, general management and office expenses. General support activities, additional organizational supervision of subsidiaries in the process of acquisition or contemplated to be acquired, and general management costs contribute to the forecasted increase in general and administrative expenditures. We currently forecast ongoing exploration activities at $300,000 for the upcoming 18 months. We are forecasting these expenses subject to capital availability and timing of regulatory approvals required to explore in the area.

Our current cash on hand is insufficient to be able to fully implement our business plan as planned. Accordingly, we must obtain additional financing in order to meet our projected property activities and maintain operations. We believe that debt financing will not be an alternative for funding exploration as we have limited tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of additional shares of our common stock. We anticipate seeking additional funding in the form of equity financing from the sale of our common stock, but cannot provide any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our exploration program or maintain operations for any period of time. In the absence of such financing, we will not be able to commence our exploration program may be forced to cease operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.

We may consider entering into a joint venture arrangement to provide the required funding to explore the properties underlying our mineral property interests. We have not undertaken any efforts to locate a joint venture participant. Even if we determine to pursue a joint venture participant, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of the properties underlying our mineral property interests. If we enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral property interests to the joint venture participant.

Net cash used in operating activities for the three months ended September 30, 2013 was $9,585, as compared to net cash used in operating activities of $46,282 for the three months ended September 30, 2012. Our net loss of $78,894 for the three months ended September 30, 2013, was the primary reason for our negative operating cash flow, which was partially offset by an increase in accounts payable of $43,372.

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Net cash used in investing activities for the three months ended September 30, 2013 was $-0- as compared to net cash used in investing activities of $1,250 for the three months ended September 30, 2012. Net cash provided in financing activities for the three months ended September 30, 2012 related to proceeds from a convertible note issued for $47,500 compared to $9,500 in a loan received for the period ended September 30, 2013.

Off Balance Sheet Arrangements

We do not have any off-balance sheet debt, nor did we have any transactions, arrangements, obligations (including contingent obligations) or other relationships with any unconsolidated entities or other persons that may have material current or future effects on financial conditions, changes in the financial conditions, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses.

Going Concern

We have incurred net losses attributable to the Company for the period from inception on May 25, 2005 to September 30, 2013 of $5,117,729 and have no source of revenue. The continuity of our future operations is dependent on our ability to obtain financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. These conditions raise substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

Our financial statements have been prepared in conformity with USGAAP. For a full discussion of our accounting policies as required by USGAAP, refer to our Annual Report on Form 10-K for the year ended June 30, 2013. We consider certain accounting policies to be critical to an understanding of our financial statements because their application requires significant judgment and reliance on estimations of matters that are inherently uncertain. The specific risks related to these critical accounting policies are unchanged at the date of this report and are described in detail in our Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2013. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Mr. Raymond DeMotte, and our Chief Financial Officer, Mr. Cristian Gomez. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2013, our disclosure controls and procedures are not effective. Our conclusion is based primarily on the material weakness in internal control over financial reporting which was disclosed in our Annual Report on Form 10-K for the year ended June 30, 2013, which we believe primarily stems from the fact that we have limited accounting and financial staff and the lack of a formal accounting manual..

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

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Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2013, no changes other than those made in conjunction with certain remediation efforts described below, were identified to our internal control over financial reporting that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Remediation of Material Weaknesses

As discussed above, as of September 30, 2013 and June 30, 2013, we identified material weaknesses in our internal control over financial reporting due to the occurrence of a significant number of out-of-period adjustments and the magnitude of such that were identified during the financial statement closing process for those periods which we believe primarily stems from the fact that we have limited accounting and financial staff who do not possess the requisite qualifications. We are currently addressing these material weaknesses as described below.

We are currently redesigning our accounting processes and related controls to provide greater assurance that our accounting and related financial disclosures can be completed accurately and in a timely manner. We are also in the process of developing sufficient written policies and procedures.

Management, in coordination with the input, oversight and support of the audit committee of our board of directors, has identified the above-mentioned measures to strengthen our disclosure controls and procedures and internal control over financial reporting and to address the material weaknesses described above.

If the remedial measures described above are insufficient to address any of the identified material weaknesses or are not implemented effectively, or if additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future. Among other things, any unremediated material weaknesses could result in material post-closing adjustments in future financial statements.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not Applicable to Smaller Reporting Companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company issued 67,938,632 common shares to a private third-party in settlement of $32,500 in convertible notes. These shares were issued pursuant to the exemption described below, no commissions or finder’s fees were paid, and were not accompanied by advertising.

Exemption From Registration Claimed

All of the above sales by the Company of its unregistered securities were made by the Company in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). All of the individuals and/or entities that purchased the unregistered securities were primarily existing shareholders, known to the Company and its management, through pre-existing business relationships, as long standing business associates and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

None.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

Exhibit Number		Description


31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS *		XBRL Instance Document
101.SCH *		XBRL Taxonomy Extension Schema Document
101.CAL *		XBRL Taxonomy Extension Calculation Linkbase Document
101 LAB *		XBRL Extension Labels Linkbase Document
101.PRE *		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF *		XBRL Taxonomy Extension Definition Linkbase Document

* In accordance with SEC rules, this interactive data file is deemed “furnished” and not “filed” for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under those sections or acts.

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SIGNATURES

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

Date: November 18, 2013

SOUTH AMERICAN GOLD CORP.,

a Nevada corporation

By: /s/ Raymond DeMotte

Raymond DeMotte

President & Chief Executive Officer

By: /s/ Cristian Gomez

Cristian Gomez, Chief Financial Officer

(Principal Accounting Officer)

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SOUTH AMERICAN GOLD CORP. - FORM 10-Q - November 18, 2013

Attached files

SOUTH AMERICAN GOLD CORP. Reports