UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2014

 

OR

 

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: 001-34996

SPARTAN GOLD LTD.

(Exact name of registrant as specified in its charter)

 

Nevada			27-3726384
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)
122 Fourth Ave., Suite 103 Indialantic, FL			32903
(Address of principal executive offices)			(Zip Code)

 

(480) 477-1585

(Registrant’s telephone number, including area code)

 

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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  x  No  o

 

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).       Yes  x  No  o

 

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 definition of “large accelerated filer”, “accelerated filer” and “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.      Yes o  No  x

 

As of November 17, 2014 the registrant had 42,335,944 shares of its Common Stock, $0.001 par value, outstanding.

 

 

SPARTAN GOLD LTD.

FORM 10-Q

SEPTEMBER 30, 2014

INDEX

 

PART I – FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013	3
	Consolidated Statements of Operations for the Three and Nine months Ended September 30, 2014 and 2013	4
	Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2014 and 2013	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1.A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	20
SIGNATURES		21

   

 

 

PART I – FINANCIAL INFORMATION

 

Item 1.    Financial Statements

 

 

SPARTAN GOLD LTD.

Consolidated Balance Sheets

 

 

		September 30,				December 31,
		2014				2013
		(unaudited)
ASSETS
Current assets:
Cash		$	2,018			$	328
Total current assets			2,018				328
Property and equipment, net			–				254
Total assets		$	2,018			$	582
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	256,529			$	212,541
Accrued expenses (Note 3)			433,704				271,065
Due to related parties (Note 3)			204,404				143,585
Total current liabilities			894,637				627,191
Commitments and contingencies (Note 5)
Stockholders' deficit (Note 4):
Common stock $.001 par value 1,000,000,000 shares authorized, 42,335,944 shares issued and outstanding, at September 30, 2014 and December 31, 2013			42,336				42,336
Common stock issuable, nil and 2,500,000 shares issuable at September 30, 2014 and December 31, 2013, respectively			–				250,000
Common stock subscriptions receivable			–				(250,000	)
Additional paid-in capital			18,344,364				18,344,364
Deficit accumulated from prior operations			(208,131	)			(208,131	)
Deficit accumulated during the exploration stage			(19,071,188	)			(18,805,178	)
Total stockholders' deficit			(892,619	)			(626,609	)
Total liabilities and stockholders' deficit		$	2,018			$	582

 

See accompanying notes to consolidated financial statements.

 

 

 

SPARTAN GOLD LTD.

Consolidated Statements of Operations

(unaudited)

                   

 

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
Operating expenses:
General and administrative (Note 3)		$	76,318			$	50,605			$	213,370			$	194,879
Mineral property expenditures (Note 2)			42,720				10,000				42,720				10,000
Mineral property exploration costs (Note 2)			9,920				11,900				9,920				4,060
Net loss		$	(128,958	)		$	(72,505	)		$	(266,010	)		$	(208,939	)
Net loss per share - Basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.00	)
Weighted average number of shares outstanding during the period - Basic and diluted			42,335,944				42,157,140				42,335,944				42,144,552

 

See accompanying notes to consolidated financial statements.

  

 

SPARTAN GOLD LTD.

Consolidated Statements of Cash Flows

(unaudited)

 

		For the Nine Months Ended
		September 30,
		2014				2013
Cash flows used in operating activities:
Net loss		$	(266,010	)		$	(208,939	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation			254				1,522
Changes in operating assets and liabilities:
Accounts payable			43,988				(28,658	)
Accrued expenses			162,639				142,639
Net cash used in operating activities			(59,129	)			(93,436	)
Cash flows from financing activities:
Advances from related parties			71,739				89,400
Payments to related parties			(10,920	)			(6,000	)
Net cash provided by financing activities			60,819				83,400
Net increase (decrease) in cash			1,690				(10,036	)
Cash at beginning of period			328				11,137
Cash at end of period		$	2,018			$	1,101
Supplemental disclosure of cash flow information:
Cash paid for interest		$	–			$	–
Cash paid for taxes		$	–			$	–
Non-cash investing and financing activities:
Cancellation of stock subscriptions received for the sale of 2,500,000 common shares
Common stock issuable		$	(250,000	)		$	–
Common stock subscriptions receivable		$	250,000			$	–
Stock issued for financing fees
Common stock		$	–			$	250
Additional paid in capital		$	–			$	12,250
Common stock issuable		$	–			$	(12,500	)

 

See accompanying notes to consolidated financial statements.

 

SPARTAN GOLD LTD.

Notes to Consolidated Financial Statements

September 30, 2014

(unaudited)

 

Note 1 – Nature of Business, Presentation, and Going Concern

 

Organization

 

Spartan Gold Ltd., (the “Company”), was incorporated in Nevada on September 6, 2007.

 

On May 21, 2010, the Company experienced a change in control and the Company abandoned its original plan of developing and operating biodiesel facilities to concentrate on gold exploration.

 

On July 8, 2010, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Spartan Gold Ltd. The Company now operates as a U.S. based junior gold exploration company. 

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

 

These unaudited consolidated financial statements should be read in conjunction with the 2013 annual financial statements included in the Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on April 15, 2014.

 

Exploration Stage Company

 

As of July 8, 2010, the Company became an “exploration stage company” as defined in the SEC Industry Guide 7, and was subject to compliance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities”. On June 10, 2014 the FASB issued authoritative guidance which eliminates the concept of a development stage entity. The incremental reporting requirements for presenting the development stage operations and cash flows since inception will no longer apply to development stage entities. The amendments of Topic 915 are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2014. The Company has elected early adoption of this guidance effective with the filing of its prior quarterly report. Deficits accumulated prior to becoming an “exploration stage company” has been separately presented in the accompanying consolidated balance sheets.

 

Going Concern

 

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $266,010 for the nine months ended September 30, 2014 and has incurred cumulative losses since inception of the exploration stage of $19,071,188. The Company has a stockholders’ deficit of $892,619 at September 30, 2014.  These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate revenues, its ability to continue to raise investment capital, and to implement its business plan. No assurance can be given that the Company will be successful in these efforts.

 

These unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

SPARTAN GOLD LTD.

Notes to Consolidated Financial Statements

September 30, 2014

(unaudited)

 

Note 2 – Mineral Properties

 

A summary of costs incurred by property is as follows:

 

		Poker Flats				Ziggurat
		Property				Property				Total
Nine Months Ended September 30, 2014
Property expenditures		$	42,720			$	–			$	42,720
Exploration costs			9,920				–				9,920
		$	52,640			$	–			$	52,640
Nine Months Ended September 30, 2013
Property expenditures		$	–			$	10,000			$	10,000
Exploration costs			2,940				1,120				4,060
		$	2,940			$	11,120			$	14,060

 

Poker Flats Property

 

On August 22, 2014, the Company entered into an Option and Property Acquisition Agreement (the “2014 Agreement”) between Mexivada Mining Corporation (“MMC” or the “Optionor”) and Sphere Resources, Inc. (“Sphere”). The 2014 Agreement replaces a previous Option and Mining Claim Acquisition Agreement between the parties entered into on December 20, 2010 and amended on March 28, 2011 (the “First Amendment”) and further amended on December 22, 2011 (the “Second Amendment”). The previous agreement expired on December 20, 2013 due to the Company not meeting its obligations under the agreement.

 

MMC is the owner of a 100% interest in certain mining claims located in the Carlin Mining District in Elko County Nevada, known as the “Poker Flats” Property, subject to a 3% Net Smelter Royalty (“NSR”) on mineral production. Under the 2014 Agreement, the Company and Sphere had the following rights and obligations:

 

·

The Company has paid to MMC $10,000 upon executing the Option Agreement for its 2013 mining lease obligation under the previous agreement;

·

The Company will pay a one-time option payment to MMC of $10,000 on or before October 31, 2014 (unpaid);

·

The Company is obligated to pay the $10,000 annual lease payment to the owner beginning December 3, 2014;

·

Sphere is required to issue certain shares of common stock to MMC;

·

An initial 51% interest in the property will be earned upon the Company incurring and paying new exploration expenditures of $300,000 on or before December 31, 2015;

·

An additional 24% interest in the property will be earned upon the Company incurring additional exploration expenditures of $250,000 and completing and delivering to the Optionor an industry-standard mining feasibility study on or before December 31, 2017; and

·

If and when the Company elects to sell and convey all or a portion of its interest in the Poker Flats Property, the Company shall have the right to purchase up to 75% and MMC shall have the right to purchase up to 25% of the 3% NSR for $1,000,000 per NSR percentage point.

 

Under the terms of the 2014 Agreement, Sphere is obligated to issue 750,000 common shares of Sphere within 60 days of Spartan acquiring a 51% interest in the Poker Flats Property, and 750,000 common shares of Sphere within 60 days of Spartan acquiring a total of a 75% interest in the Poker Flats Property.

 

SPARTAN GOLD LTD.

Notes to Consolidated Financial Statements

September 30, 2014

(unaudited)

Note 2 – Mineral Properties (Continued)

 

Poker Flats Property (Continued)

 

On August 23, 2014, in anticipation of this potential issuance of common shares by Sphere, the Company and Sphere have agreed as follows:

 

·

The Company grants, conveys and assigns to Sphere a 2% NSR, on its share of mineral production from the Poker Flats Property if and when there is production from the Poker Flats Property. This 2% NSR granted by the Company to Sphere on the Company's share of production from the Poker Flats Property is in addition to the 3% NSR retained by the owner of the mining claims leased to MMC, subject to the 2014 Agreement;

·

If and when the Company elects to sell and convey all or a portion of its interest in the Poker Flats Property, the Company shall have the right to purchase up to 100% of the 2% NSR granted, conveyed and assigned by the Company to Sphere on its share of production from the Poker Flats Property, under terms to be agreed upon by the Company and Sphere;

·

If the Company fails or is unable to exercise the option to acquire the Poker Flats Property under the 2014 Agreement, or the Company elects not to purchase the NSR granted, conveyed and assigned to Sphere, before selling and conveying the Company’s interest in the Poker Flats Property to an independent third party, such NSR held by Sphere, applicable to mineral production from the particular property, will terminate and be of no further force or effect. This provision does not apply to the 3% NSR on mineral production from the Poker Flats Property retained by the owner of the mining claims subject to the 2014 Agreement;

·

Within 60 days upon obtaining a 51% interest in the Poker Flats Property, the Company agrees to issue 250,000 common shares of the Company to Sphere and within 60 days upon obtaining a total of a 75% interest in the Property, the Company agrees to issue an additional 250,000 common shares of the Company to Sphere; and

·

Sphere agreed that they will not pursue acquisition of other mining properties or mining development opportunities within two miles of the current boundary of the Poker Flats Property.

 

On April 1, 2011, the Company entered into a Mining Lease and Agreement (the “Agreement”) with K & K Tomera Lands, LLC, a Nevada Limited Liability Company (“Tomera”). The Agreement pertains to the Poker Flats property located within the Carlin Mining District in Elko County, Nevada.

 

Under the terms of this Agreement, the Company agreed to pay Tomera a of 5% NSR, as defined in the Agreement. In order to maintain this Agreement in effect, the Company shall pay to Tomera Advance Minimum Royalty (“AMR”) payments. AMR payments are calculated based on the net mineral acres leased on an annual basis. The Company paid, at the execution of the Agreement, $30,800 for the first year of the lease based on the 1,760 net mineral acres leased at $17.50 per acre. Future AMR payments, on a per net mineral acre basis, are: $17.50 per acre on the first and second anniversaries of the Agreement, $21.00 per acre on the third and fourth anniversaries, $24.50 per acre on the fifth and sixth anniversaries, and $28.00 per acre on the seventh and any subsequent anniversaries. The Company paid $30,800 and $30,800 during the years ended December 31, 2013 and 2012, respectively, and $nil during the nine months ended September 30, 2014. At September 30, 2014, the Company has accrued $36,960 payable to Tomera for these AMR payments. The term of the Agreement is for a period of ten years. The Company has the option to extend the initial term for an additional ten year period.

 

In connection with the Agreement, the Company entered into a Surface Access and Use Agreement on April 1, 2011 with Kevin Tomera, a Nevada resident, which grants the Company general rights of ingress and egress over certain surface tracts and the right to use the surface tracts in conduct of its mineral exploration, development and mining activities. Additionally, Kevin Tomera has granted the Company an option to purchase portions of the surface tracts. Under the terms of the Surface Access and Use Agreement, the Company agrees to pay Kevin Tomera annual rental of $4.50 per acre for each acre of land included in the surface tracts. The Company paid $7,260 and $5,760 during the years ended December 31, 2013 and 2012, respectively, and $nil during the nine months ended September 30, 2014. At September 30, 2014, the Company has accrued $5,760 payable to Kevin Tomera for these surface rents. The term of the Agreement is for ten years. 

 

 

SPARTAN GOLD LTD.

Notes to Consolidated Financial Statements

September 30, 2014

(unaudited)

 

Note 2 – Mineral Properties (Continued)

 

Ziggurat Property

 

On December 27, 2010, the Company entered into an Option and Mining Claim Acquisition Agreement (the “Option Agreement”) between MMC and Sphere.  The agreement was amended on March 28, 2011 (the “First Amendment”) and further amended on December 22, 2011 (the “Second Amendment”).

 

MMC is the owner of a 100% interest in certain mining claims in Nye County, in the State of Nevada, known as the “Ziggurat” Property. Resulting from the Agreement and First and Second Amendments, the Company and Sphere had the following rights and obligations:

 

·

Issuance of 393,125 shares of common stock (issued at a fair value of $7,076,250) and 41,875 shares of common stock (issued at a fair value of $753,750) to Sphere and MMC, respectively on execution of the amended Option Agreement;

·

Issuance of a warrant to purchase 193,100 shares (recorded at a fair value of $1,853,760) and a warrant to purchase 41,875 shares (recorded at a fair value of $402,000) to Sphere and MMC, respectively, with an exercise price of $20.00 per share until March 28, 2016;

·

The Company paid to MMC $25,000 upon executing the Option Agreement;

·

The Company paid to MMC $35,000 on May 27, 2011;

·

The Company paid to MMC $25,000 on or before the second anniversary date of the Agreement;

·

The Company was to pay to MMC $25,000 on or before the third anniversary date of the Agreement;

·

An initial 51% interest in the property will be earned upon incurring exploration expenditures of $1,500,000 on or before the third anniversary date of the agreement, all of which will be paid by the Company;

·

An additional 24% interest in the property will be earned upon incurring additional exploration expenditures of $1,000,000 and completing and delivering to the Optionor an industry-standard mining feasibility study on or before the fifth anniversary date of the agreement;

·

Sphere is required to issue certain shares of common stock to MMC;

·

The Company granted a 2.5% NSR for any and all products that are produced from the Ziggurat mining claims to Sphere and a .5% NSR to MMC;

·

If and when the Company elects to sell and convey all or a portion of its interest in the Ziggurat Property, the Company shall have the right to purchase up to 100% of the 2.5% NSR granted, conveyed and assigned by the Company to Sphere on its share of production from the Ziggurat Property, under terms to be agreed upon by the Company and Sphere.

 

Further, the Company paid $117,250 and $16,750 (not paid) to Sphere and MMC, respectively, of which 50% is to be paid within 60 days after the effective date of a S-1 to be filed with the SEC and the remainder after such date of the Company obtaining financing of $2,000,000. As of September 30, 2014, the Company has neither filed the S-1 nor obtained such financing.

 

As of December 27, 2013 (the third anniversary date), the Company had incurred $213,659 of exploration and property expenditures on the property. On December 30, 2013, the Company received a letter from MMC stating that the agreement was in default and thus was terminated. Accordingly, the Company has not earned the initial 51% interest pursuant to the terms of the Option and Claim Acquisition Agreement.

 

 

SPARTAN GOLD LTD.

Notes to Consolidated Financial Statements

September 30, 2014

(unaudited)

 

Note 3 – Related Party Transactions

 

As of September 30, 2014 and December 31, 2013, the Company owed a total of $150,585 and $130,585, respectively, to Sphere. The advance is included in due to related parties and is unsecured, has no repayment date, and does not bear interest.

 

As of December 31, 2013, the Company owed its President and Director a total of $13,000. During the nine months ended September 30, 2014, the Company received $36,369 of additional advances and repaid $1,000, leaving a balance of $48,369 at September 30, 2014. The advance is included in due to related parties and is unsecured, has no repayment date, and does not bear interest.

 

During the nine months ended September 30, 2014, the Company received an advance of $700 from its Chief Financial Officer and Director. The advance is included in due to related parties and is unsecured, has no repayment date, and does not bear interest.

 

During the nine months ended September 30, 2014, the Company received advances of $14,670 from a Director and repaid $9,920, leaving a balance of $4,750 at September 30, 2014. The advance is included in due to related parties and is unsecured, has no repayment date, and does not bear interest.

 

Accounts payable at September 30, 2014 includes $40,000 (December 31, 2013 - $31,000) of amounts due to the Company’s Chief Financial Officer for services rendered and $26,054 (December 31, 2013 - $19,139) of amounts due to four of the Company’s directors for reimbursement of rent and travel expenses. Accrued expenses at September 30, 2014 and December 31, 2013 include $408,000 and $255,000, respectively, of accrued compensation for officers.

 

Note 4 – Stockholders’ Deficit

 

The Company’s authorized number of common shares is 1,000,000,000 with a $0.001 par value.

 

Warrants

 

The following table summarizes warrant transactions for the year ended December 31, 2013 and the nine months ended September 30, 2014:

 

		Number				exercise				contracted				intrinsic
		of warrants				price				term (years)				value
Outstanding at December 31, 2012			2,499,975			$	3.84				3.80			$	–
Granted in 2013			–			$	–				–				–
Outstanding at December 31, 2013			2,499,975			$	3.84				2.80			$	–
Granted in 2014			–			$	–				–				–
Outstanding at September 30, 2014			2,499,975			$	3.84				2.05			$	–
Exercisable at September 30, 2014			2,499,975			$	3.84				2.05			$	–
Weighted Average Grant Date Fair Value						$	2.09

 

2012 Equity Plan

 

On March 28, 2012, the Company’s Board of Directors approved and adopted the Spartan Gold Ltd. 2012 Equity Incentive Plan (the “2012 Plan”) and reserved 4,750,000 shares of the Company’s common stock for issuance under the 2012 Plan to the Company’s directors, officers, consultants and other service providers.  The Plan allows for two types of grants: 1) options and 2) stock awards and stock purchase offers.

 

 

SPARTAN GOLD LTD.

Notes to Consolidated Financial Statements

September 30, 2014

(unaudited)

 

 

Note 4 – Stockholders’ Deficit (Continued)

 

2012 Equity Plan (Continued)

 

The Company has granted stock options to employees. The following summarizes option activity under the 2012 Plan for the year ended December 31, 2013 and the nine months ended September 30, 2014:

 

Common

Weighted

Shares

stock

average

available for

options

exercise

grant

outstanding

price

Balance at December 31, 2012

750,000

4,000,000

$

0.10

Options granted in 2013

–

–

–

Balance at December 31, 2013

750,000

4,000,000

$

0.10

Options granted in 2014

–

–

–

Balance at September 30, 2014

750,000

4,000,000

$

0.10

 

The following table summarizes information with respect to stock options outstanding and exercisable by employees under the 2012 Plan at September 30, 2014:

 

Options outstanding

Options vested and exercisable

Weighted

average

Weighted

Weighted

remaining

average

Aggregate

average

Aggregate

Number

contractual

exercise

intrinsic

Number

exercise

intrinsic

Exercise price

outstanding

life (years)

price

value

vested

price

value

$0.10

4,000,000

8.25

$ 0.10

$

–

4,000,000

$ 0.10

$

–

 

Note 5 – Commitments and Contingencies

 

See Note 2 – Mineral Properties.

 

As of September 1, 2012, the Company’s corporate office is leased from a company owned by its Chief Financial Officer for $1,000 per month on a month-to-month basis.

 

Note 6 – Subsequent Events

 

The Company has evaluated subsequent events through the date the financial statements were issued and filed with the SEC. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements.

 

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

 

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Form 10-Q are "forward-looking statements" regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

 

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "future," "potential," "estimate," "encourage," "opportunity," "growth," "leader," "expect," "intend," "plan," "expand," "focus," "through," "strategy," "provide," "offer," "allow," commitment," "implement," "result," "increase," "establish," "perform," "make," "continue," "can," "ongoing," "include" or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements. Our actual results could differ materially from the forward-looking statements.

 

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

 

Company Overview

 

Spartan Gold Ltd. (the "Company", “Spartan”, “we”, “us” or “our”) is a U.S. based junior gold exploration company with gold exploration and development activities centered in the Carlin-Rain Gold Trend in Nevada.

 

This region is endowed with major gold deposits operated by many of the world leaders in the mining industry. Major mining projects in the Carlin Trend are currently operated by Newmont Mining Corporation (trading on the NYSE) to the north and west of the Poker Flats prospects.  The Company also has mining interests in the northeast region of Alabama in the historical Arbacoochee Mining District. The Company is currently pursuing opportunities for several acquisition targets around the world and focusing on operational plans for current projects. The directors, management and advisers of Spartan Gold have over 90 years of combined experience in the exploration and development of global mining projects.

 

Spartan's commitment to asset growth and increased shareholder value will be sustained by the development of highly prospective projects, accelerated exploration activities and the acquisition of viable resources. Spartan has selected an international board of directors experienced in undertaking exploration, development and funding of numerous energy and minerals projects around the world.

 

Company History

 

Spartan Gold Ltd. was incorporated in Nevada on September 6, 2007 under the name Powergae, Inc. with the purpose of profitably constructing and operating biodiesel production facilities, establishing them in strategic locations, and selling the biodiesel through existing petroleum manufacturers and distributors. On September 24, 2009, the Company changed its name to Algoil, Inc. The central concept of Algoil, Inc. was making the production of biodiesel independent of its traditional sources such as soy bean, rape, sunflower seed or palm oil.

 

 

On May 21, 2010, the Company experienced a change in control. Magic Grace Ltd. (“Magic Grace”) acquired the majority of the issued and outstanding common stock of Algoil, Inc. in accordance with a stock purchase agreement by and between Andriy Kovalenko and Magic Grace. On the closing date, May 21, 2010, pursuant to the terms of the Stock Purchase Agreement, Magic Grace purchased from Mr. Kovalenko 14,290,000 (pre-split) shares of Company’s outstanding common stock for $187,500. In accordance with the agreement, all related party obligations were settled. Also on May 21, 2010, Real Challenge Group, Ltd. (“Real Challenge”) acquired 935,000 (pre-split) free-trading shares of the Company’s outstanding common stock in accordance with a stock purchase agreement by and between Andriy Kovalenko, as a duly authorized representative of the selling shareholders, and Real Challenge for $187,500.  As a result of the change in control, the Company abandoned its original plan of developing and operating biodiesel facilities.

 

On July 8, 2010, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Spartan Gold Ltd. The Company has adopted its new strategic plan of gold exploration, development and mining.

 

On July 19, 2010, the Company's Board of Directors declared a forty-to-one forward stock split of all outstanding shares of common stock. Subsequently, on August 12, 2010, Magic Grace contributed to the treasury, and the Company retired, 9,896,250 common shares of stock (395,850,000 as adjusted for the stock split). The effect of the stock split and retirement of shares increased the number of shares of common stock outstanding from 15,225,000 to 213,150,000 as of August 12, 2010.

 

On October 19, 2011, the Company issued 18,952,774 shares of its common stock to Sphere Resources, Inc. (“Sphere”) in conversion of a Secured Convertible Promissory Note totaling $379,055 (including accrued interest of $4,055). As a result of the share issuance, Sphere became the majority shareholder of the Company.

 

On November 9, 2011, the Company's Board of Directors declared a one-for-twenty reverse stock split of all outstanding shares of common stock. The effect of the reverse stock split decreased the number of shares of common stock outstanding from 632,892,868 to 31,644,658 as of November 9, 2011.

 

Plan of Operation

 

The immediate goal of Spartan’s management is to secure and augment the prospective land holdings under the Mexivada Mining Corporation (“MMC”) option agreement located in the Carlin-Rain Gold Trend in Nevada.

 

The Poker Flats property requires geological and geochemical mapping and analysis, in conjunction with geophysical mapping involving gravity and magnetic survey work, in order to better define future drill and exploration targets. Our strategy is to advance this project to the drilling stage as aggressively as prudent financing will allow and to determine the presence of gold, silver or other precious mineral reserves.

 

If we are successful in doing so, we believe we can attract the attention of the existing mining companies already operating in the area or new mining companies to either enter into development agreements with us or to acquire the project from us outright.

 

Additionally, we are currently identifying other acquisition opportunities.

Mineral Properties

 

Currently, we have an option and property acquisition agreement on the Poker Flats property in the Carlin-Rain Mining District in Nevada and own the mineral rights to one property in the northeast region of Alabama. A description of each property is summarized below:

 

Poker Flats Property

 

On August 22, 2014, the Company entered into an Option and Property Acquisition Agreement (the “2014 Agreement”) between Mexivada Mining Corporation (“MMC” or the “Optionor”) and Sphere Resources, Inc. (“Sphere”). The 2014 Agreement replaces a previous Option and Mining Claim Acquisition Agreement between the parties entered into on December 20, 2010 and amended on March 28, 2011 (the “First Amendment”) and further amended on December 22, 2011 (the “Second Amendment”). The previous agreement expired on December 20, 2013 due to the Company not meeting its obligations under the agreement.

 

MMC is the owner of a 100% interest in certain mining claims located in the Carlin Mining District in Elko County Nevada, known as the “Poker Flats” Property. Under the 2014 Agreement, the Company had the following rights and obligations:

 

·

The Company has paid to MMC $10,000 upon executing the Option Agreement for its 2013 mining lease obligation under the previous agreement;

·

The Company will pay a one-time option payment to MMC of $10,000 on or before October 31, 2014;

·

The Company is obligated to pay the $10,000 annual lease payment to the owner beginning December 3, 2014;

·

Sphere is required to issue certain shares of common stock to MMC;

 

·

An initial 51% interest in the property will be earned upon the Company incurring and paying new exploration expenditures of $300,000 on or before December 31, 2015;

·

An additional 24% interest in the property will be earned upon the Company incurring additional exploration expenditures of $250,000 and completing and delivering to Optionor an industry-standard mining feasibility study on or before December 31, 2017;

·

If and when the Company elects to sell and convey all or a portion of its interest in the Poker Flats Property, the Company shall have the right to purchase up to 75% and MMC shall have the right to purchase up to 25% of the 3% NSR on mineral production from the Poker Flats Property retained by the owner of the mining claims subject to the Poker Flats Option Agreement, for one million U.S. dollars (U.S. $1,000,000) per NSR percentage point;

 

On August 23, 2014, the Company entered into an Agreement for Grant of NSR Production Royalty and Share Issue with Sphere. Under the terms of the 2014 Agreement, Sphere is obligated to issue 750,000 common shares of Sphere within 60 days of Spartan acquiring a 51% interest in the Property, and 750,000 common shares of Sphere within 60 days of Spartan acquiring a total of a 75% interest in the Property.

 

In consideration of this potential issuance of common shares by Sphere, the parties have agreed as follows:

 

·

Spartan grants, conveys and assigns to Sphere a two percent (2%) Net Smelter Returns (NSR) Production Royalty, to be calculated in the same manner as the “Net Smelter Returns Production Royalty” defined in the 2014 Agreement, on its share of mineral production from the Poker Flats Property if and when there is production from the Poker Flats Property. This 2% NSR Production Royalty granted by Spartan to Sphere on Spartan's share of production from the Poker Flats Property is in addition to the three percent (3%) NSR Production Royalty retained by the owner of the mining claims leased to Mexivada and Area of Interest defined therein, subject to the 2014 Agreement.

·

If and when Spartan elects to sell and convey all or a portion of its interest in the Poker Flats Property, Spartan shall have the right to purchase up to one hundred percent (100%) of the two percent (2%) NSR Production Royalty granted, conveyed and assigned by Spartan to Sphere on its share of production from the Poker Flats Property, under terms to be agreed upon by Spartan and Sphere.

·

It is understood and agreed among the Parties that if Spartan fails or is unable to exercise the option to acquire the Poker Flats Property under the 2014 Agreement, or Spartan elects not to purchase the NSR Production Royalty granted, conveyed and assigned to Sphere, before selling and conveying Spartan’s interest in the Poker Flats Property to an independent third party, such NSR Production Royalty held by Sphere, applicable to mineral production from the particular property, will terminate and be of no further force or effect. This provision does not apply to the three percent (3%) NSR Production Royalty on mineral production from the Poker Flats Property retained by the owner of the mining claims subject to the 2014 Agreement.

·

Within 60 days upon obtaining a 51% interest in the Property, Spartan agrees to issue 250,000 common shares of Spartan to Sphere and within 60 days upon obtaining a total of a 75% interest in the Property, Spartan agrees to issue an additional 250,000 common shares of Spartan to Sphere.

·

Sphere agrees that they will not pursue acquisition of other mining properties or mining development opportunities within two (2) miles of the current boundary of the Poker Flats Property. It is agreed that Sphere may engage in acquisition of mining properties or mining development opportunities in other geographical areas should such opportunities arise.

 

On April 1, 2011, the Company entered into a Mining Lease and Agreement (the “Agreement”) with K & K Tomera Lands, LLC, a Nevada Limited Liability Company (“Tomera”). This Mining Lease and Agreement pertains to the Poker Flats property located within the Carlin Mining District in Elko County, Nevada.

 

Under the terms of this Agreement, the Company agreed to pay Tomera a Production Royalty of 5% of NSR, as defined in the Agreement. In order to maintain this Agreement in effect, the Company shall pay to Tomera Advance Minimum Royalty (“AMR”) payments. AMR payments are calculated based on the net mineral acres leased on an annual basis. The Company paid, at the execution of the Agreement, $30,800 for the first year of the lease based on the 1,760 net mineral acres leased at $17.50 per acre. Future AMR payments, on a per net mineral acre basis, are: $17.50 per acre on the first and second anniversaries of the Agreement, $21.00 per acre on the third and fourth anniversaries, $24.50 per acre on the fifth and sixth anniversaries, and $28.00 per acre on the seventh and any subsequent anniversaries. The Company paid $30,800 and $30,800 during the years ended December 31, 2013 and 2012, respectively, and $nil during the nine months ended September 30, 2014. The term of the Agreement is for a period of ten years. The Company has the option to extend the initial term for an additional ten year period.

 

In connection with the Mining Lease and Agreement, the Company entered into a Surface Access and Use Agreement on April 1, 2011 with Kevin Tomera, a Nevada resident, which grants the Company general rights of ingress and egress over certain surface tracts and the right to use the surface tracts in conduct of its mineral exploration, development and mining activities. Additionally, Tomera has granted the Company an option to purchase portions of the surface tracts. Under the terms of the Surface Access and Use Agreement, the Company agrees to pay Kevin Tomera annual rental of $4.50 per acre for each acre of land included in the surface tracts. The Company paid $7,260 and $5,760 during the years ended December 31, 2013 and 2012, respectively, and $nil during the nine months ended September 30, 2014. The term of the Agreement is for ten years.

 

 

Poker Flats is located approximately 20 miles south-southwest of Elko, Nevada in the Carlin-Rain Trend. Poker Flats began with 500 acres in the Carlin region which is home to some of the world's leaders in the mining industry. Neighboring mining projects north and south of Poker Flats include Newmont Mining Corporation, Gold Standard Ventures Corporation, and Premier Gold Mines Limited. The Company expanded Poker Flats to 3,600 acres in 2011, which was reduced to 3,040 acres in October, 2012, and now holds an option for 75% majority ownership of this project. The geological mapping process is under way and an updated NI 43-101 report was completed on November 22, 2011. The new claim blocks and private mineral rights now included in the Poker Flats project are surrounded by Newmont Mining Corporation's Emigrant project on the northern border and several other productive projects including Newmont's Rain-Tess and Emigrant Mines, Premier Gold Mines Limited's Saddle gold prospect and Gold Standard Ventures Corporations' Railroad gold project. The Company’s team has completed geological mapping and analysis, in conjunction with geophysical mapping involving gravity and magnetic survey work.

 

Additional geophysical, drilling and geological work is planned at Poker Flats under a two-phase exploration program. Since the property is situated adjacent to other current gold mining properties such as Pinon and Railroad, and as the mineralization appears similar to those at Newmont's Emigrant and Rain Mines and at the Railroad deposit, additional exploration expenditures are justified for the Poker Flats property.

 

The exploration goal at the Poker Flats prospect is to identify a 500,000 to 1,000,000 ounce open-pit gold mining resource. A major mining project is currently being developed by Newmont Mining Corporation immediately north of the Poker Flats prospects.

 

Arbacoochee Gold Prospect

 

On October 22, 2010, we acquired the mineral rights to a Gold Prospect which is a tract of approximately 320 acres located in close proximity to the historic Arbacoochee Gold Mining District. This Prospect contains potentially minable placer located in Cleburne County, Alabama, 9 miles southeast of the city of Heflin. The property is located adjacent to the historic Gold Hill and is the central drain point for that hill. Most of the area’s historic gold production came from placer deposits near Gold Hill and Clear Creek. This property has not been worked in over 120 years.

 

The Company assumed an existing mineral royalty agreement which requires the payment of 6% NSR overriding royalty for any and all precious metals that are mined, processed or recovered from the Arbacoochee Gold Prospect to AMP.

 

Results of Operations

 

For the three months ended September 30, 2014 compared to the three months ended September 30, 2013

 

Revenues

 

The Company had no revenue for the three months ended September 30, 2014 and 2013, respectively as we are still in the exploration stage.

 

Operating Expenses

 

For the three months ended September 30, 2014 our total operating expenses were $128,958 compared to $72,505 for the nine months ended September 30, 2013 resulting in an increase of $56,453. The increase is attributable to an increase in general and administrative expenses of $25,713, offset by an increase in mineral property expenditures of $32,720, offset by a decrease in mineral property exploration costs of $1,980.

 

For the nine months ended September 30, 2014 compared to the nine months ended September 30,

 

Revenues

 

The Company had no revenue for the nine months ended September 30, 2014 and 2013, respectively as we are still in the exploration stage.

 

Operating Expenses

 

For the nine months ended September 30, 2014 our total operating expenses were $266,010 compared to $208,939 for the nine months ended September 30, 2013 resulting in an increase of $57,071. The increase is attributable to increases in general and administrative expenses of $18,491, mineral property expenditures of $32,720, and mineral property exploration costs of $5,860.

 

Liquidity and Capital Resources

 

Overview

 

For the nine months ended September 30, 2014 and September 30, 2013, respectively, we funded our operations through advances from related parties. Our principal use of funds during the nine months ended September 30, 2014 has been for general corporate expenses and mineral property exploration costs.

 

Liquidity and Capital Resources during the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013

 

As of September 30, 2014, we had cash of $2,018 and deficit in working capital of $892,619. The Company generated a negative cash flow from operations of $59,129 for the nine months ended September 30, 2014 compared to cash used in operations of $93,436 for the nine months ended September 30, 2013. The negative cash flow from operating activities for the nine months ended September 30, 2014 is primarily attributable to the Company's net loss from operations of $266,010, offset by depreciation of $254 and net changes in operating assets and liabilities of $206,627. Cash used in operations for the nine months ended September 30, 2013 is primarily attributable to the Company's net loss from operations of $208,939, offset by depreciation of $1,522 and net changes in operating assets and liabilities of $113,981.

 

During the nine months ended September 30, 2014 and 2013, the Company had no cash flows from investing activities.

 

During the nine months ended September 30, 2014, the Company had cash flows from financing activities of $60,819 compares to cash flows from financing activities of $83,400 for the nine months ended September 30, 2014. During the nine months ended September 30, 2014, the Company received advances from related parties of $71,739, and made repayments to related parties of $10,920. During the nine months ended September 30, 2013, the Company received advances from related parties of $89,400, and made repayments to related parties of $6,000.

 

We anticipate cash needs of approximately $125,000 to sustain our current level of operations. We will rely on loans and advances from our majority shareholder to fund our operations until we are able to raise capital via sales of equity or debt securities. Any such sales of equity or debt securities are not certain and may not occur.

 

Should we be able to raise the necessary capital, we plan to spend approximately $750,000 in the next twelve months to carry out exploration and administration activities on our anticipated Nevada mineral property. We presently do not have sufficient financing to enable us to complete these activities and will require additional financing to perform future exploration work on all of our mineral properties. Our actual expenditures on these activities will depend on the amount of funds we have available as a result of our financing efforts. There is no assurance that we will be able to raise the necessary financing.

 

Going Concern

 

Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the financial statements for the year ended December 31, 2013 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

 

Our unaudited financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

 

There is no assurance that our operations will be profitable. Historically, the Company has conducted private placements of its common stock, which have generated funds to satisfy the initial cash requirements of its planned Nevada exploration ventures. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

 

 

Off-Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of 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. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

 

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited consolidated financial statements for the year ended December 31, 2013, included in our Annual Report on Form 10-K as filed on April 15, 2014, for a discussion of our critical accounting policies and estimates.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

The disclosure required under this item is not required to be reported by smaller reporting companies.

 

Item 4. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures

 

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to chief executive and chief financial officers to allow timely decisions regarding disclosure.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of such date.

 

(b)

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A.  Risk Factors

The disclosure required under this item is not required to be reported by smaller reporting companies.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

None.

 

Item 4. Mine Safety Disclosures.

 

As the Company is its exploration stage, no mining activities have occurred as of the date of this report. Therefore, this item is not applicable.

 

Item 5. Other Information.

 

Item 1.01 Entry into a Material Definite Agreement.

 

Option and Property Acquisition Agreement

 

On August 22, 2014, Spartan Gold Ltd., (“the Company”) entered into an Option and Property Acquisition Agreement between Mexivada Mining Corporation (“MMC” or the “Optionor”) and Sphere Resources, Inc. (“Sphere”). The Agreement replaces a previous Option and Mining Claim Acquisition Agreement between the parties entered into on December 20, 2010 and amended on March 28, 2011 (the “First Amendment”) and further amended on December 22, 2011 (the “Second Amendment”). The previous agreement expired on December 20, 2013.

 

MMC is the owner of a 100% interest in certain mining claims located in the Carlin Mining District in Elko County Nevada, known as the “Poker Flats” Property. Under the 2014 Agreement, the Company had the following rights and obligations:

 

·

The Company has paid to MMC $10,000 upon executing the Option Agreement for its 2013 mining lease obligation under the previous agreement;

·

The Company will pay a one-time option payment to MMC of $10,000 on or before October 31, 2014;

·

The Company is obligated to pay the $10,000 annual lease payment to the owner beginning December 3, 2014;

·

Sphere is required to issue certain shares of common stock to MMC;

·

An initial 51% interest in the property will be earned upon the Company incurring and paying new exploration expenditures of $300,000 on or before December 31, 2015;

·

An additional 24% interest in the property will be earned upon the Company incurring additional exploration expenditures of $250,000 and completing and delivering to Optionor an industry-standard mining feasibility study on or before December 31, 2017;

·

If and when the Company elects to sell and convey all or a portion of its interest in the Poker Flats Property, the Company shall have the right to purchase up to 75% and MMC shall have the right to purchase up to 25% of the 3% NSR on mineral production from the Poker Flats Property retained by the owner of the mining claims subject to the Poker Flats Option Agreement, for one million U.S. dollars (U.S. $1,000,000) per NSR percentage point;

 

Agreement for Grant of NSR Production Royalty and Share Issue

 

On August 23, 2014, Spartan Gold Ltd., (“the Company”) entered into an Agreement for Grant of NSR Production Royalty and Share Issue with Sphere Resources, Inc. (“Sphere”). Under the terms of the Option and Property Acquisition Agreement between the Company, Mexivada Mining Corporation (“MMC”) and Sphere, Sphere is obligated to issue 750,000 common shares of Sphere within 60 days of the Company acquiring a 51% interest in the Property, and 750,000 common shares of Sphere within 60 days of the Company acquiring a total of a 75% interest in the Property.

 

In consideration of this potential issuance of common shares by Sphere, the parties have agreed as follows:

 

·

Spartan grants, conveys and assigns to Sphere a two percent (2%) Net Smelter Returns (NSR) Production Royalty, to be calculated in the same manner as the “Net Smelter Returns Production Royalty” defined in the 2014 Agreement, on its share of mineral production from the Poker Flats Property if and when there is production from the Poker Flats Property. This 2% NSR Production Royalty granted by Spartan to Sphere on Spartan's share of production from the Poker Flats Property is in addition to the three percent (3%) NSR Production Royalty retained by the owner of the mining claims leased to Mexivada and Area of Interest defined therein, subject to the 2014 Agreement.

·

If and when Spartan elects to sell and convey all or a portion of its interest in the Poker Flats Property, Spartan shall have the right to purchase up to one hundred percent (100%) of the two percent (2%) NSR Production Royalty granted, conveyed and assigned by Spartan to Sphere on its share of production from the Poker Flats Property, under terms to be agreed upon by Spartan and Sphere.

·

It is understood and agreed among the Parties that if Spartan fails or is unable to exercise the option to acquire the Poker Flats Property under the 2014 Agreement, or Spartan elects not to purchase the NSR Production Royalty granted, conveyed and assigned to Sphere, before selling and conveying Spartan’s interest in the Poker Flats Property to an independent third party, such NSR Production Royalty held by Sphere, applicable to mineral production from the particular property, will terminate and be of no further force or effect. This provision does not apply to the three percent (3%) NSR Production Royalty on mineral production from the Poker Flats Property retained by the owner of the mining claims subject to the 2014 Agreement.

·

Within 60 days upon obtaining a 51% interest in the Property, Spartan agrees to issue 250,000 common shares of Spartan to Sphere and within 60 days upon obtaining a total of a 75% interest in the Property, Spartan agrees to issue an additional 250,000 common shares of Spartan to Sphere.

·

Sphere agrees that they will not pursue acquisition of other mining properties or mining development opportunities within two (2) miles of the current boundary of the Poker Flats Property. It is agreed that Sphere may engage in acquisition of mining properties or mining development opportunities in other geographical areas should such opportunities arise.

 

 

 

Item 6. Exhibits

 

Exhibit 10.1	Option and Property Acquisition Agreement between Mexivada Mining Corporation, Spartan Gold, Ltd., and Sphere Resources Inc. dated August 22, 2014
Exhibit 10.2	Agreement for Grant of NSR Production Royalty and Share Issue between Spartan Gold, Ltd. And Sphere Resources, Inc. dated August 23, 2014.
Exhibit 31.1	Rule 13a-14(a) Certification by the Principal Executive Officer
Exhibit 31.2	Rule 13a-14(a) Certification by the Principal Financial Officer
Exhibit 32.1	Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS	XBRL Instance Document
Exhibit 101.SCH	XBRL Schema Document
Exhibit 101.CAL	XBRL Calculation Linkbase Document
Exhibit 101.DEF	XBRL Definition Linkbase Document
Exhibit 101.LAB	XBRL Label Linkbase Document
Exhibit 101.PRE	XBRL Presentation Linkbase Document

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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 19, 2014		By: /s/ Malcolm Stevens
		Malcolm Stevens
		Chief Executive Officer (Principal Executive Officer)

 

 

Date: November 19, 2014		By: /s/ John S. Wittler
		John S. Wittler
		Chief Financial Officer (Principal Financial Officer)