PART I Item 1. Description of Business.
Introduction
Uranium Hunter Corporation, a Nevada corporation (referred to herein as the Company, we, us and our) was incorporated on
September 4, 2003 under the name Brownsville Company.
From inception until November 2006, we operated a boat launch, parking lot, marina and convenience store located in Maple Ridge, British Columbia. In November 2006, we sold and transferred such business to Fraser River Metals Depot Inc. (Fraser River) pursuant to an Asset Purchase Agreement dated November 16, 2006, pursuant to which on the same date we sold and transferred to Fraser River all of our assets relating to the Companys boat launch, parking lot, marina and convenience store business.
On October 13, 2006, we were granted the sole exclusive right and option to acquire up to a 100% undivided right, title and interest in and to the Gambaro Resources Property located in Njombe and Songea districts in the Republic of Tanzania. The Gambaro Resources Property, which is held under the terms of a Prospecting License issued by the government of Tanzania, is believed to cover sediments of the Karoo sequence which share common features with rocks of the Colorado Plateau in the western United States that have been prolific producers of uranium. See The Gambaro Property below.
On February 14, 2007, pursuant to a Certificate of Amendment to our Articles of Incorporation filed with the State of Nevada, we changed the name of the corporation from Brownsville Company to Uranium Hunter Corporation.
On June 26, 2007, we were granted the sole and exclusive right and option to acquire up to a 75% undivided right, title and interest in and to the Nkoko and Kagadi Uranium Properties which contain approximately 820 square kilometers located in Kiballe District, Uganda. See The NPK Property below.
On October 11, 2007, we entered into a letter of intent with Pinewood Resources Ltd. to earn a 75% interest in the Karoo Project which contains approximately 8,600 square kilometers of Karoo-based uranium exploration lands located in the Southern regions of Tanzania. See The Karoo Project below.
The Gambaro Property
On October 13, 2006, we entered into an Option Agreement (the Trimark Agreement) with Trimark Explorations Ltd. and its wholly- owned subsidiary, Gambaro Resources Limited (together referred to herein as Trimark), whereby Trimark granted us the sole exclusive right and option to acquire up to a 100% undivided right, title and interest in and to the Gambaro Resources Property located in Njombe and Songea districts in the Republic of Tanzania (the Gambaro Property). The Gambaro Property consists of approximately 170 square kilometers in the southwestern part of Tanzania which is located on the East Coast of Africa. The Gambaro Property, which is held under the terms of a Prospecting License issued by the government of Tanzania, is believed to cover sediments of the Karoo sequence which share common features with rocks of the Colorado Plateau in the western United States that have been prolific producers of Uranium. Under the terms of the Trimark Agreement, Trimark has granted us the sole and exclusive option to acquire up to a 100% undivided interest in and to the Gambaro Property, by making the following cash payments totaling $100,000 over a three year period: (i) $25,000 within 45 days of signing the Trimark Agreement (which has been extended up to an additional 30 days or 5 days after the issuance of an exploration and prospecting license, whichever occurs first); (ii) an additional $35,000 within two years of signing of the Trimark Agreement; and (iii) an additional $40,000 within three years of signing of the Trimark Agreement.
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Pursuant to the Trimark Agreement, we must also complete the following cumulative exploration expenditures on the Gambaro Property totaling $1,000,000 over a 36 month period: (i) $100,000 in cumulative exploration expenditure within the first 12 months after signing the Trimark Agreement; (ii) $500,000 in cumulative exploration expenditures within 24 months of signing of the Trimark Agreement; and (iii)
$1,000,000 in cumulative exploration expenditures within 36 months of signing of the Trimark Agreement. If 36 months after the date of the
Trimark Agreement, we have not completed exploration expenses of $1,000,000, we may still earn our 100% interest in the Gambaro Property if we issue in favor of Trimark payments totaling up to 1,000,000 of our shares of common stock or cash of up to $1,000,000 at our sole option less the cumulative exploration expenditures already paid and/or met on the Gambaro Property. The value of the shares shall be determined as the average share price of the shares over the 30 business days of trading prior to the 36 month period, provided, however, that the shares shall not be valued at less than $1.00 per share. In the event such shares are valued at less than $1.00, we may still execute this buyout using cash.
The Trimark Agreement further provides that we will act as operator during the earn-in phase of the Trimark Agreement and will be entitled to charge a management fee of 15% on all property exploration expenditures and related head office overhead paid solely out of cumulative exploration expenditures provided by us and from revenues from the operation of the Gambaro Property pursuant to the terms of the Trimark Agreement. Once we have earned our 100% interest in the Gambaro Property, Trimark shall be entitled to a 2% net smelter royalty which shall be reduced to 1% at our sole option upon payment to Trimark of $1,000,000. The Trimark Agreement provides that a management committee consisting of two representatives of each company shall be formed pursuant to which we shall be responsible for the proposal of exploration programs to the management committee and for funding in full any and all exploration programs approved by the management committee in advance of the commencement of exploration.
We may terminate the Trimark Agreement at any time by giving written notice to Trimark of the termination of the Trimark Agreement and such termination shall be effective on the 15
th
day after such notice is sent to Trimark. In addition, if we fail to make any payment under the Trimark Agreement or fails to do anything on or before the last day provided for such payment or performance under the Trimark Agreement (in each or either case referred to as a default), Trimark may terminate the Trimark Agreement but only if: (i) Trimark has first given us written notice of the default containing particulars of the payment which we have not made or the act which we have not performed; and (ii) we have not, within 30 days following delivery of such notice, cured such default by appropriate payment or performance. Should we fail to comply with the foregoing, Trimark may thereafter terminate the Trimark Agreement by notice to us. Upon such termination, we forfeit any and all interest in the Gambaro Property and shall cease to be liable to Trimark.
During fiscal 2007, we performed initial exploration work on the Gambaro Property consisting of radiometric data interpretation performed in Toronto, Ontario. After this was completed, some early field reconnaissance work was performed with the assistance of a hand held scintilometer. Once further uranium anomalies were confirmed, we commissioned a helicopter aerial survey to be performed, which was done following the end of fiscal 2007. Exploration expenditures during fiscal 2007 amounted to US $107,979.
During fiscal 2008, results of helicopter aerial survey were interpreted by Gap Geophysics of South Africa. Interpretation results were used to map ground targets for a preliminary field work program headed by Gold Finders of Tanzania.
We are currently in default of certain payment obligations pursuant to the Trimark Agreement have abandoned this project.
The NPK Property
On June 26, 2007, we entered into an Option Agreement (the NPK Agreement) with NPK Resources Ltd. (NPK), whereby NPK granted us the sole and exclusive right and option to acquire up to a 75% undivided right, title and interest in and to the Nkoko and Kagadi Uranium Properties which contain approximately 820 square kilometers located in Kiballe District, Uganda (the NPK Property).
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Under the terms of the NPK Agreement, NPK has granted us the sole and exclusive option to acquire up to a 75% undivided interest in and to the NPK Property by making a cash payment to NPK of $25,000 US within five days of signing the NPK Agreement. We paid $15,000 during the quarter ended June 30, 2007 and paid the balance of $10,000 in July 2007. The Company shall also be responsible for making all necessary property payments and taxes to keep the NPK Property in good standing. We shall maintain its 75% interest in the NPK Property after we pay the $25,000 as described above by completing the following cumulative exploration expenditures on the NPK Property totaling $150,000
US over a 36 month period: (i) $50,000 in cumulative exploration expenditure within the first 12 months after signing the NPK Agreement; (ii)
$100,000 in cumulative exploration expenditures within 24 months of signing of the NPK Agreement; and (iii) $150,000 in cumulative exploration expenditures within 36 months of signing of the NPK Agreement. If 36 months after the date of the NPK Agreement, we have not completed exploration expenses of $150,000, we may still maintain our 75% interest in the NPK Property if we issue in favor of NPK payments totaling up to $150,000 in shares of common stock of the Company or cash of up to $150,000 US at our sole option less the cumulative exploration expenditures already paid and/or met on the NPK Property. The value of the shares shall be determined as the average share price of the shares over the 30 business days of trading prior to the 36 month period as described herein provided, however, that the shares shall not be valued at less than $1.00 per share.
Once we have vested and maintained our 75% interest in the project (i.e. by spending $150,000 on the project within three years), the parties shall enter into a joint venture agreement and shall share proportionally in all exploration costs and payments subject to standard dilution terms.
In addition once we have earned our 75% interest in the NPK Property, for a one year period from date of earn in, NPK shall be entitled to convert its 25% ownership of the NPK Property into common stock of the Company at the fair market value for NPKs 25% ownership of the NPK Property. The fair market value of the NPK Property shall be determined by the parties and if they cannot agree, shall be determined by three experts. Should NPK convert its 25% ownership into shares of common stock of the Company, then we shall own 100% of the NPK Property. The value of the shares shall be determined as the average share price of the shares over the 30 business days of trading prior to the election period, provided, however, that the shares shall not be valued at less than $1.00 per share.
We may terminate the NPK Agreement at any time by giving written notice to NPK of the termination of the NPK Agreement. If we fail to make any payment (optional, discretionary or otherwise) or fails to do anything on or before the last day provided for such payment or performance under the NPK Agreement, NPK may terminate the NPK Agreement but only if: (i) NPK has first given us written notice of the default containing particulars of the payment which we have not made or the act which we have not performed; and (ii) we have not, within 30 days following delivery of such notice, cured such default by appropriate payment or performance. Should the Company fail to comply with the foregoing, NPK may thereafter terminate the NPK Agreement by notice to the Company. Upon the termination of the NPK Agreement, we shall forfeit any and all interest in the NPK Property and shall cease to be liable to NPK.
During the fourth quarter of fiscal 2007, we performed some early reconnaissance and mapping work on the NPK Property. There was also some radiometric interpretation done using old data from the Ugandan Geological survey. Exploration expenditures during fiscal 2007 amounted to US $29,600.
No subsequent exploration work was conducted on the NPK Property in fiscal 2008 and this project has been abandoned.
The Karoo Project
On October 11, 2007, we entered into a letter of intent with Pinewood Resources Ltd. (Pinewood) to earn a 75% interest in the Karoo Project which contains approximately 8,600 square kilometers of Karoo-based uranium exploration lands located in the Southern regions of Tanzania (the Karoo Property). In fiscal 2008, Management decided not to pursue any further interest in this property.
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Competition
We are an exploration mining stage company. We expect to face significant competition in our business of exploration and mining, a business in which we will compete with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom we will compete have greater financial and technical resources than us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.
Patents and Trademarks
We do not own, either legally or beneficially, any patent or trademark.
Employees
As of the date hereof, and other than the services provided by our sole officer, we do not have any full or part time employees and have no plans for retaining employees until such time as our business warrants the expense.
Uncertainties and Risk Factors
In addition to other information and financial data set forth elsewhere in this report, the following risk factors should be considered carefully in evaluating the Company.
LACK OF SUCCESSFUL OPERATING HISTORY; NEW BUSINESS. We commenced business in September 2003 in order to operate a boat launch, parking lot, marina and convenience store. Subsequent to the end of the 2006 fiscal year, and in November 2006, we sold this business. Such business had suffered continual losses since its inception. In October 2006, we were granted the sole exclusive right and option to acquire up to a 100% undivided right, title and interest in and to the Gambaro Resources Property located in Njombe and Songea districts in the Republic of Tanzania. In June 2007, we were granted the sole and exclusive right and option to acquire up to a 75% undivided right, title and interest in and to the Nkoko and Kagadi Uranium Properties which contain approximately 820 square kilometers located in Kiballe District, Uganda. As a result of this change of direction, our business focus is now exploration and mining, a business in which we have no operating history. Due to this lack of operating history, the Company and our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. There is nothing at this time upon which to base an assumption that our exploration and mining prospects will prove successful, and there is no assurance that we will be able to operate profitably.
NEED FOR ADDITIONAL FINANCING. We are in the exploration mining stage and have not yet realized revenues from our planned operations. We have incurred a net loss of $18,691 for the year ended September 30, 2010. At September 30, 2010, we had an accumulated deficit of $1,062,884. We have funded operations through the issuance of capital stock. We plan is to continue raising additional funds through future equity or debt financing until we achieve profitable operations from our mineral extraction activities. No assurance can be given, however, that we will be able to obtain additional financing or that our mining activities will be successful.
DOUBTFUL ABILITY TO CONTINUE AS A GOING CONCERN. As stated above, we are now an exploration stage mining company and have not realized any revenues from our operations. We are primarily engaged in the acquisition, exploration and development of uranium mining properties in Africa. At the present time we do not own any properties. Our financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have no source for operating revenue and expect to incur significant expenses before establishing operating revenue. We have a need for equity capital and financing for working capital and exploration of our properties. Because of continuing operating losses, negative working capital and cash outflows from operations, our continuance as a going concern is dependent upon our ability to obtain adequate financing and to reach profitable levels of operation. Our future success is dependent upon our continued ability to raise sufficient capital, not only to maintain its operating expenses, but to explore for uranium reserves. There is no guarantee that such capital will continue to be available on acceptable terms, if at all or if we will attain profitable levels of operation.
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THE EXPLORATION AND MINING INDUSTRY IS HIGHLY COMPETITIVE. We expect to face significant competition in our business of exploration and mining, a business in which we will compete with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom we will compete have greater financial and technical resources than us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.
WE RELY UPON KEY PERSONNEL AND IF THEY LEAVE US, OUR BUSINESS PLAN AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED. We rely heavily on our Chief Executive Officer, Ghaith Qamheiah. His experience and input create the foundation for our business and he is responsible for the directorship and control over our exploration activities. We presently have a consulting agreement with Mr. Qamheiah which can be terminated by either party on 30 days prior notice. Moving forward, should we lose the services of Mr. Qamheiah, for any reason, we will incur costs associated with recruiting a replacement and delays in our operations. If we are unable to replace him with another suitably trained individual or individuals, we may be forced to scale back or curtail our business plan and exploration activities.
WE MAY NOT BE ABLE TO MAKE THE REQUIRED PAYMENTS UNDER THE OPTION AGREEMENT. On October 13,
2006, we entered into an Option Agreement (the Trimark Agreement) with Trimark Explorations Ltd. and its wholly-owned subsidiary, Gambaro Resources Limited, whereby we were granted us the sole exclusive right and option to acquire up to a 100% undivided right, title and interest in and to the Gambaro Resources Property located in Njombe and Songea districts in the Republic of Tanzania. On June 26, 2007, we entered into an Option Agreement (the NPK Agreement) with NPK Resources Ltd. (NPK), whereby NPK granted us the sole and exclusive right and option to acquire up to a 75% undivided right, title and interest in and to the Nkoko and Kagadi Uranium Properties which contain approximately 820 square kilometers located in Kiballe District, Uganda. Pursuant to the Trimark Agreement and NPK Agreement, we must make certain cash payments and we must complete certain exploration expenditures. If we are unable to make these payments or complete such required exploration expenditures, we could lose our interests in such mining properties. We are currently in default of certain payment obligations pursuant to the Trimark Agreement and have now abandoned this project.
OUR PLANNED MINERAL EXPLORATION EFFORTS ARE HIGHLY SPECULATIVE; WE HAVE NOT YET ESTABLISHED ANY PROVEN OR PROBABLE RESERVES. Mineral exploration is highly speculative. It involves many risks and is often nonproductive. Even if we believe we have found a valuable mineral deposit, it may be several years before production is possible. During that time, it may become no longer feasible to produce those minerals for economic, regulatory, political, or other reasons. Additionally, we may be required to make substantial capital expenditures and to construct mining and processing facilities. As a result of these costs and uncertainties, we may be unable to start, or if started, to finish our exploration activities. In addition, we have not to date established any proven or probable reserves on our mining properties and there can be no assurance that such reserves will ever be established.
MINING OPERATIONS IN GENERAL INVOLVE A HIGH DEGREE OF RISK, WHICH WE MAY BE UNABLE, OR MAY NOT CHOOSE TO INSURE AGAINST, MAKING EXPLORATION AND/OR DEVELOPMENT ACTIVITIES WE MAY PURSUE SUBJECT TO POTENTIAL LEGAL LIABILITY FOR CERTAIN CLAIMS. Our operations are subject to all of the hazards and risks normally encountered in the exploration, development and production of minerals. These include unusual and unexpected geological formations, rock falls, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although we plan to take adequate precautions to minimize these risks, and risks associated with equipment failure or failure of retaining dams which may result in environmental pollution, there can be no assurance that even with our precautions, damage or loss will not occur and that we will not be subject to liability which will have a material adverse effect on our business, results of operation and financial condition.
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BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN MINERAL EXPLORATION VENTURES, WE FACE A HIGH RISK OF BUSINESS FAILURE. Stockholders should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. Most exploration projects do not result in the discovery of commercially mineable deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts.
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS. The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time, we have no coverage to insure against these hazards. The payment of such liabilities may result in our inability to complete our planned exploration program and/or obtain additional financing to fund our exploration program.
TITLE TO PROPERTIES MAY BE AT RISK. Although we have taken steps to verify title to the properties on which we are conducting exploration and in which we have an interest, in accordance with industry standards for the current stage of development of such properties, these procedures do not guarantee the Companys title. Property title may be subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims, and non compliance with regulatory and environmental requirements.
CURRENT LEVELS OF MARKET VOLATILITY COULD HAVE ADVERSE IMPACTS. The capital and credit markets have been experiencing volatility and disruption. If the current levels of market disruption and volatility continue or worsen, there can be no assurance that the Company will not experience adverse effects, which may be material. These effects may include, but are not limited to, difficulties in raising additional capital or debt and a smaller pool of investors and funding sources. There is thus no assurance the Company will have access to the equity capital markets to obtain financing when necessary or desirable.
GENERAL DETERIORATION IN ECONOMIC CONDITIONS MAY HAVE ADVERSE IMPACTS. The current economic environment is challenging and uncertain. The consequences of a prolonged recession may include a lower level of economic activity and uncertainty regarding commodity markets. Further, the risks associated with industries in which the Company operates become more acute in periods of a slowing economy or slow growth.
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE. We have never declared or paid a dividend on our common stock. We intend to retain earnings, if any, for use in the operation and expansion of our business and, therefore, do not anticipate paying any dividends in the foreseeable future.
THE TRADING PRICE OF OUR COMMON STOCK MAY BE VOLATILE. We currently anticipate that the market for our common stock will remain limited, sporadic, and illiquid until such time as we generate significant revenues, if ever, and that the market for our common stock will be subject to wide fluctuations in response to several factors, including, but not limited to the risk factors set forth in this report as well as the depth and liquidity of the market for our common stock, investor perceptions of the Company, and general economic and similar conditions. In addition, we believe that there are a small number of market makers that make a market in our common stock. The actions of any of these market makers could substantially impact the volatility of the Companys common stock.
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OUR COMMON STOCK IS A PENNY STOCK. Our Common Stock is classified as a penny Stock, which is traded on the OTCBB. As a result, an investor may find it more difficult to dispose of or obtain accurate quotations as to the price of the shares of the Common Stock. In addition, the penny stock rules adopted by the Securities and Exchange Commission subject the sale of the shares of the Common Stock to certain regulations which impose sales practice requirements on broker-dealers. For example, broker-dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities. Furthermore, if the person purchasing the securities is someone other than an accredited investor or an established customer of the broker-dealer, the broker-dealer must also approve the potential customers account by obtaining information concerning the customers financial situation, investment experience and investment objectives. The broker-dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the Commissions rules may result in the limitation of the number of potential purchasers of the shares of the Common Stock. In addition, the additional burdens imposed upon broker-dealers by such requirements may discourage broker- dealers from effecting transactions in the Common Stock, which could severely limit the market of the Companys Common Stock.
LIMITATIONS OF THE OTCBB CAN HINDER COMPLETION OF TRADES. Trades and quotations on the OTCBB involve a manual process that may delay order processing. Price fluctuations during a delay can result in the failure of a limit order to execute or cause execution of a market order at a price significantly different from the price prevailing when an order was entered. Consequently, one may be unable to trade in the Companys Common Stock at optimum prices.
THE OTCBB IS VULNERABLE TO MARKET FRAUD. OTCBB securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTCBB reporting requirements are less stringent than those of the stock exchanges or NASDAQ.
INCREASED DEALER COMPENSATION COULD ADVERSELY AFFECT STOCK PRICE. OTCBB dealers spreads (the difference between the bid and ask prices) may be large, causing higher purchase prices and less sale proceeds for investors.
Except as required by the Federal Securities Law, we do not undertake any obligation to release publicly any revisions to any forward- looking statements to reflect events or circumstances after the date of this Form 10-KSB or for any other reason.