Notes to the Financial Statements
1.
ORGANIZATION AND DESCRIPTION OF BUSINESS
Orofino Gold Corp. ("Orofino" or the "Company") was organized under the laws of the State of Nevada on April 12, 2005. Orofino started operations on September 1, 2007 under the "Clean 'N Shine" name operating as a full service automotive car wash, cleaning, detailing, and polishing business generating some revenues. With limited opportunities available the Company decided to look at mineral resources as an alternative business. On May 20, 2009, the Company completed a forward stock split of its common stock on a ratio of six shares for every one share of the Company. The record date of the forward stock split was May 15, 2009, the payment date of the forward split was May 19, 2009, and the ex-dividend date of the forward split was May 20, 2009. As a result of the forward split, the post forward split number off issued and outstanding shares was 60,000,000. On December 5, 2009, the Company passed a resolution to change its name from SNT Cleaning Inc. to Orofino Gold Corp.
The Company is an exploration stage gold mining company with its efforts initially focused on what it believes to be under-explored mineral concessions and larger scale development of existing high grade artisanal mining operations. The Company has achieved no operating revenues to date.
2.
SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). A summary of the significant accounting policies are as follows:
Use of estimates
Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses for the periods presented. Actual results could differ from those estimates.
Comprehensive income
The Company has adopted ASC Topic 220, "Comprehensive Income." Comprehensive income is comprised of net income (loss) and all changes to stockholders' equity (deficit), except those related to investments by stockholders, changes in paid-in capital and distribution to owners. In accordance with FASB ASC Topic 220 "Comprehensive Income," comprehensive income consists of net income and other gains and losses affecting stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency translation gains and losses and minimum pension liability. Since inception other comprehensive income has consisted of translation gains and losses.
Mineral properties
All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines or to develop mine areas substantially in advance of production are also capitalized once proven and probable reserves exist, and the property is determined to be a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the cost of mineral rights will be expensed at that time. Costs of abandoned projects, including related property and equipment costs, are charged to mining costs. To determine if these costs are in excess of their recoverable amount, periodic evaluations of the carrying value of capitalized costs and any related property and equipment costs are performed. These evaluations are based upon expected future cash flows and/or estimated salvage value.
7
Orofino Gold Corp.
Notes to the Financial Statements
2.
SIGNIFICANT ACCOUNTING POLICIES continued
Fair Value of Financial Instruments
The Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company's financial position or operating results, but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity's own assumptions.
The Company did not have any Level 2 or Level 3 assets or liabilities as of February 29, 2012.
The Company discloses the estimated fair values for all financial instruments for which it is practicable to estimate fair value. As of the date of the financial statements, the fair value short-term financial instruments including prepaid, and accounts payable and accrued expenses, approximates book value due to their short-term duration.
Basic and diluted loss per share
Basic net earnings (loss) per common share are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.
Income taxes
Income taxes are accounted for in accordance with the provisions of FASB ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
Foreign Currency Translation and Transactions
The Company's functional currency is US dollars. Foreign currency balances are translated into US dollars as follows: Monetary assets and liabilities are translated at the period-end exchange rate. Non-monetary assets are translated at the rate of exchange in effect at their acquisition, unless such assets are carried at market or nominal value, in which case they are translated at the period-end exchange rate. Revenue and expense items are translated at the average exchange rate for the period. Foreign exchange gains and losses in the period are included in operations. The assets and liabilities arising from these operations are translated at current exchange rates and related revenues and expenses at the exchange rates in effect at the time the revenue or expense is incurred. Resulting translation adjustments, if material, are accumulated as a separate component of accumulated other comprehensive income in the statement of stockholders 'deficit while foreign currency transaction gains and losses are included in operations.
8
Orofino Gold Corp.
Notes to the Financial Statements
2.
SIGNIFICANT ACCOUNTING POLICIES continued
Convertible debt
The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income. In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes. Fees incurred in the placement of the convertible notes are deferred and recognized over the life of the debt agreement as an adjustment to interest expense using the interest method.
New Accounting Standards
In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs," ("ASU 2011-04"). This standard results in a common requirement between the FASB and the International Accounting Standards Board for measuring fair value and disclosing information about fair value measurements. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011. We do not expect the adoption of this accounting pronouncement to have any effect on our financial position and results of operations.
In June 2011, the FASB issued ASU 2011-05, "Comprehensive Income: Presentation of Comprehensive Income." ASU 2011-05 will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. ASU 2011-05 does not change the items which must be reported in other comprehensive income, how such items are measured or when they must be reclassified to net income. ASU 2011-05 will be effective for the first interim and annual periods beginning after December 15, 2011. Further, in December 2011, the FASB issued ASU 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05." The Company believes the adoption of this guidance concerns disclosure only and will not have a material impact on its financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances. A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our financial statements.
9
Orofino Gold Corp.
Notes to the Financial Statements
3.
GOING CONCERN
In the course of the Company's exploration activities, the Company has sustained losses and expects such losses to continue unless and until the Company can achieve net operating revenues. Future issuances of the Company's equity or debt securities will be required in order for the Company to continue to finance its operations and continue as a going concern. The Company currently has no revenue from operations and has incurred cumulative net losses of $2,355,397 since its inception. The Company's financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. Realization values may be substantially different from carrying values as shown and the Company's financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amount and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
4.
PREPAID EXPENSE
The Company's attorney received a retainer of $25,000 of which $12,615 has been expensed leaving a balance of $12,385 for future work.
5.
MINERAL PROPERTIES
On April 6, 2010, the Company counter-signed an offer for joint venture-earn-in to option several mining concessions in the Department of Bolivar, Republic of Colombia. Pursuant to various stages of due diligence it was determined that the best way of obtaining title to the various target mineral properties was to enter into new agreements. On November 15, 2010 the Company entered into four agreements. The terms of the new agreements allowed for the Company to acquire an 80% interest in four mining concessions. The agreements were amended on April 18, 2011. However the Company was unable to make the October 1, 2011 payment under the amended formula. On March 1, 2012 the Company amended the acquisition agreements again on a basis of reducing the number of properties from 4 to 2 and reducing the payment schedule. A summary of the terms and ongoing payment obligations are as follows:
Cash payments:
1. $5,000 as an initial option payment;
2. $100,000 on or before January 31, 2011 (paid);
3. $150,000 on or before March 31, 2011 (amended), (paid), (previously February 28, 2011);
4. $50,000 on April 18, 2011 (amended), (paid) (previously $800,000 on or before March 31, 2011);
5. $450,000 every six months starting on July 1, 2012 (previously $900,000 every six months starting October 1, 2011, of which the Company may pay one-half of issuing restricted common shares to the vendor at a 10-day average trading price per amendment on April 18, 2011), (previously $800,000 every six months thereafter starting on June 1, 2011).
Share issuances:
1. 24 million shares on or before March 31, 2011 (issued in March 2011)
2. 10 million shares on or before March 31, 2012, (discontinued under March 1, 2012 amendment) and
3. 10 million shares on or before December 31, 2012 (discontinued under March 1, 2012 amendment).
The Company paid a total of $350,000 to independent third parties for consulting services in relation to the signing of the option agreements. The Company incurred a cost of $100,000 paid to a person in the United States for the initial introduction of the mineral concessions and $250,000 paid to some concession holders as the initial payments to pursue an option agreement.
6.
LOANS PAYABLE
The Company has loans payable to various independent third parties on the basis of being unsecured, payable on demand and bearing interest at the rate of 10% per annum.
|
|
|
|
|
|
February 29, 2012
|
|
May 31, 2011
|
|
$
|
1,316,720
|
$
|
756,349
|
10
Orofino Gold Corp.
Notes to the Financial Statements
7.
CONVERTIBLE LOANS
On January 18, 2011 the Company concluded agreements to convert a portion of loans payable into 10% convertible promissory notes on the basis that the principal balance and unpaid interest at the rate of 10% per annum be convertible into shares of the Company's restricted common stock at the conversion price of $0.0075 per share. The holder is limited to convert no more than 4.99% of the issued and outstanding common stock at the time of conversion.
|
|
|
|
|
|
|
|
February 29,
2012
|
|
May 31,
2011
|
|
Balance, at beginning of period
|
$
|
424,088
|
$
|
-
|
|
Convertible debt additions
|
|
-
|
|
752,572
|
|
Accrued interest
|
|
30,480
|
|
19,891
|
|
|
|
454,568
|
|
772,463
|
|
Converted into shares
|
|
(4,125)
|
|
(348,375)
|
|
Balance, end of period
|
$
|
450,443
|
$
|
424,088
|
|
Conversion price
|
$
|
0.0075
|
$
|
0.0075
|
|
Number of shares issuable
|
|
60,059,067
|
|
56,545,067
|
8.
CAPITAL STOCK
Common Stock
The company issued to the founders 10,000,000 common shares of stock for $1,000. On May 20, 2009, the Company completed a 6-for-1 forward stock split (the Forward Split") of the Company's common stock in the form of a stock dividend. All share and per share information has been retroactively adjusted to reflect the Forward Split. The par value of the Company's common stock was unchanged by the Forward Split.
On October 14, 2010, the Company increased its total authorized shares of common stock from 75,000,000 to 250,000,000, par value $0.001 per share.
On June 10, 2010 the Company issued 600,000 restricted shares to two parties for services at a value of $0.13 per share.
On August 17, 2010 the Company issued 3,600,000 restricted shares at $0.01 each pursuant to an assignment of debt dated October 31, 2009.
On August 18, 2010 the Company issued 6,000,000 restricted shares at $0.01 each pursuant to the retirement of debt as at February 17, 2010.
On March 8, 2011 the Company issued 24,000,000 restricted shares at $0.015 each pursuant to the acquisition of mineral properties.
On March 8, 2011 the Company issued 46,450,000 restricted shares at $0.0075 each to fourteen parties pursuant to the exercise of convertible debt.
On March 28, 2011 the Company issued 5,000,000 warrants at $0.10 each for cash consideration of $500,000. The warrants may be exercised to purchase 5,000,000 shares at $1.00 each until December 31, 2012 or may be surrendered for the receipt of 2,500,000 restricted shares.
On August 23, 2011 the Company issued 550,000 restricted shares at $0.0075 each to two parties pursuant to the exercise of convertible debt.
11
Orofino Gold Corp.
Notes to the Financial Statements
8.
CAPITAL STOCK continued
Warrants
(i) Warrant transactions are summarized as follows:
|
|
|
|
|
|
|
For the nine
|
|
For the
|
|
|
|
months ended
|
Weighted
|
year ended
|
Weighted
|
|
|
February 29,
|
average
|
May 31,
|
average
|
|
|
2012
|
exercise price
|
2011
|
exercise price
|
|
Balance
|
5,000,000
|
$ 1.00
|
5,000,000
|
$ 1.00
|
|
Granted
|
-
|
-
|
-
|
-
|
|
Exercised
|
-
|
-
|
-
|
-
|
|
Expired
|
-
|
-
|
-
|
-
|
|
Balance
|
5,000,000
|
$ 1.00
|
5,000,000
|
$ 1.00
|
At February 29, 2012 the Company has outstanding warrants, exercisable as follows:
|
|
|
|
Number
|
Exercise Price
|
Expiry Date
|
|
5,000,000
|
$ 1.00
|
December 31, 2012
|
The warrants may be exercised to purchase 5,000,000 shares at $1.00 each until December 31, 2012 or may be surrendered for the receipt of 2,500,000 restricted shares.
9.
RELATED PARTY TRANSACTIONS
The following expenses were incurred with directors and officers of the Company
|
|
|
|
|
|
|
|
For the nine
|
|
For the nine
|
|
|
|
months ended
|
|
months ended
|
|
|
|
February 29,
|
|
February 28,
|
|
|
|
2012
|
|
2011
|
|
Management fees
|
$
|
53,000
|
$
|
43,000
|
|
Total
|
$
|
53,000
|
$
|
43,000
|
As at February 29, 2012 accounts payable included $22,000 (May 31, 2011 - $40,000) owing to officers and directors.
The amounts charged to the Company for the services provided have been determined by negotiation among the parties. These transactions were in the normal course of operations and were measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.
10.
INCOME TAXES
No provision for federal income taxes has been recognized for the years ended May 31, 2011 and 2010 as the Company incurred a net operating loss for income tax purposes in each year and has no carryback potential. Deferred tax assets and liabilities at May 31, 2011 and 2010 totaled a net deferred tax asset of $505,000 and $350,000, respectively. At May 31, 2011 and 2010, the Company provided a full valuation allowance due to uncertainty regarding the realizability of these tax asset.
At May 31, 2011, the Company has net operating loss carry forwards totaling approximately $2.2 million for federal income tax purposes, which may be carried forward in varying amounts until the time when they begin to expire in 2029 through 2031.
11.
SUBSEQUENT EVENTS
Nil
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements involve risks and uncertainties, including statements regarding Orofino Gold Corp. (the "Company") capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports the Company files with the SEC. These factors may cause the Company's actual results to differ materially from any forward-looking statement. The Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
As used in this quarterly report, the terms "we," "us," "our," and "our company" mean Orofino Gold Corp. unless otherwise indicated. All dollar amounts in this quarterly report are in U.S. dollars unless otherwise stated.
OVERVIEW
Orofino Gold Corp. ("Orofino" or the "Company") was organized under the laws of the State of Nevada on April 12, 2005. Orofino is a development stage company and has a limited history of operations. The authorized share capital of the Company is 250,000,000 common shares.
Orofino Gold Corp. started operations on September 1, 2007 under the "Clean `N Shine" name. Prior to this, the company had no operations from inception (April 12, 2005) to November 30, 2007. On September 1, 2007, Orofino began operating as a full service automotive car wash, cleaning, detailing, and polishing business. The company has generated revenues from cleaning and car care services specifically, automotive upholstery and leather cleaning and automotive interior and exterior cleaning and washing.
On May 20, 2009, the Company completed a forward stock split of its common stock on a ratio of six shares for every one share of the Company. The record date of the forward stock split was May 15, 2009, the payment date of the forward split was May 19, 2009, and the ex-dividend date of the forward split was May 20, 2009. The forward split was payable as a dividend, thereby requiring no action by shareholders, nor any amendment to the articles of incorporation of the Company. As a result of the forward split, the post forward split number off issued and outstanding shares was 60,000,000.
There are no preferred shares authorized. The Company has issued no preferred shares. The Company has no stock option plan, warrants or other dilutive securities. We are contemplating raising additional capital to finance our business. No final decisions regarding the financing have been made at this time.
On December 5, 2009, the Company passed a resolution to change its name from SNT Cleaning Inc. to Orofino Gold Corp. On December 5, 2009, the Company accepted the resignation of its President, Secretary and director, Robert Denman, and appointed John Martin as a Director of the Company, effective as of equal date.
On June 6, 2010 John Martin resigned and Shi Long Ning, a resident of China, was appointed as a director. On February 28, 2011, Ary Pernett, a resident of Colombia; Alfonso Calderon, also a resident of Colombia and Dr, Hans Bocker, a resident of Switzerland joined the board. On January 7, 2011, Salvador Rivero, a resident of Germany, was appointed to the board. Presently Ary Pernett is the president and Shi Long Ning is the chairman.
The Company has offices in China and Colombia.
China:
93-B342 Xinliu Street
Zhong Shan District,
Dalian 116001, China
Colombia:
Carrera 40, No.10A-65,
Barrio El Poblado
Medellin - Colombia
13
INFORMATION ON DIRECTORS AND OFFICERS:
NING SHI LONG
·
Mr. Long is a Professional Software Engineer who has led an experienced team in developing and operating specified information and data systems the last 12 years. His company has designed and successfully commissioned over 20 Software installations at local and national organizations.
·
At Dalian Runbest Technology Development Co. Ltd. he was responsible for the entire design and development of key technology and coding for development of public packaging of a proprietary software technology. The clients of the company are concerned with the fields of finance, government, sci-tech education, medical, communication & energy, manufacturing and public utility.
·
He was responsible for project budgeting and the successful launching of major projects within financial guidelines as per the corporate policies of the responsible ministry.
·
ShanDong University - Information management and information system
·
Proficient in Chinese, English, French and Japanese languages.
·
VC++ | proficient | 12 months
·
OracleDB2 | proficient | 48 months
·
PowerbuilderSqlserverPowerdesigner | expert | 84 months JavaAspMs Project | average | 6 months
·
Ning Shi Long is a hands on leader and is relied-upon for Leadership and financial control and the company's direct link to large Chinese/Japanese investment companies and high net worth individuals. Ning Long is also proficient in handling data information systems to provide information to investors and financial institutions.
ARY PERNETT
EDUCATION
·
1973: Ingeniero de Minas y Metalurgia - Universidad Nacional de Colombia - Medellin (Mining and Metallurgy Engineer- National University of Colombia)
·
1977: Course de Reciclage en Geologie - Ecole National Superieur de Geologie - Nancy, France (Actualization in Geology - National School of Geology - Nancy - France)
·
1978: Docteur de L'institute National de Lorraine - Nancy - France (Fluid Inclusions in Gour Negre - State of Gare in France)
WORK HISTORY
·
1968 - 1970: Assistant in Petroleum Lab, National University of Colombia, Medellin-Colombia
·
1972 - 1976: Ministery of Mines of Colombia, as Engineer in Technical Assistance for Miners, (Choco State); Director of Marmato Mines, (Maramto, Caldas State) and Mining Inspecter, (Frontino Gold Mines in Segovia, Antioquia State)
·
1978 - 1981: National Institute of Geology of Colombia, INGEOMINAS, as field geologist working in the Mining Map of Antioquia -
·
1982- 1984: Carbones de Uraba (Coals of Uraba, a coal Enterprise exploring for Coal in Uraba area, Antioquia State, Colombia
·
1985 -1992: Personal activity in mining; explotation in alluvial deposits and assistance for small miners
·
1993 - 2000: CDI Gold Company in the Zancudo Mine, Titiribi, Antioquia State, Colombia, as partner, consultant, and at the ent as resident engineer in the mine site.
·
2000 - 2010: Personal Business in wood home construction, Cars, Computers, in Mexico
PUBLICATIONS
·
1980: Mining Map of the State of Antioquia - Ingeominas - Medellin - Colombia
·
1980: Memory of the Mining Map of the Antioquia State - Ingeominas - Medellin
LANGUAGES
·
Spanish: 100%
·
French: 70%
·
English: 50%
14
ALFONSO CALDERON
EDUCATION
·
BS in Geology and Petroleum Engineering from Escuela de Minas de Medellin, Universidad Nacional de Colombia.
·
MSc in Coal Geology / Mining and Geotectonics from University of Illinois. Credits in Economic Geology and Mineral Exploration for Ph.D. at Indiana University and Pennsylvania State University.
PROFESSIONAL EXPERIENCE
·
Organization, evaluation, and technical and statistical analysis of the Colombian Mining data universe collected in the development of the Technical Appraisal and Control Process for the Improvement of Mining Activity in Colombia. Consulting contract with Minercol Ltda.
·
Design and preparation of CD Package for international promotion of four areas for the exploration and exploitation of emeralds in the Chivor District, Boyaca, Colombia. Joint Venture with private parties.
·
Supervision of the Technical Appraisal and Control Process for the Improvement of Mining Activity in the Minercol's La Jagua Seccional Area (Atlantico, Magdalena, Bolivar) and the Minercol's Bogota Seccional (Gran Mineria, Cordoba, Cesar y Guajira). For Minercol Ltda.
·
Design and Implementation of the Colombia National Mining Balance. Design Definition and Implementation of a Computer Model and System. For the Colombian Mines Ministry - UPME.
·
Analysis of the National Minerals Market for the Project "MEDC 2000". For Minercol Ltda.
·
Definition of Technical, Economical and Environmental Potentialities and Restrictions for the Development of the Energy - Mining Sector in Colombia. GIS Tool for this Sector Planning. For the Colombian Mines Ministry - UPME.
·
Appraisal and technical concept on the Geological Exploration Program Final Report submitted by Carboandes S.A. to Minercol Ltda. to develop mining operations at La Victoria and El Tesoro areas within the coal region of La Jagua de Ibirico, Cesar, Colombia.
·
Technical supervision of the geoelectrical study to establish the alluvial covering thickness on top of the multi - seam coal deposit at Similoa and Rincon Hondo areas within the La Loma coal basin, Chiriguana and La Jagua, Cesar, Colombia.
·
Drummond Coal Mining Operations appraisal, for Colombian Government, at the Pribbenow Mine in La Loma, Cesar, Colombia.
·
Feasibility study for Fuel Conversion of vehicles to Liquid Petroleum Gas – LPG - in Bogota. Identification and Value Estimation of all Mining Related Equipment, Machinery and Tools of the Colombian Government Property and the Recommendation of their Use and Final Destination.
·
Study for appraisement of Potential Demand of Fuel Gases in Colombia. Technical and Administrative Supervision of the Exploration, Geological Evaluation and Industrial Characterization of Gypsum Deposits in the Area of Paez-Miraflores, Boyaca, Colombia. Advisory to INGWE Coal Corporation Ltd. from South Africa.
·
Study for the Appraisement of Potential Substitution of Firewood for Mineral Coal in Colombia.
·
Definition / Preparation of Bid Terms, Contracts Preparation and Negotiations. Installation of a Plant for Grinding / Treatment of Industrial Minerals. Commercialization of Industrial Minerals.
·
Surface and Underground Geology and Mining Development Adviser. Managing and coordinating Several Matters before Government Entities.
·
POSITIONS: Covenas Terminal Construction Manager, Executive Assistant to the Covenas Terminal Operations Manager and Executive Assistant of the Cano Limon Field General Maintenance/Construction and the Pipeline/Terminal Operations Manager.
·
RESPONSIBILITIES: Managing all aspects of construction and installation of the Covenas Petroleum Terminal facilities. Active participation in the supervision and coordination of all aspects of the Cano Limon-Covenas pipeline and Covenas Petroleum Terminal operations and maintenance activities. Participation in evaluating and reviewing bid documents, materials requisitions, budget control, cost centers. Direct participation in the Cravo Norte Association Technical Subcommittee meetings. Coordination of relations with partners. Participation in negotiations with government entities (Minminas, Ecopetrol, Dimar) on permits, operations, others.
15
INTERCOL and INTERCOR (EXXON Subsidiaries)
·
POSITIONS: Geologist, Field Geological Supervisor, Field Exploration Resident, Projects Director, Field Operations Director, Senior Engineer, Assistant to Cerrejon Coal Project Director and Project Administration Manager.
·
RESPONSIBILITIES: Managed planning and development of the field exploration program for the Cerrejon Coal Project - North Zone. Drilling, logging, log interpretation and correlation. Geometry of coal deposit definition, computer modeling of the Cerrejon Coal Deposit. Volumetric calculations of reserves. Supervision and administration of Intercor contractors performing engineering works. Aerial photography and topographic mapping, underwater (offshore) geotechnical explorations for selection of a main Coal Port. Groundwater Control design and a river diversion geotechnical studies. Mine facilities foundation investigations. Quarries investigations. Seismic and geotechnical studies. Selection of the railroad route.
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Active role in the definition and co-ordination of engineering, construction and procurement of all facilities for the Cerrejon Project. Assist the General Project Director for the supervision, monitoring and appraisal of the Cerrejon Project Prime Contractor (Morrison Knudsen). Active role in the office of Prime Contractor (MK), at Burlingame, California, for definition and coordination of engineering, design, procurement and construction of all facilities for the Cerrejon Project. In Barranquilla, managed several specific responsibilities in the areas of personnel administration, administrative services, government relations, systems support, and public affairs. Monitor MK (Prime Contractor) in related activities such as plans for winding down construction activities, relocation/transfer/termination of personnel and facilities. Disposal of materials and equipment, etc, others.
CARTER OIL COMPANY (EXXON Subsidiary)
Wellsite Geologist. Training with Exxon
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Geological exploration for coal in Texas, Louisiana, Alabama, Arkansas, Tennessee, West Virginia. Drilling and core description, mapping, log correlation, and evaluation.
ILLINOIS STATE GEOLOGICAL SURVEY.
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Training on general coal geology, mapping and underground mine development. Correlation of electrical logs. Structural geology application for underground mapping and mine development. Drilling and core description and correlation.
INGEOMINAS(Instituto Nacional de Investigaciones Geologico Mineras de Colombia).
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As Field Geologist: Geological mapping along Central and Western cordilleras of Colombia. Rock and soil geological and geophysical correlation for mapping and mineral exploration and evaluation. Soil and hard rock drilling / logging supervision. Log interpretation / correlation. Geochemical mineral exploration in jungle areas. Geological and Economical Evaluation of mineral deposits.
DR. HANS BOCKER
Prof. Bocker lives in Switzerland. He holds two professorships in business administration and applies his dual education in technology and economics/management in many areas. As a cosmopolitan, he works as a consultant, author, finance and business journalist, columnist and IR specialist. He has for decades devoted himself to precious metals and the mining industry. His assignments and interests have taken him to over 60 countries, including many in the Middle and Far East, Africa, Europe, North and South America.
To date, the number of his publications exceeds the 2000 mark. 150 of which are academic. The majority of his articles and papers have been published by the Borsen-Zeitung (11 years of collaboration), the Frankfurter Allgemeine (2 years), Finance and Wirtschaft (over 20 years) and Die Welt (1 year). He can be found under "B" in all additions of: Who's Who in the World" from 1991 to 2009. He teaches at two elite business schools, works in public and international relations, advises a number of commodity and mining companies and is a member of Rotary International.
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SALVADOR RIVERO
Mr. Rivero graduated as a lawyer in Mexico and has over 25 years of diverse experience in international business and corporate finance. An acquisitions specialist, he has been responsible for the development of various turn-key projects in the mining, energy, fertilizer, oil and gas, and shipping sectors. Mr. Rivero has been involved with all phases of mining exploration and development in various senior capacities.
Mr. Rivero graduated as a lawyer in Mexico and has over 25 years of extensive experience in international business and corporate finance. An acquisitions specialist, he is responsible for the development of various turn-key projects in the energy, fertilizer, oil and gas, and shipping sectors. Mr. Rivero founded and directed Constructora y Perforadora Marina, S.A. de C.V., and Kaiser Internacional, S.A. de C.V., Ultramar Bancorp Inc., Ultramar Capital Plc. and First Mercantile Bank Ltd. In 1998-2000 Mr. Rivero was responsible for acquiring, developing and putting into production a silver mine in Sinaloa for Real de Panuco, S.A. de C.V. and was a member of the Board of Directors of the Canadian mining company Golden Temple Mining and the Mexican mining company Minas Kaiser, S.A. de C.V. Until recently, he acted as the President and served as a Director of Oroco Resource Corp, a mining corporation in Vancouver, Canada during its start up and pre IPO phase, during which time he was responsible for the successful acquisition of its mining properties in Mexico.
LABOR FORCE
Over the quarter ending February 29, 2012 the company has employed casual part-time labor, as required.
MINING CONCESSIONS
On April 6, 2010, the Company counter-signed an offer for joint venture-earn-in to option several mining concessions in the Department of Bolivar, Republic of Colombia. Pursuant to various stages of due diligence it was determined that the best way of obtaining title to the various target mineral properties was to enter into new agreements. On November 15, 2010 the Company entered into four agreements. The terms of the new agreements allow for the Company to acquire an 80% interest in four mining concessions. A summary of the terms and ongoing payment obligations are as follows:
Cash payments:
1. $5,000 as an initial option payment;
2. $100,000 on or before January 31, 2011
3. $150,000 on or before February 28, 2011;
4. $800,000 on or before March 31, 2011;
5. $800,000 every six months thereafter starting on June 1, 2011
Share issuances:
1. 24 million shares on or before March 31, 2011
2. 10 million shares on or before March 31, 2012, and
3. 10 million shares on or before December 31, 2012.
The Company paid the sum of $350,000 to third parties for consulting services in relation to the signing of the option agreements.
The Sur de Bolivar concessions consist of four exploration licenses totaling 4,300 hectares ("ha") (plus or minus) and additional, in process exploration applications, totaling 6,244.5 ha. The concessions are located approximately 500 km NNW of Bogota (or alternatively 200 km SE of Cartagena), at the northern end of the Serrania de San Lucas, within the Municipality of Rio Viejo, Department of Bolivar. Access to the area requires 4 hours of overland travel, from the nearest national airport, along a reasonably good secondary road system. Entrance may be facilitated by the reclamation of a presently overgrown, 1000 m airstrip located within the license area. The strip is suitable for moderate-sized aircraft, flights taking approximately 50 minutes from Medellin.
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GEOLOGY, MINERALIZATION, AND EXPLORATION POTENTIAL
REGIONAL GEOLOGY
The Serrania San Lucas, situated due south of the confluence between the rivers Cauca and Magdalena, forms an offset, northeaster-most extension of Colombia's Cordillera Central. Sparse regional geologic studies by the Ministry of Mines and Energy, through the 1970's and early 1980's have suggested that The Serrania represents a geologic extension of the northern Cordillera Central, underlain by a deformed, Paleozoicaged, metamorphic basement, intruded by Upper Jurassic-Lower Cretaceous aged, batholithic-scale plutons of tonalitic through granitic (generally dioritic to quartz dioritic) affinity, and overlain by associated high-level volcanic, pyroclastic, and derived sedimentary rocks of similar through Cretaceous age. The region exhibits offset and subdued topographic relief relative to the northern Cordillera Central due to uplift and oblique dextral movement along the Palestina and Magdalena valley fault systems. Regional lithologic contacts strike broadly north-south paralleling the Palestina system at this latitude and are of a mixed structural-stratigraphic nature. A strong north-easterly tectonic element transects the entire region, reflected by the sub-paralle alignment of numerous drainages and photogeologically-interpreted faults. A more sporadic set of east-west trending lineaments is noted to transect at least the northern portion of the Serrana. The tectonic history of this portion of Colombia is complex, and movement and reactivation along any one of these sets of structures may have a multiphase history dating from the late Jurassic through to the late Tertiary (Pliocene) and recent times.
LOCAL GEOLOGY
Ground-work to date, documents a mixed sequence of predominantly volcanic rocks of intermediate to felsic composition (including lithic and crystal tuffs of fine to medium grain-size, and common coarser agglomeratic fragmentals). Fine grained cherty "sinters", coarse, possible phreatic-style breccias (fine matrix-supported, very angular clasts), and local occurrences of siliciclastic sediments, are also present. These rocks overly gneissic basement, andor are intruded by plutons of granodioritic composition exhibiting medium to coarse-grained, equigranular intergrowths of quartz, mixed feldspars, and a mafic phase (chlorite after amphibole). Local shearing has imposed a "pseudo-gneissic" appearance to the rock manifesting as a lineation observed within the mafic phase. The relationship between the intrusive rocks and the cover sequence is not understood, and is presently under investigation.
Observed structural orientations appear to reflect regional structural trends with textures in the granitoids and documented fault structures striking, north-south, and additional faulting striking NE-SW. Notably the volcanic sequence generally lacks a penetrative fabric, and is characterized by a brittle fracture and orthogonally jointed style of high-level deformation.
Recent re-thinking of the geology of at least the northern San Lucas area superimposes an additional Tertiary magmatic even upon the region. Although not yet strongly evidenced, it attempts to account for the widespread occurrence of relatively flat-lying and undeformed, highlevel volcanicpyroclastic lithotypes, as described above, which may lie directly upon deformed in intrusivegneissic basement and lack obvious correlatives in other parts of the northern Cordillera Central.
MINERALIZATION
MINERO (small-scale miner) activity beginning in the mid-1980's, has outlined a series of rich gold occurrences, of both INSITU and local alluvial provenance, in broad N-S belt, extending CA. 50 kilometres from Norosi in the south to San Martin de Loba, on the bank of the Magdalena River, in the north. GOVERNMENT RECORDED gold production from the region, between 1987 and 1994 is CA. 1,271,000 ounces of gold, and the region is presently reporting a very high annual gold production in Colombia, averaging CA. 275,000 ounces per year since 1991. Virtually no exploration, systematic or otherwise, has been carried out in the region, by either the governmental or private sectors.
Within the license and solicitude area, numerous INSITU gold occurrences have been exposed by MINERO activity. Three zones of concentrated workings have been located within the area. These include, from north to south, 1) La Azul, 2) Culo Alzado, and 3) Buena Sena.
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LA AZUL
Based upon exposures in old workings, mineralization in the La Azul area is hosted within roughly N-S striking shear structures within both the intrusive and volcanic rock-types. The majority of the previous subsurface work has excavated a series of shafts and galleries to 20 m depth over a 100 m strike length within the "pseudo-gneissic" lithology. (2010 records show depths to 37 metres and strike length of 400+ metres) Mineralized material included argillically and potassically altered and sheared intrusive hosting quartz flooded zones, and quartz with peripheral cm-scale quartz stringers. These zones host 1 to 7 percent mixed sulphides, mostly pyrite, but also including galena, sphalerite and chalcopyrite. Gold analyses reported by the owners from this material returned values in the 10's to 100's of g Aut. Current cut-off grades used by the local miners is around 10 to 20 grams per tonne). The sulphidised granitoid hosting only minor amounts of veining returned base metal contents in the 100's of ppm, including 1% Cu. Evidence for the presence of two or three sub-parallel N-S structures hosting shearing and veining was noted in trenches to the SW of the main area of workings.
CULO ALZADO
At Culo Alzado, on the north margin of Cerro San Carlos (now Senderos de Oro), at least two low spurs are underlain by medium grained granodiorite. Broadly N-S structure is implied by N-S drifting and removal of vein material. Irregular quartz-sulphide stringers and argillic alteration are observed along the margins of the adits. Current mining activity, is extracting a 1 m wide quartz vein from a 20 m deep shaft within sheared granodiorite. The vein material contains up to 20 percent mixed sulphides, including pyrite, galena, sphalerite, and chalcopyrite. Pyritic sulphidation and argillic bleaching of the wallrocks is widespread. Laboratory analyses reveal the grade of the vein material is highly variable, ranging from 3 to 68 g Aut (reportedly averaging about 20 g Aut from past production). Visually the copper content of the materials extracted from the Culo Alzado adits appears to be increasing at depth, where numerous fractures filled with quartz and chalcopyrite are appearing within the granitoid host, at the expense of the lead and zinc-bearing sulphides.
BUENA SENA
Work to date reveals that the largest workings within the concessions are at Buena Sena, where extensive extraction of alluvials (up to 10, 235-style back hoes were working at one time) has taken place along the major drainages (Quebrada San Pedro, Quebrada Aguas Blancas) servicing the south flank of Cerro San Carlos and the hills immediately to the south. Most, if not all, of these source regions are within the concessions and solicitudes. Numerous underground and small open cut workings are also seen at Buena Sena, on Cerro San Carlos, and on the low hills to the south, across the alluvial workings. Some appear to be working a series (at least 10) of sub-parallel, or EN ECHELON N50-60E striking, subvertical structures hosting discrete quartz-pyrite veins to 90 cm thickness, while others have attempted to exploit clusters of anastomosed, quartz-pyrite-stringer veining which strike N20 to N45-degrees east, and tend to dip steeply to the west. An additional series of mm to cm-scale, generally sub-parallel quartz-pyrite fracture fills, which strike E-W to NW, are of widespread occurrence, but have not been exploited due to their small size.
Structural considerations based upon filed observations and LandSat image interpretations suggest the Cerro San Carlos-Buena Sena zone is contained within an east-west-striking normal (+-oblique) fault-bound corridor, which transects the southern portion of the Western solicitudelicencia area. The corridor measures CA. 15 km E-W by 3 km N-S, and is lithologically dominated by a mixture of brittley deformed, high level volcanic-volcaniclastic protoliths, including intermediate to felsic crystal and lithic tuffs and agglomerates (locally welded), and volcanic (+/- phreatichydrothermal) breccias, with lessor clastic sedimentary rocktypes, which host the mineralized structures described above. The throw on the northern boundary fault (Falla Piloto) juxtaposes foliated granitoid basement to the north against the high level volcanics to the south. The southern boundary fault (Falla Los Delfines) is of some-what lessor magnitude, with volcanics (and mineralization) being noted in both the hanging
wall and the footwall. Additional zones of alteration have been recorded within this corridor, to the west of the solicitude block, and are presently being investigated. This corridor is noted to offset, as well as to be offset by the dominant, locally reactivated, NE trends of the region.
Field investigations suggest that, within the E-W corridor, strong structural control with respect to mineralization is exerted by a N45E-striking, sinistral shear zone and associated splays faults. Along this structure, a continuous zone of alteration and mineralization is observed which measures a minimum of 2 km along strike by 400 m in width, and is geologically open along strike (both ends) and broadly to the SE. This structure includes a core zone defined by the presence of artisanal workings, which measures some 1400 m by up to 300 m. Within the main corridor argillic +- sericitic wallrock alteration accompanied by silicification and pyritic sulphidation are pervasive, with concentrations of disseminated pyrite reaching 8 to 10%, and quartz vein densities up to 10 to 15% over 10's of square metres, in the well mineralized zones.
Geochemical sampling and mapping reveal; 1) gold mineralization is widespread, with virtually every rock type and every structural orientation hosting veining returning anomalous gold values, 2) increasing gold values exhibit positive correlation with enhanced quartz veining and pyritic sulphidation, 3) gold content tends to show positive, although not necessarily linear correlation, with values in silver, copper, lead, zinc and arsenic +- antimony, and 4) disseminated pyritic sulfidation alone does not carry gold grades.
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EXPLORATION AND RESOURCE POTENTIAL
Reconnaissance covering the northern San Lucas region, documents very clearly the dominant structural trends, as outlined above. Additionally, numerous km-scale features, including circular plutonic clusters, and regional argillic and Fe-oxide alteration patterns are observed. Ground reconnaissance to date, implies the potential presence of an as yet poorly recognized metallogenic domain spanning 1000's of square kilometers, which is only recently surfacing, from rather spectacular artisanal gold production. The region is virtually unexplored from a modern metallogenic standpoint, but based upon work to date, it demonstrates very good potential for the ECONOMIC occurrence of;
1) large-scale high level, volcanic-hosted epithermal gold deposits (E.G. quartz-sericite-adularia(?)) systems, as suggested at Buena Sena,
2) porphyry-style copper+- gold systems as seen at Culo Alzado, and observed in, regional mineralogical and alteration patterns, and,
3) high-grade, mesothermal, "Segovia"-style gold vein systems, as evidenced at La Azul
Results from recent sampling and assaying will be released when a compilation of the data is completed.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED FEBRUARY 29, 2012
We incurred operating expenses of $684,181 for the nine months ended February 29, 2012. These expenses consisted of general operating expenses incurred in connection with day to day operation of our business. We have taken on 4 mineral resource concessions in Colombia. We sent a geological team to Colombia to examine several properties in Colombia. We had paid the sum of $350,000 in preparation of the acquisition of the properties starting in the previous year. We have spent a considerable effort on examining title to the properties and determining ownership issues. The issue of title opinions has caused a delay in our planning. We are confident now and we will begin our next phase of exploration.
LIQUIDITY AND FINANCIAL CONDITION
Our cash balance at February 29, 2012 was $nil with outstanding liabilities of $1,989,729 and loans payable of $1,316,720. A total of 9,600,000 shares were issued at a fair value of $174,000 to reduce debt. A total of 6 million shares have been returned for cancellation. A further 600,000 shares were issued for services at a fair value of $60,000.
The Company has been funded by way of loans at an annual rate of interest of 10%. On January 18, 2011 the Company issued convertible debentures to debt holders to issue shares at $0.0075 per share. A total of some 100,000,000 shares are issuable at $0.0075 each to repay debt of some $752,572. A total of $623 010 being loans payable at July 18, 2010 was converted and the balance of $129,562 was loans payable to January 18, 2011. Pursuant to the terms of the convertible notes any shares issued will be restricted shares according to the following paragraphs included in the terms of the agreement:
"Restricted Securities. This Note is, and the shares of Common Stock issuable upon conversion hereof shall be, "restricted securities" within the meaning of SEC Rule 144 promulgated under the Securities Act of 1933 (the "1933 Act"). Holder acknowledges and agrees that it is acquiring this Note and, upon conversion, the shares of Common Stock, without a view to the public distribution or resale of the Note or such shares in violation of applicable federal or state securities laws.
No Registration. This Note has not been, and the shares of Common Stock issuable upon conversion hereof will not be, registered under the 1933 Act or under the securities laws of any other jurisdiction; and therefore, Holder must be able to hold the Note or the shares indefinitely without any transfer, sale or other disposition, unless they are subsequently registered under the 1933 Act and under the securities laws of other applicable jurisdictions or, in the opinion of counsel to the Company, registration is not required under such Act or laws as the result of an available exemption from registration."
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Based on our current operating plan, we do not expect to generate revenue that is sufficient to cover our expenses for at least the next year. In addition, we do not have sufficient cash and cash equivalents to execute our operations for the next year. We will need to obtain additional financing to operate our business for the next twelve months. We will raise the capital necessary to fund our business through a private placement and public offering of our common stock. Additional financing, whether through public or private equity or debt financing, arrangements with shareholders or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us. Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital. If we issue additional equity securities to raise funds, the ownership percentage of our existing shareholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. Debt incurred by us would be senior to equity in the ability of debt holders to make claims on our assets. The terms of any debt issued could impose restrictions on our operations. If adequate funds are not available to satisfy either short or long-term capital requirements, our operations and liquidity could be materially adversely affected and we could be forced to cease operations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
INFLATION
In the opinion of management, inflation has not had a material effect on our operations.
STOCK OPTIONS
The Company currently has no stock option plan.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our incorporation.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patent or trademark.
HOLDERS OF OUR COMMON STOCK
As of February 29, 2012, we had approximately 270 stockholder(s) of record holding 143,900,000 shares of our common stock.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1. We would not be able to pay our debts as they become due in the usual course of business; or
2. Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.