29-Dec-2011
Annual Report
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 16 of this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
RESULTS OF OPERATIONS FOR OUR YEARS ENDED DECEMBER 31, 2010 AND 2009
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2010 AND 2009
Year Ended December 31,
2010 2009
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Revenue $ Nil $ Nil
Operating Expenses 691,341 $ 312,740
Net Loss $(1,734,968) $ (332,740)
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EXPENSES
Our operating expenses for the years ended December 31, 2010 and December 31,
2009 are outlined in the table below:
Year Ended December 31,
2010 2009
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General and Administrative $ 143,043 $ 17,746
Management Compensation 71,000 71,500
Management stock based compensation 297,500 --
Rent - Related Party -- 2,000
Professional Fees 71,809 195,813
Exploration Costs 107,989 25,681
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Operating expenses for the year ended December 31, 2010, increased by approximately 121% as compared to the comparative period in 2009 primarily as a result of an increase in exploration costs, consulting fees and an increase in interest expenses due to stock fair value.
REVENUE
We did not earn any revenues during the years ended December 31, 2010 and 2009. We do not anticipate earning revenues until such time as we have entered into commercial production on the Nyinahin property. We have not commenced the exploration stage of our business and can provide no assurance that we will discover economic mineralization on the property, or if such minerals are discovered, that we will enter into commercial production.
EQUITY COMPENSATION
We currently do not have any formal stock option or equity compensation plans or arrangements. However, the company issued stock based compensation of 297,500 in 2010. See Item 11 Executive Compensation.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
December 31, December 31, Increase/
2010 2009 (Decrease)
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Current Assets $ 147,251 $ 33,387 113,864
Current Liabilities $ 91,592 $ 635,531 (543,939)
Working Capital (deficit) $ 55,659 $(602,144) 657,803
CASH FLOWS
Year Ended Year Ended
December 31, December 31,
2010 2009
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Net Cash (Used) in Operating Activities $(234,089) $(152,774)
Net Cash (Used) by Investing Activities $ (52,215) $ --
Net Cash Provided by Financing Activities $ 383,502 $ 152,180
Net Increase (Decrease) in Cash During the Period $ 97,198 $ (594)
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CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular disclosure obligations.
GOING CONCERN
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future debt or equity financing.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant 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 are material to stockholders.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
EXPLORATION STAGE COMPANY
Our company complies with Accounting Standards Codification (ASC) Topic 915 and for its characterization of our company as exploration stage. All losses accumulated since inception has been considered as part of our company's exploration stage activities.
Our company is subject to several categories of risk associated with its exploration stage activities. Mineral exploration and production is a speculative business, and involves a high degree of risk. Among the factors that
have a direct bearing on our company's prospects are uncertainties inherent in estimating mineral deposits, future mining production, and cash flows, particularly with respect to properties that have not been fully proven with economic mineral reserves; access to additional capital; changes in the price of the underlying commodity; availability and cost of services and equipment; and the presence of competitors with greater financial resources and capacity.
MINERAL PROPERTY COSTS
Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred. Our company assesses the carrying costs for impairment at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units of production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or our company's commitments to plan of action based on the then known facts.
ASSET RETIREMENT OBLIGATION
Our company records asset retirement obligations as a liability in the period in which a legal obligation associated with the retirement of tangible long-lived assets result from the acquisition, construction, development and/or normal use of the assets. At December 31, 2010, our company had not undertaken any drilling activity on its properties and had not incurred significant reclamation obligations. Consequently no asset retirement obligation was accrued in the December 31, 2010 and 2009 financial statements.
IMPAIRMENT OF LONG-LIVED ASSETS
Our Company reviews the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things, assumptions about future operating performance, and may differ from actual cash flows. Long-lived assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value in the period in which the determination is made. During the years ended December 31, 2010 and 2009 our Company impaired $0 and $3,450, respectively.
STOCK BASED COMPENSATION
The Company has on occasion issued stock in lieu of cash to various vendors for services rendered. The Company has adopted FASB ASC 718-10, "Compensation-Stock Compensation", which requires the compensation cost related to share-based payments, such as stock options and employee stock purchase plans, be recognized in the financial statements based on the grant-date fair value of the award. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 2 of the financial statements

