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Article by DailyStocks_admin    (11-27-13 11:32 PM)

Description

ROYAL MINES & MINERALS CORP. CEO & President, 10% Owner KENNETH IAN MATHESON bought 10,500,000 shares on 11-19-2013 at $ 0.05

BUSINESS OVERVIEW

Overview

We were incorporated on December 14, 2005 under the laws of the State of Nevada. We are an exploration stage company and our primary objectives are to: (i) commercially extract and refine precious metals from our own and others mineralized materials; (ii) use our leaching process (Cholla) to recover precious metals from specific ore bearing materials; and (iii) joint venture, acquire and develop mining projects in North America.

We are focusing our business on commercially processing specific fly ash and other mineable materials, using a leach process that exposes extractable gold (the “Cholla Process”) at our processing and refining plant located in Scottsdale, Arizona (the “Scottsdale Facility”). In November 2012, we shut down our Phoenix Facility and we have no plans to continue that operation.

We entered into a Memorandum of Understanding dated October 19, 2010 with Golden Anvil, SA de CV (“Golden Anvil”) with respect to the proposed formation and funding of a proposed joint venture for the exploration and development of mineral concessions owned by Golden Anvil in the State of Nayarit, Mexico (the “Golden Anvil Mine”). We are currently working with management of Golden Anvil to move the assets of Golden Anvil to an entity on the TSX Venture Exchange from which we would receive a percentage ownership via common stock from the conversion of our loans.

In August 2012, we did not pay the renewal fee on our interest a gold project that consisted of a mineral lease covering 20.61 acres of patented claims and an option to acquire a 100% interest in 20 unpatented claims located near the mineral lease.

We are actively seeking to enter into joint ventures with third parties who have legal rights to fly ash resources, including landfills/monofills. There are no assurances that we will be able to commercially extract precious metals from fly ash or other mineable ores using our Cholla process or that we will be able to enter into joint ventures for the exploration and development of additional mining projects.

RECENT CORPORATE DEVELOPMENTS

The following corporate developments occurred since the filing of our Form 10-Q for the fiscal quarter ended January 31, 2013:

Adoption of 2013 Stock Incentive Plan

On June 20, 2013, the Board of Directors of the Company adopted the Company’s 2013 Stock Incentive Plan (the "2013 Plan"). The purpose of the 2013 Plan is to enhance the long-term stockholder value of the Company by offering opportunities to directors, officers, employees and eligible consultants of the Company (“Participants”) to acquire and maintain stock ownership in the Company in order to give these persons the opportunity to participate in the Company's growth and success, and to encourage them to remain in the service of the Company.

Extension of Warrants

On July 2, 2013, we extended the expiration dates of the following warrants:

(i)
23,020,000 warrants previously issued on July 13, 2011 with an original expiration date of July 12, 2013, have been extended to July 12, 2014. Each warrant entitles the holder to purchase an additional share of our common stock at a price of $0.10 per share; and

(ii)
1,000,000 warrants previously issued on September 26, 2011, with an original expiration date of September 25, 2013, have been extended to September 25, 2014. Each warrant entitles the holder to purchase an additional share of our common stock at a price of $0.10 per share.

Facilities and Technologies

Our Phoenix Facility is an industrial building of approximately 9,800 square feet located in Phoenix, Arizona. The Phoenix Facility is designed as a compact, modular, cost efficient, turn-key operation, with a capacity of processing 4 tons of fly ash per day. In our Phoenix Facility we utilize our Cholla Process and our Lixiviation Technology, being a closed loop, zero liquid discharge, leach extraction process. Below is a diagram of a 2 ton per hour processing circuit. The circuit at our Phoenix Facility is smaller in size. In November 2012, we shut down our Phoenix Facility and we have no plans to continue that operation. Our lease on the Phoenix Facility expires in August 2013 and we do not plan to renew that lease.

We acquired our interest in the Lixiviation Technology and our Phoenix Facility on April 2, 2007 under the terms of a Technology and Asset Purchase Agreement (the “Technology Agreement”) with New Verde River Mining Co., Inc. (“New Verde”) and Robert H. Gunnison. In consideration of the Lixiviation Technology and the Phoenix Facility, we paid and issued the following:

(a)
$300,000 to New Verde for the purchase of the equipment within the Phoenix Facility as follows:


(i)
$175,000 upon execution of the Technology Agreement (which amount has been paid); and


(ii)
$125,000 (of which $50,000 is outstanding).

Page 4 of 28


(b)
issued 2,000,000 shares to Mr. Gunnison for the Lixiviation Technology.

Concurrent with the acquisition of the Lixiviation Technology and the Phoenix Facility, we entered into an Employment Agreement dated April 2, 2007 (the “Employment Agreement”) with Robert H. Gunnison whereby Mr. Gunnison agreed to act as our Production Manager commencing on April 2, 2008. In consideration of Mr. Gunnison’s services, we paid Mr. Gunnison a salary of $120,000 per annum. Mr. Gunnison left as Production Manager in January 2012, but assists us on a consulting basis.

On March 13, 2009, we entered into the Payment Extension and License Agreement with New Verde and Mr. Gunnison whereby New Verde and Mr. Gunnison agreed to extend the deadline for the balance owed to New Verde to June 30, 2010. In consideration of the extension, we agreed to pay interest at 6% per annum on the balance owing to New Verde. We also agreed to grant New Verde and Mr. Gunnison a non-exclusive worldwide license on the Technology (the “License”). The License will only take effect in the event of the termination of the employment agreement between Mr. Gunnison and the Company. New Verde and Mr. Gunnison will not be permitted to assign or sub-license without our prior written approval. On July 22, 2010 and July 7, 2011, we entered into a payment extension with New Verde and Mr. Gunnison whereby New Verde and Mr. Gunnison agreed to extend the deadline for the balance owed to New Verde to June 30, 2011 and June 30, 2012, respectively. In consideration of the extension, we agreed to extend the accrual of interest at 6% per annum on the balance owing to New Verde. As of the date of this filing the deadline has been extended to June 30, 2014.

Our Scottsdale Facility is an industrial building of approximately 6,825 square feet located in Scottsdale, Arizona. The Scottsdale Facility is designed specifically for processing fly ash using our Cholla Process, a closed-loop, modular, turn-key, leaching operation, with a capacity of processing 6 tons of fly ash per day.

We have yet to realize significant revenues from our Cholla Process and Lixiviation Technology.

Compliance with Government Regulation

Our activities are subject to extensive federal, state, and local regulations in the United States. These statutes regulate the mining of and exploration for mineral properties, and also the possible effects of such activities upon the environment. Future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the development of the Piute Valley Property, the extent of which cannot be predicted. Our Piute Valley Property is comprised of patented and unpatented mining claims located on federal land managed by the U.S. Bureau of Land Management. Mining activities on the Piute Valley Property must be carried out in accordance with a permit issued by the Bureau of Land Management.

Other regulatory requirements monitor the following:

(a)
Explosives and explosives handling.

(b)
Use and occupancy of site structures associated with mining.

(c)
Hazardous materials and waste disposal.

(d)
State Historic site preservation.

(e)
Archaeological and paleontological finds associated with mining.

(f)
Wildlife preservation.

The State of Nevada adopted the Mined Land Reclamation Act (the “Nevada Act”) in 1989 that established design, operation, monitoring and closure requirements for all mining facilities. The Nevada Act has increased the cost of designing, operating, monitoring and closing new mining facilities and could affect the cost of operating, monitoring and closing existing mining facilities. The State of Nevada has also adopted reclamation regulations. The Nevada Act also requires reclamation plans and permits for exploration projects that will result in more than five acres of surface disturbance.

In the context of environmental permitting, we must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays, depending on the nature of the activity to be permitted and how stringently the regulations are implemented by the permitting authority. We are not presently aware of any specific material environmental constraints affecting our property that would preclude the economic development or operation of any specific property.

Competition

We are an exploration stage company. We 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 compete have greater financial and technical resources than we do. 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 our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.

We will also compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared to make investments in junior mineral exploration companies. The presence of competing junior mineral exploration companies may impact our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors. We will also compete with other junior and senior mineral companies for available resources, including, but not limited to, professional geologists, camp staff, helicopter or float planes, mineral exploration supplies and drill rigs.

Patents and Trademarks

We do not own, either legally or beneficially, any patent or trademark.

Research and Development Expenditures

During our fiscal year ended April 30, 2013, we spent approximately $589,970 on mineral exploration and evaluation costs. During our fiscal year ended April 30, 2012, we spent approximately $1,216,280 on mineral exploration and evaluation costs.

CEO BACKGROUND

Our Board of Directors currently consists of three directors: Ian Matheson, Jason Mitchell and Michael Boyko. At the Annual and Special Meeting, stockholders will elect three directors to serve until the next Annual Meeting of stockholders and until their respective successors shall have been duly elected and qualified, or until their death, resignation or removal. Unless marked otherwise, proxies received will be voted “FOR” the election of the three nominees named below.

Directors are elected by a plurality of the votes present in person and represented by proxy and entitled to vote at a meeting at which a quorum is present. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees for director named above. Abstentions will be counted as present for purposes of determining the presence of a quorum. If a quorum is present, the nominees for director receiving the highest number of votes will be elected as directors. Abstentions will have no effect on the vote. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as the Board may propose.

Nominees

The Board of Directors intends to nominate the three persons identified as its nominees in this proxy statement. The names of each nominee and certain information about them are set forth below:

There is no family relationship between the Company’s directors and there are no legal proceedings to which any of its directors are a party adverse to us or in which any of the Company’s directors have a material interest adverse to us. Set forth below is a brief description of the background and business experience of each of the Company’s directors for the past five years:

K. Ian Matheson was appointed a member of the Company’s Board of Directors on June 25, 2008 and its Chief Executive Officer and President on November 19, 2008. Mr. Matheson earned a Bachelor of Commerce degree from the University of British Columbia in 1963. In 1964 and 1965 he attended McGill University in Montreal, Quebec where he earned a degree as a Chartered Accountant at the Quebec Institute of Chartered Accountants. He was admitted into the British Columbia Institute of Chartered Accountants in 1965. From 1965 to 1967 he worked as a Chartered Accountant with Coopers and Lybrand in Vancouver, BC. He is presently a member of the British Columbia Institute of Chartered Accountants and the Canadian Institute of Chartered Accountants. Mr. Matheson was a member of the Board of Directors of Searchlight Minerals Corp. (OTCBB) from February 10, 2005 to February 16, 2007. Mr. Matheson has also been a director and officer of numerous private companies that have been involved in the research and development of precious metals in the southern Nevada area.

Jason S. Mitchell was appointed the Company’s Chief Financial Officer and Treasurer on February 1, 2008, its Secretary on November 19, 2008, and a member of its Board of Directors on May 28, 2008. Mr. Mitchell earned a Masters of Accountancy degree from Southern Utah University in 1994. He is a Certified Public Accountant, who has, since April, 2005, been a self-employed financial consultant, providing consulting services and preparing financial statements for numerous companies. From October 1998 to October 2004, Mr. Mitchell was a corporate controller, principal accounting officer, vice president and manager of merger and acquisitions for USI Holdings Corporation, a Nasdaq listed insurance brokerage firm where Mr. Mitchell oversaw financial reporting responsibilities, prepared SEC annual and quarterly filings, generated financial models and assisted in its October 2002 $90 million initial public offering. From October 1994 to September 1998, Mr. Mitchell worked as an auditor for Arthur Andersen LLP and KPMG Peat Marwick.

Recommendation of the Board of Directors

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF ALL NOMINEES NAMED ABOVE. PROXIES RECEIVED BY THE COMPANY WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES NAMED ABOVE UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE IN THE PROXY.

MANAGEMENT DISCUSSION FROM LATEST 10K

RESULTS OF OPERATIONS

Revenues

During the year ended April 30, 2013, we earned no revenues. During the year ended April 30, 2012 we earned revenues of $49,231. We are currently in the exploration stage of our business. We can provide no assurances that we will be able to develop a commercially viable process or earn significant revenue from the processing of fly ash.

Operating Expenses

Our operating expenses for the year ended April 30, 2013 decreased as compared to the year ended April 30, 2012. The decrease in our operating expenses primarily relates to a decrease in mineral exploration and evaluation expenses, and general and administrative expenses. The decrease was partially offset by the recording of bad debt, impairments of intellectual property and mineral claims and the recording of a gain from the sale of a fixed asset.

Mineral exploration and evaluation expenses primarily consisted of rent, leased equipment, extraction-processing costs, consulting fees and labor expenses in connection with our Phoenix Facility and Scottsdale Facility. The decrease in mineral exploration and evaluation expenses in fiscal 2013 was primarily due to a decrease in consulting fees, contract labor and extraction processing costs due to reduced activities at our Phoenix and Scottsdale Facilities. In November 2012, we shut down our Phoenix Facility and we have no plans to continue that operation.

Impairment of mineral claims relates to our decision not to renew the Smith Lease and BLM Claims. Impairment of intellectual property relates to the impairment of our thiourea lixiviation technology.

Our general and administrative expenses primarily consisted of: (i) monthly consulting fees accrued for our Chief Executive Officer, Mr. Matheson and paid to our Chief Financial Officer, Mr. Mitchell; and (ii) legal and audit fees in connection with meeting our reporting requirements under the Exchange Act.

We anticipate that our operating expenses will increase significantly as we implement our plan of operation for our Scottsdale Facility.

LIQUIDITY AND CAPITAL RESOURCES

As at April 30, 2013, we had a working capital deficit of $1,706,502 as compared to a working capital deficit of $811,139 as at our year ended April 30, 2012. The increase in our working capital deficit is primarily due to an increase in loans payable and loans payable – related parties.

Financing Requirements

Currently, we do not have sufficient financial resources to complete our plan of operation for the next twelve months. As such, our ability to complete our plan of operation is dependent upon our ability to obtain additional financing in the near term.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned mining, development, and exploration activities.

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 is material to stockholders.

CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 1 to our audited financial statements included in this Annual Report.

Exploration Costs – Mineral exploration costs are expensed as incurred.

Revenue Recognition – The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Revenue from licensing our technology is recognized over the term of the license agreement. Costs and expenses are recognized during the period in which they are incurred.

Research and Development - All research and development expenditures are expensed as incurred.

Stock-Based Compensation – The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation , which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date , the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part II – Item 1A. Risk Factors" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and Current Reports, that we file from time to time with the United States Securities and Exchange Commission (the “SEC”).

OVERVIEW

We were incorporated on December 14, 2005 under the laws of the State of Nevada. We are an exploration stage company and our primary objectives are to: (i) commercially extract and refine precious metals from our own and others mineralized materials; (ii) use our leaching process (Cholla) to recover precious metals from specific ore bearing materials; and (iii) joint venture, acquire and develop mining projects in North America.

We are focusing our business on commercially processing specific fly ash and other mineable materials, using a leach process that exposes extractable gold (the “Cholla Process”) at our processing and refining plant located in Scottsdale, Arizona (the “Scottsdale Facility”). In November 2012, we shut down our Phoenix Facility and we have no plans to continue that operation.

We entered into a Memorandum of Understanding dated October 19, 2010 with Golden Anvil, SA de CV (“Golden Anvil”) with respect to the proposed formation and funding of a proposed joint venture for the exploration and development of mineral concessions owned by Golden Anvil in the State of Nayarit, Mexico (the “Golden Anvil Mine”). We are currently working with management of Golden Anvil to move the assets of Golden Anvil to an entity on the TSX Venture Exchange from which we would receive a percentage ownership via common stock from the conversion of our loans.

In August 2012, we did not pay the renewal fee on our interest a gold project that consisted of a mineral lease covering 20.61 acres of patented claims and an option to acquire a 100% interest in 20 unpatented claims located near the mineral lease.

We are actively seeking to enter into joint ventures with third parties who have legal rights to fly ash resources, including landfills/monofills. There is no assurance that we will be able to commercially extract precious metals from fly ash or other mineable ores using our Cholla process or that we will be able to enter into joint ventures for the exploration and development of additional mining projects.

RECENT CORPORATE DEVELOPMENTS

The following corporate developments occurred since the filing of our Form 10-K for the fiscal year ended April 30, 2013:

Amendment to Articles of Incorporation

On August 26, 2013, we filed a certificate of change with the Nevada Secretary of State, amending our Articles of Incorporation to increase the number of authorized shares of common stock from 300,000,000 shares to 900,000,000 shares. The Amendment to the Articles of Incorporation was approved at our Annual General Meeting and Special Meeting on August 22, 2013, as described under the heading “Annual General Meeting an Special Meeting” below.

Annual General Meeting and Special Meeting

On August 22, 2013, we held our Annual General Meeting and Special Meeting (the “Meeting”). There were 23,931,000 shares represented in person and 105,040,875 shares represented by proxy, for a total of 131,190,875 shares or 71.8% of the issued and outstanding shares of our common stock represented at the Meeting.

At the Meeting the stockholders voted: (1) to approve the election of Jason S. Mitchell, K. Ian Matheson and Michael C. Boyko as members our Board of Directors; (2) to ratify the appointment the De Joya Griffith, LLC as our independent registered accounting firm for the fiscal year ended April 30, 2014; (3) to approve our 2013 Stock Option Plan; (4) to approve the amendment to our Articles of Incorporation to increase the number of authorized shares of common stock to 900,000,000 shares; (5) to approve, on a advisory basis, the compensation of the our named executive officers; and (6) to approve, on advisory basis that an advisory vote on executive compensation take place every three years.

RESULTS OF OPERATIONS

Revenues

We earned no revenues during the three months ended July 31, 2013 and 2012. We are currently in the exploration stage of our business. We can provide no assurances that we will be able to develop a commercially viable process or earn significant revenue from the processing of fly ash.

Expenses

We are focusing our business on commercially processing specific fly ash and other mineable materials, using a leach process that exposes extractable gold (the “Cholla Process”) at our processing and refining plant located in Scottsdale, Arizona (the “Scottsdale Facility”). In November 2012, we shut down our Phoenix Facility and we have no plans to continue that operation.

We entered into a Memorandum of Understanding dated October 19, 2010 with Golden Anvil, SA de CV (“Golden Anvil”) with respect to the proposed formation and funding of a proposed joint venture for the exploration and development of mineral concessions owned by Golden Anvil in the State of Nayarit, Mexico (the “Golden Anvil Mine”). We are currently working with management of Golden Anvil to move the assets of Golden Anvil to an entity on the TSX Venture Exchange from which we would receive a percentage ownership via common stock from the conversion of our loans.

In August 2012, we did not pay the renewal fee on our interest a gold project that consisted of a mineral lease covering 20.61 acres of patented claims and an option to acquire a 100% interest in 20 unpatented claims located near the mineral lease.

We are actively seeking to enter into joint ventures with third parties who have legal rights to fly ash resources, including landfills/monofills. There is no assurance that we will be able to commercially extract precious metals from fly ash or other mineable ores using our Cholla process or that we will be able to enter into joint ventures for the exploration and development of additional mining projects.

RECENT CORPORATE DEVELOPMENTS

The following corporate developments occurred since the filing of our Form 10-K for the fiscal year ended April 30, 2013:

Amendment to Articles of Incorporation

On August 26, 2013, we filed a certificate of change with the Nevada Secretary of State, amending our Articles of Incorporation to increase the number of authorized shares of common stock from 300,000,000 shares to 900,000,000 shares. The Amendment to the Articles of Incorporation was approved at our Annual General Meeting and Special Meeting on August 22, 2013, as described under the heading “Annual General Meeting an Special Meeting” below.

Our operating expenses for the three months ended July 31, 2013 decreased as compared to the three months ended July 31, 2012. The decrease in our operating expenses primarily relates to decreases in mineral exploration and evaluation expenses and general and administrative expenses.

Mineral exploration and evaluation expenses primarily consisted of rent, leased equipment, extraction-processing costs, consulting fees and labor expenses in connection with our Phoenix Facility and Scottsdale Facility. The decrease in mineral exploration and evaluation expenses during the three months ended July 31, 2013 was primarily due to a decrease in consulting fees, contract labor and extraction processing costs due to reduced activities at our Scottsdale Facility and the fact that we shut down our Phoenix Facility in November 2012.

During the three months ended July 31, 2013, our general and administrative and general and administrative related party expenses primarily consisted of: (i) monthly consulting fees paid to our Chief Financial Officer, Mr. Mitchell; and (ii) legal and audit fees in connection with meeting our reporting requirements under the Exchange Act. We anticipate that our operating expenses will increase significantly as we implement our plan of operation for our Scottsdale Facility.

LIQUIDITY AND CAPITAL RESOURCES

As at July 31, 2013, we had a working capital deficit of $1,724,034 as compared to a working capital deficit of $1,706,502 as at April 30, 2013. The increase in our working capital deficit is primarily due to an increase in accounts payable and accrued interest offset by an increase in cash.

FINANCING REQUIREMENTS

Currently, we do not have sufficient financial resources to complete our plan of operation for the next twelve months. As such, our ability to complete our plan of operation is dependent upon our ability to obtain additional financing in the near term.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned mining, development and exploration activities.

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 is material to stockholders.

CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 1 to our unaudited audited financial statements included in this Quarterly Report.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Exploration Costs – Mineral exploration costs are expensed as incurred.

Research and Development - All research and development expenditures are expensed as incurred.

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