(Mark One)

SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended December 31, 2013

SECURITIES EXCHANGE ACT OF 1934

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Explanatory Note:

 

Paramount Gold and Silver Corp. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A to amend its Quarterly Report on Form 10-Q for the period ended December 31, 2013, as filed with the Securities and Exchange Commission on February 4, 2014 (the “Original Filing”).  The Company is filing this amendment to its Original Filing to reflect the following changes:

 

1.

Part I Item 1 “Financial Statements”:  To revise the recording of a change in estimate as a retrospective adjustment for the comparative three and six month periods ending December 31, 2012 on the condensed consolidated interim statement of operations and comprehensive loss and on the condensed consolidated interim statement of cash flows.

2.	Part I Item 2  “Management Discussion and Analysis”.  To reflect the changes to the Company’s Financial Statements that have been amended by this Form 10-Q/A

 

These restatements are further described in our Notes to the Consolidated Financial Statements (Note 12).  In addition, pursuant to the rules of the Securities and Exchange Commission, the registrant has also included in this Form 10-Q/A, under Part II, Item 6 “Exhibits,” currently dated certifications pursuant to Rules 13a-14(a) and 15d-14 of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. Except as described above, no other changes have been made to the Filing. This Amendment speaks as of the original filing date of the Original Filing and does not reflect any events that occurred at a date subsequent to the filing of the Original Filing or modify or update those disclosures therein in any way.

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2

 

PARAMOUNT GOLD AND SILVER CORP.

 

(An Exploration Stage Mining Company)

Condensed Consolidated Interim Financial Statements

 

(Unaudited)

Period ended December 31, 2013 and 2012

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The accompanying notes are an integral part of the condensed consolidated interim financial statements

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The accompanying notes are an integral part of the condensed consolidated interim financial statements

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The accompanying notes are an integral part of the condensed consolidated interim financial statements

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The accompanying notes are an integral part of the condensed consolidated interim financial statements

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1.	Principal  Accounting Policies:

 

Paramount Gold and Silver Corp. (the “Company”), incorporated under the General Corporation Law of the State of Delaware, and its wholly-owned subsidiaries are engaged in the acquisition, exploration and development of  precious metal properties. The Company’s wholly owned subsidiaries include Paramount Gold de Mexico S.A. de C.V., Magnetic Resources Ltd, Minera Gama SA de CV, and Paramount Nevada Gold Corp. (formerly X-Cal Resources Ltd.).   The Company is an exploration stage mining company in the process of exploring its mineral properties in both the United States and Mexico, and has not yet determined whether its properties contain reserves that are economically recoverable.

Basis of Presentation and Preparation

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements.  In the opinion of management, all of the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included.  The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years.

These interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States and, with the exception of new accounting pronouncements described in Note 2, follow the same accounting policies and methods of their application as the most recent annual financial statements.   The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  All significant intercompany accounts and transactions are eliminated in consolidation.  These interim financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Annual Report on Form 10-K of Paramount Gold and Silver Corp. for the year ended June 30, 2013.

Use of Estimates

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

Significant estimates made by management in the accompanying financial statements include collectability of amounts receivable, the adequacy of the Company’s asset retirement obligations and fair value of stock based compensation.

Stock Based Compensation

The Company has adopted the provisions of FASB ASC 718, “Stock Compensation” (“ASC 718”), which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).  New shares of the Company’s Common Stock will be issued for any options exercised or awards granted.

Mineral Properties

Mineral property acquisition costs are capitalized when incurred and will be amortized using the units –of – production method over the estimated life of the reserve following the commencement of production.  If a mineral property is subsequently abandoned or impaired, any capitalized costs will be expensed in the period of abandonment or impairment.

Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of mineral properties.

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1.	Principal  Accounting Policies (Continued):

 

Exploration Costs

Exploration costs, which include maintenance, development and exploration of mineral claims, are expensed as incurred.  When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives.  To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed.

Derivatives

The Company accounts for its derivative instruments not indexed to our stock as either assets or liabilities and carries them at fair value.  Derivatives that are not defined as hedges must be adjusted to fair value through earnings.

Warrants and options issued in prior periods with exercise prices denominated in Canadian dollars are no longer considered indexed to our stock, as their exercise price is not in the Company’s functional currency of the US dollar, and therefore no longer qualify for the scope exception and must be accounted for as a derivative.  These warrants and options are reclassified as liabilities under the caption “Warrant liability” and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation method.  Changes in the liability from period to period are recorded in the Statements of Operations under the caption “Change in fair value of warrant liability.”

The Company elected to record the change in fair value of the warrant liability as a component of other income and expense on the statement of operations as we believe the amounts recorded relate to financing activities and not as a result of our operations.

Net Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during each period.  Diluted loss per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Concentration of Credit Risk and Amounts Receivable

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents and amounts receivable.  We deposit our cash with financial institutions which we believe have sufficient credit quality to minimize risk of loss.

Impuesto al Valor Agregado taxes (IVA) are recoverable value-added taxes charged by the Mexican government on goods sold and services rendered at a rate of 16%.  Under certain circumstances, these taxes are recoverable by filing a tax return and as determined by the Mexican taxing authority.  Each period, receivables are reviewed for collectability.  When a receivable is determined to not be collectable we allow for the receivable until we are either assured of collection or assured that a write-off is necessary.  Allowances in association with our receivable from IVA from our Mexico subsidiaries are based on our determination that the Mexican government may not allow the complete refund of these taxes.  The Company believes that all amounts recorded as a receivable from the Mexican government will be recovered.

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1.	Principal  Accounting Policies (Continued):

 

Marketable Securities

The Company classifies its marketable securities as available-for-sale securities.  The securities are measured at fair market value in the financial statements with unrealized gains and temporary losses on investments classified as available for sale are included within accumulated other comprehensive income, net of any related tax effect. Upon realization, such amounts are reclassified from accumulated other comprehensive income to other income, net, realized gains and losses and other than temporary impairments, if any, are reflected in the statements of operations as other income or expenses. The Company does not recognize changes in the fair value of its investments in income unless a decline in value is considered other than temporary.

Foreign Currency

The parent company’s functional currency is the United States dollar. The functional currencies of the Company’s wholly-owned subsidiaries are the U.S. Dollar and the Canadian Dollar.  Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the consolidated balance sheet date.   Foreign currency transaction gains and losses are included in the statement of operations and comprehensive loss. The aggregate foreign transaction loss for the six month period ended December 31, 2013 that is included in the statement of operations is $4,068.

The financial statements of the subsidiaries are translated to United States dollars in accordance with ASC 830 using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.

 

2.	Recent Accounting Pronouncements Adopted and New Accounting Pronouncements:

Accounting Pronouncements Adopted During the Period

i)

ASU 2012-04

On July 1, 2013, the Company adopted ASU 2012-04, “Technical Corrections and Improvements”. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The adoption of ASU 2012-04 did not have a material impact on our financial position or results of operations.

ii)

ASU 2013-02

On July 1, 2013, the Company adopted ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income.” This updated guidance improves the reporting of significant items reclassified out of accumulated other comprehensive income and requires an entity to present, either on the face of the statement where net income is presented or in the notes, separately for each component of comprehensive income, the current period reclassifications out of accumulated other comprehensive income by the respective line items of net income affected by the reclassification. Other than requiring additional disclosures, the adoption did not have an effect on our financial position or results of operations.

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2.	Recent Accounting Pronouncements Adopted and New Accounting Pronouncements (Continued):

 New Accounting Pronouncements Not Yet Adopted

i)

ASU 2013-05

In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-05, “Foreign Currency Matters (Topic 830);  Parents Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.”  This guidance applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of substance real estate or conveyance of oil and gas, mineral rights) within a foreign entity.  ASU No. 2013-05 is effective prospectively for fiscal years (and interim reporting periods with those years) beginning after December 15, 2013.  We are currently reviewing the provisions of ASU No. 2013-05 on our financial position or results of operations.

ii)

ASU 2013-11

In July 2013, FASB issued ASU 2013-11, “Income Taxes (Topic 740):  Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exits.”  The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP.  This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date.  ASU No. 2013-11 is effective for public entities for fiscal years beginning after December 15, 2013, and interim periods within those years.  Early adoption is permitted.  The amendments should be applied to all unrecognized tax benefits that exist as of the effective date.  Entities may choose to apply the amendments retrospectively to each prior reporting period presented.  We are currently assessing the impact of the adoption of this update on our financial position or results of operations.

3.	Marketable Securities:

The following table summarizes the Company’s available-for sale securities on hand as of December 31, 2013 and June 30, 2013:

In the three month period ended December 31, 2013, the Company recorded an unrealized loss of $108,591 (2012 – $0).  In the six month period ended December 31, 2013, the Company recorded an unrealized loss of $3,798 (2012 - $0).    The marketable securities reflected in the table above include a convertible preferred share with an attached purchase warrant of a single entity involved in the exploration of precious metals.  The Company performs a quarterly assessment on its marketable securities with unrealized losses to determine if the security is other than temporarily impaired.

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On July 30, 2013, the Company sold 6 million shares of common stock of Valor Gold Corporation for proceeds of approximately $450,000.

On August 7, 2013, the Company purchased convertible preferred shares and stock purchase warrants of Pershing Gold Corporation, a gold exploration and development company, in the amount of $499,950.

4.	Fair Value Measurements:

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

 

The three levels of the fair value hierarchy under ASC 820 are described below:

 

The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by ASC 820, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

 

The Company’s cash and cash equivalents and short-term investments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash and cash equivalents that are valued based on quoted market prices in active markets are primarily comprised of commercial paper, short-term certificates of deposit and U.S. Treasury securities.

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5.	Non-Cash Transactions:

During the six months ended December 31, 2013 and 2012, the Company entered into certain non-cash activities as follows:

6.	Capital Stock:

a)	Share issuances:

 

Authorized capital stock consists of 200,000,000 common shares with par value of $0.001 per share.  At December 31, 2013 there were 155,731,068 shares issued and outstanding and 155,731,068 shares issued and outstanding at June 30, 2013.

 

During the six months ended December 31, 2013 and 2012, the Company issued the following shares:

 

b)	Stock options:

 

On August 23, 2007, the board and stockholders approved the 2007/2008 Stock Incentive & Compensation Plan thereby reserving an additional 4,000,000 common shares for issuance to employees, directors and consultants.

 

On February 24, 2009, the stockholders approved the 2008/2009 Stock Incentive & Equity Compensation Plan thereby reserving an additional 3,000,000 common shares for future issuance.  The stockholders also approved the re-pricing of the exercise price of all outstanding stock options to $0.65 per share.

 

On December 2, 2011, the stockholders approved the 2011/2012 Stock Incentive & Equity Compensation Plan thereby reserving an additional 4,000,000 common shares for future issuance to employees, directors and consultants.

 

Stock Based Compensation

 

The Company uses the Black-Scholes option valuation model to value stock options granted. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates which are subjective and may not be representative of actual results. Changes in assumptions can materially affect estimates of fair values.

 

The Company did not grant options for the three month periods ending December 31, 2013 and 2012.

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6.	Capital Stock (Continued):

Changes in the Company’s stock options for the six months ended December 31, 2013 are summarized below:

 

At December 31, 2013, there were 3,821,500 options outstanding. Options outstanding above that have not vested at period end are 189,999 which have a maximum service term of 1- 4 years. The vesting of these options is dependent on market conditions which have yet to be met.   As of December 31, 2013, there was $115,336 (2012 - $208,832) of unrecognized compensation cost related to non-vested stock options to be recognized over a weighted average period of 1.44 years.

A summary of the non-vested options as of June 30, 2013 and changes during the six months ended December 31, 2013 are as follows:

For the three and six months ended December 31, 2013, the Company recognized a stock based compensation expense in the amount of $23,370 and $120,836 respectively (2012 - $23,297 and $289,411).

7.	Related Party Transactions:

During the three and six months ended December 31, 2013, directors earned fees in the amount of $54,000 and $108,000 respectively (2012 -$45,000 and $90,000) for their services as directors or members of committees of the Company’s Board.   During the three and six months ended December 31, 2013, the Company also recorded a non-cash transaction to recognize stock based compensation for directors in the amount of $15,970 and $31,946 respectively (2012 -$25,297 and $123,927)

All transactions with related parties are made in the normal course of operations and measured at exchange value.

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8.	Mineral Properties:

The Company has capitalized acquisition costs on mineral properties as follows:

San Miguel Project:

The 100% owned San Miguel Project is located in southwestern Chihuahua, a state in Northern Mexico.  It consists of 40 mining concessions which total approximately 551 square miles. The concessions were acquired from 2005 to 2012 over a series of transactions with third parties.

Sleeper:

The Sleeper Gold Project was acquired through our acquisition of X-Cal Resources Ltd. in August 2010.  Sleeper is located in northern Nevada approximately 26 miles northwest of the town of Winnemucca.  When acquired in 2010, the Sleeper Gold Mine consisted of 1,044 unpatented mining claims.  In August 2011 and July 2012, the Company has staked a total of 1,526 additional unpatented lode mining claims.

Mill Creek:

The Mill Creek property consists of 36 unpatented lode mining claims totaling 720 acres south of Battle Mountain Nevada.

Spring Valley:

The Spring Valley property consists of 38 unpatented lode mining claims located in Pershing County, Nevada.

9.	Property and Equipment:

Property and equipment consist of the following:

 

During the six months ended December 31, 2013, net additions to property, and equipment were $2,204 (2012- $25,745). During the six months ended December 31, 2013 the Company recorded depreciation of $29,241(2012-$33,132).

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10.	Segmented Information:

Segmented information has been compiled based on the geographic regions in which the Company has acquired mineral properties and performs exploration activities.

Loss for the period by geographical segment for the six months ended December 31, 2013:

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10.	Segmented Information (Continued):

Loss for the period by geographical segment for the six months period ended December 31, 2012:

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Assets by geographical segment:

 

11.	Reclamation and Environmental:

The Company holds an insurance policy related to its Sleeper Gold Project that covers reclamation costs in the event the Company defaults on payments of its reclamation costs up to an aggregate of $25 million.  The insurance premium is being amortized over ten years and the current and non-current prepaid insurance balance at December 31, 2013 is $245,215 (2012 - $490,430).

As a part of the policy, the Company has funds in a commutation account which is used to reimburse reclamation costs and indemnity claims.  The balance of the commutation account at December 31, 2013 is $2,695,145 (June 31, 2013 - $2,718,384).

Reclamation and environmental costs are based principally on legal requirements.  Management estimates costs associated with reclamation of mineral properties and properties under mine closure.  On an ongoing basis the Company evaluates its estimates and assumptions; however, actual amounts could differ from those based on estimates and assumptions.

The asset retirement obligation at the Sleeper Gold Project has been measured using the following variables:  1)Expected costs for earthwork, re-vegetation, in-pit water treatment, on-going monitoring, labor and management, 2)Inflation adjustment, and 3) Market risk premium.  The sum of the expected costs by year is discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement obligation to the time it incurs the obligation.    The reclamation and environmental obligation recorded on the balance sheet is equal to the present value of the estimated costs.

 

Changes to the Company’s asset retirement obligations for the six months ended December 31, 2013 are as follows:

18

PARAMOUNT GOLD AND SILVER CORP.

(An Exploration Stage Mining Company)

Notes to Condensed Consolidated Interim Financial Statements

For the Six Month Period Ended December 31, 2013

(Expressed in United States dollars, unless otherwise stated)

(Unaudited)

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12.	Restatement:

 

In the fourth quarter of the Company’s fiscal year ended June 30, 2013, we disclosed an adjustment that decreased the gain that was recorded on the sale of a mineral property in the amount of $2,940,000.   The adjustment was a result of a change in the Company’s valuation technique and therefore a change in accounting estimate under guidance of FASB ASC 820-10-35-26.   We have determined that this adjustment was reflected on a retrospective basis for the comparative three month and six month periods ending December 31, 2012 on the condensed consolidated interim statement of operations and comprehensive loss and on the condensed consolidated interim statement of cash flows.  As per the guidance under FASB ASC 250-10-45-17 a change in estimate is recorded in the period of change or future periods.

The unaudited condensed consolidated interim statement of operations and comprehensive loss, unaudited condensed consolidated interim statement of cash flows and unaudited notes to condensed consolidated interim financial statements have been adjusted where applicable to reflect the revision.

 

The adjustment to net loss for the three and six month period ended December 31, 2012 is summarized below:

		Three Month Period Ended December 31, 2012				Six Month Period Ended December 31, 2012
Net loss (gain), as previously reported		$	(2,739,165	)		$	3,120,298
Adjustement for change in gain on sale of mineral property			(2,940,000	)			(2,940,000	)
Tax effect of restatement adjustment			-				-
Net loss (gain), as restated			(5,679,165	)			180,298
Basis and diluted net loss per share, as restated		$	(0.04	)		$	0.00

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		As Previously Reported For the Three Month Period Ended December 31, 2012				As Restated Reported For the Three Month Period Ended December 31, 2012				As Previously Reported For the Six Month Period  Ended December 31, 2012				As Restated Reported For the Six Month Period Ended December 31, 2012
Revenue
Interest income		$	16,867			$	16,867			$	32,645			$	32,645
Gain on sale of mineral property			4,421,233				7,361,233				4,421,233				7,361,233
Other income			54,030				54,030				61,530				61,530
Total Revenue			4,492,130				7,432,130				4,515,408				7,455,408
Expenses
Exploration			3,304,365				3,304,365				6,798,835				6,798,835
Professional fees			467,753				467,753				660,862				660,862
Directors compensation			60,972				60,972				204,602				204,602
Travel & lodging			52,250				52,250				105,044				105,044
Corporate communications			46,564				46,564				107,178				107,178
Consulting fees			62,151				62,151				191,744				191,744
Office & administration			145,143				145,143				268,944				268,944
Interest & service charges			2,870				2,870				6,477				6,477
Loss on disposal of property and equipment			-				-				-				-
Insurance			87,577				87,577				178,192				178,192
Depreciation			16,680				16,680				33,132				33,132
Accretion			41,936				41,936				83,872				83,872
Total Expenses			4,288,261				4,288,261				8,638,882				8,638,882
Net Loss (Gain) before other items			(203,869	)			(3,143,869	)			4,123,474				1,183,474
Other items
Change in fair value of warrant liability			(2,535,296	)			(2,535,296	)			(1,003,176	)			(1,003,176	)
Net Loss (Gain)			(2,739,165	)			(5,679,165	)			3,120,298				180,298
Other comprehensive loss (gain)
Foreign currency translation adjustment			15,057				15,057				(12,230	)			(12,230	)
Unrealized loss (gain) on available-for-sale-securities			-				2,940,000				-				2,940,000
Total Comprehensive Loss (Gain) for the Period		$	(2,724,108	)		$	(2,724,108	)		$	3,108,068			$	3,108,068
Loss (Gain) per Common share
Basic		$	(0.02	)		$	(0.04	)		$	0.02			$	0.00
Diluted		$	(0.02	)		$	(0.04	)		$	0.02			$	0.00
Weighted Average Number of Common			147,546,184				147,546,184				147,514,241				147,514,241
Shares Used in Per Share Calculations
Basic
Diluted			152,095,775				152,095,775				152,133,554				152,133,554

		As Previously Reported For the Six Month Period Ended  December 31, 2013				As Restated For the Six Month Period Ended December 31, 2012
Net Loss		$	(3,120,298	)		$	(180,298	)
Adjustment for:
Depreciation			33,132				33,132
Loss on disposal of assets			-				-
Stock based compensation			289,411				289,411
Accrued interest			-				-
Write-down of mineral properties			-				-
Accretion expense			83,872				83,872
Change in reclamation			(1,492	)			(1,492	)
Insurance expense			122,608				122,608
Non cash gain on sale of mineral property			(4,421,233	)			(7,361,233	)
Other than temporary impairment of marketable securities			-				-
Change in fair value of equity conversion right			-				-
Change in fair value of warrant liability			(1,003,176	)			(1,003,176	)
(Increase) Decrease in accounts receivable			233,653				233,653
(Increase) Decrease in prepaid expenses			(128,639	)			(128,639	)
Increase (Decrease) in accounts payable			(827,111	)			(827,111	)
Cash used in operating activities		$	(8,739,273	)		$	(8,739,273	)
Sale (purchase) of marketable securities			-				-
Increase of reclamation bond			(29,418	)			(29,418	)
Sale (purchase) of GIC receivable			7,500,000				7,500,000
Notes receivable issued			-				-
Purchase of equity conversion right			-				-
Purchase of mineral properties			(1,460,000	)			(1,460,000	)
Sale of mineral properties			(14,706	)			(14,706	)
Cash acquired on acquisition of X-Cal			-				-
Purchase of equipment			(25,745	)			(25,745	)
Cash provided by (used in) investing activities		$	5,970,131			$	5,970,131
Demand notes payable issued			-				-
Issuance of capital stock			52,000				52,000
Cash provided by financing activities		$	52,000			$	52,000
Effect of exchange rate changes on cash			12,230				12,230
Change in cash during period			(2,704,912	)			(2,704,912	)
Cash at beginning of period			12,500,708				12,500,708
Cash at end of period		$	9,795,796			$	9,795,796
Supplemental Cash Flow Disclosure
Cash		$	1,696,862			$	1,696,862
Cash Equivalents		$	8,098,934			$	8,098,934