10QSB 1 form10-qsb.txt AURORA GOLD 10-QSB 03-31-2006 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2006 -------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from _ _ _ _ _ _ _ _ _ _ to _ _ _ _ _ _ _ _ _ _ Commission file number 0-24393 ------- AURORA GOLD CORPORATION ----------------------- (Exact name of small business issuer as specified in its charter) Delaware 13-3945947 -------- ---------- (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 30 Ledgar Road, Balcatta, WA 6021 Australia ------------------------------------------- (Address of principal executive offices) (+61 8) 9240-2836 ----------------- (Issuer's Telephone Number) -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check, whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of securities under a plan confirmed by court. YES [ ] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 44,218,522 shares of Common Stock were outstanding as of March 31, 2006. Transitional Small Business Disclosure Format (check one); YES [ ] NO [X] AURORA GOLD CORPORATION This quarterly report contains statements that plan for or anticipate the future and are not historical facts. In this Report these forward looking statements are generally identified by words such as "anticipate," "plan," "believe," "expect," "estimate," and the like. Because forward looking statements involve future risks and uncertainties, these are factors that could cause actual results to differ materially from the estimated results. These risks and uncertainties are detailed in Part 1 - Financial Information - Item 1. "Financial Statements," Item 2. "Management's Discussion and Analysis or Plan of Operation." The Private Securities Litigation Reform Act of 1995, which provides a "safe harbor" for such statements, may not apply to this Report.
INDEX Page No. PART I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets -- 3 March 31, 2006 and December 31, 2004 (audited) Interim Consolidated Statements of Operations -- 4 Three-months Ended March 31, 2006 Interim Consolidated Statements of Cash Flows -- 5 Three-months Ended March 31, 2006 Notes to Interim Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Controls and Procedures 16 PART II. Other Information Item 1. Legal Proceedings 16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 18
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AURORA GOLD CORPORATION (An exploration stage enterprise) Consolidated Balance Sheets (Unaudited) March 31, 2006 and December 31, 2005 (Expressed in U.S. Dollars) March 31 December 31 2006 2005 (unaudited) ------------------------------------------------------------------------------------------- ASSETS Current assets Cash $ 3,522,180 $ 164,189 Available-for-sale securities 46,910 33,451 ------------------------------------------------------------------------------------------- Total current assets 3,569,090 197,640 Equipment, net 366 679 ------------------------------------------------------------------------------------------- Total assets $ 3,569,456 $ 198,319 =========================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities Accounts payable and accrued expenses $ 39,853 $ 32,588 ------------------------------------------------------------------------------------------- Total current liabilities 39,853 32,588 =========================================================================================== Stockholders' Equity (Deficiency) Common stock Authorized: 50,000,000 common shares, with par value $0.001each Issued and outstanding: 44,218,522 (December 31, 2004 - 19,534,431) common shares 44,218 36,218 Additional paid-in capital 8,474,137 4,582,137 Accumulated deficit during the exploration stage (4,997,597) (4,448,010) Accumulated other comprehensive income (loss) 8,845 (4,614) ------------------------------------------------------------------------------------------- Stockholders' equity (deficiency) 3,529,603 165,731 ------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity (deficiency) $ 3,569,456 $ 198,319 =========================================================================================== The accompanying notes are an integral part of these financial statements
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AURORA GOLD CORPORATION (An exploration stage enterprise) Cumulative Interim Consolidated Statements of Operations October 10 Three months Three months (Expressed in U.S. Dollars) 1995 (inception) Ended Ended (Unaudited) to March 31 March 31 March 31 2006 2006 2005 ------------------------------------------------------------------------------------------------------ Expenses Administrative and general $ 746,857 $ 35,149 $ 2,237 Depreciation and amortization 54,587 313 1,086 Imputed interest on loan payable - related party 1,560 - - Interest, bank charges and foreign exchange loss (gain) 60,873 11,396 (385) Professional fees - accounting and legal 474,529 47,777 474 Property search and negotiation 225,198 - - Salaries and consulting fees 992,689 26,682 - ------------------------------------------------------------------------------------------------------ 2,556,293 121,317 3,412 Exploration expenses 2,238,033 428,270 2,061 Write-off of mineral property costs 172,981 - - ------------------------------------------------------------------------------------------------------ 4,967,307 549,587 5,473 ------------------------------------------------------------------------------------------------------ Other income (loss) Gain on disposition of subsidiary 216,474 - - Interest income 22,353 - - Gain on sale of rights to the Matupa agreement, net of expenses of $138,065 80,237 - - Realized (loss) on investments (32,756) - - Operating (loss) of Spun-off operations (316,598) - - ------------------------------------------------------------------------------------------------------ (30,290) - - ------------------------------------------------------------------------------------------------------ Net (loss) for the period $ (4,997,597) $ (549,587) $ (5,473) ====================================================================================================== Earnings (loss) per share - basic and diluted $ (0.01) $ (0.00) ====================================================================================================== Weighted average number of common shares outstanding - basic and diluted 39,454,477 19,534,431 ====================================================================================================== The accompanying notes are an integral part of these financial statements
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AURORA GOLD CORPORATION (An exploration stage enterprise) Cumulative Interim Consolidated Statements of Cash Flows (Unaudited) October 10 Three Months Three Months (Expressed in U.S. Dollars) 1995 (inception) Ended Ended to March 31 March 31 March 31 2006 2006 2005 --------------------------------------------------------------------------------------------------------------------- Net (loss) for the period $ (4,997,597) $ (549,587) $ (5,473) Cash flows from (used in) operating activities Adjustments to reconcile net loss to net cash used in operating activities: - depreciation and amortization 54,587 313 1,087 - compensation on stock options 720,500 - - - expenses satisfied with issuance of common stock 498,800 - - - expenses satisfied with transfer of marketable securities 33,903 - - - imputed interest on loan payable - related party 1,560 - - - writeoff of mineral property costs 172,981 - - - adjustment for spin-off of Aurora Metals (BVI) Limited 316,498 - - - realized loss on investments 32,756 - - - gain on sale of rights to Matupa agreement, net of expenses (80,237) - - Changes in assets and liabilities: - - (increase) decrease in receivables (206,978) - - - (decrease) increase in accounts payable and accrued expenses 580,010 7,265 4,033 --------------------------------------------------------------------------------------------------------------------- Net cash flow used in operating activities (2,873,217) (542,009) (353) --------------------------------------------------------------------------------------------------------------------- Cash flows from (used in) investing activities Purchase of equipment (57,891) - - Proceeds on disposal of equipment 14,449 - - Acquisition of mineral property costs (172,981) - - Payment for incorporation cost (11,511) - - --------------------------------------------------------------------------------------------------------------------- Net cash flow used in investing activities (227,934) - - --------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities Proceeds from issuance of common stock, less issuance costs 6,552,339 3,900,000 - Loan proceeds from related party 39,000 - - Loan proceeds 31,992 - - --------------------------------------------------------------------------------------------------------------------- Net cash flow provided by financing activities 6,623,331 3,900,000 - --------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 3,522,180 3,357,991 (353) Cash and cash equivalents, beginning of period - 164,189 1,275 --------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 3,522,180 $ 3,522,180 $ 922 ===================================================================================================================== The accompanying notes are an integral part of these financial statements
5 Notes to Interim Consolidated Financial Statements (Unaudited) --------------------------------------------------------------------------- 1. Nature of Business and Continuance of Operations Aurora Gold Corporation ("the Company") was formed on October 10, 1995 under the laws of the State of Delaware and is in the business of location, acquisition, exploration and, if warranted, development of mineral properties. We have not yet determined whether our properties contain mineral reserves that may be economically recoverable and has not generated any operating revenues to date. These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. We have incurred recurring operating losses and requires additional funds to meet our obligations and maintain our operations. Management's plans in this regard are to raise equity financing as required. These conditions raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty. 2. Significant accounting Policies (a) Principles of Accounting The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-QSB and Item 310(b) of Regulation S-B and include the accounts of the Company and our wholly-owned subsidiary, Aurora Gold Minera o Ltda ("Aurora Gold Mineracao"). Collectively, they are referred to herein as "the Company". Significant inter-company accounts and transactions have been eliminated. Aurora Gold Minera o was incorporated on October 27, 2005. These unaudited interim condensed financial statements do not include all the information and disclosures required by US GAAP for annual financial statements. The accounting policies used in the preparation of the accompanying unaudited interim financial statements are the same as those described in our audited financial statements and notes thereto for the year ended December 31, 2005. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results for the periods presented have been reflected in these financial statements. These unaudited interim financial statements should be read in conjunction with the audited annual financial statements and the notes thereto for the year ended December 31, 2005. Operating results for the three month periods ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ended December 31, 2006. The balance sheet at December 31, 2005 has been derived from the audited financial statements at that date. (b) Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. (c) Cash Equivalents Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when purchased. We did not have any cash equivalents at March 31, 2006 and December 31, 2005. 6 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Available-for-Sale Securities Our available-for-sale securities consist of shares of common stock of one publicly traded company and are stated at fair value. The cost of these securities is $38,065 at March 31, 2006 and the gross unrealized holding gains of $8,845 is included in accumulated other comprehensive income (loss) at March 31, 2006. Any unrealized holding gains or losses in these securities are included in the determination of accumulated other comprehensive income (loss). If a loss in value in the available-for-sale securities is considered to be other than temporary, it is recognized in the determination of net income. All unrealized holding gains at March 31, 2006 are on securities held less than 12 months. Cost is based on the specific identification method for the individual securities to determine realized gains or losses. (e) Equipment Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method. Equipment is recorded at cost. Depreciation is provided over the following useful lives:
Computer equipment 2 years Office equipment 5 years Telecommunication equipment 5 years
(f) Share-Based Payment We have adopted the fair value method of accounting for stock-based compensation consistent with Statement of Financial Accounting Standards No. 123 (R) (SFAS 123 (R)), Accounting for Share-based Payment. (g) Advertising Expenses We expense advertising costs as incurred. We did not incur any advertising expenses for three months ended March 31, 2006 and the years ended December 31, 2005. (h) Foreign Currency Translations and Transactions Our reporting currency is the U.S. Dollar. Foreign Subsidiaries utilize the function currency applicable to the country in which they operate. We translate assets and liabilities of our foreign subsidiaries at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the year. Gains or losses from these translations, if significant, are reported as a separate component of other comprehensive income, until all or a part of the investment in the subsidiary is sold or liquidated. Translation adjustments do not recognize the effect of income tax because we expect to reinvest the amounts indefinitely in operations. (i) Concentration of Credit Risk We place our cash and cash equivalents with high credit quality financial institutions. We occasionally maintain balances in a financial institution beyond the insured amount. As of March 31, 2006 and December 31, 2005, we had deposits in a bank beyond insured limits. (j) Long-Lived Assets Impairment Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with the Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets. An 7 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset's carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. We have not recognized any impairment losses through December 31, 2005. (k) Fair Value of Financial Instruments and Risks Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The carrying value of cash, receivables, accounts payable and accrued expenses, accounts payable - related party, and loan payable - related party approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that we are not exposed to significant interest or credit risks arising from these financial instruments. We operate outside of the United States of America and are exposed to foreign currency risk due to the fluctuation between the currency in which we operate in and the U.S. dollar. (l) Intangible Assets We adopted the Statement of Financial Accounting Standards No. 142 (SFAS 142) Goodwill and Other Intangible Assets which requires that goodwill and intangible assets with indefinite life are not amortized but rather tested at least annually for impairment. Intangible assets with a definite life are required to be amortized over its useful life or its estimated useful life. We do not have any goodwill or intangible assets with indefinite or definite lives. (m) Accounting for Derivative Instruments and Hedging Activities We have adopted the Statement of Financial Accounting Standards No. 133 (SFAS 133) Accounting for Derivative Instruments and Hedging Activities, which requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. Historically, we have not entered into derivative contracts either to hedge existing risks or for speculative purposes. We do not anticipate that the adoption of the statement will have a significant impact on its financial statements. (n) Income Taxes We have adopted the Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes, which requires us to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in our financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carry amounts and tax bases of 8 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. (o) Earnings (Loss) Per Share Earnings (loss) per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding during the year. We have adopted the Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings Per Share. Diluted loss per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities and is equivalent to basic loss per share for 2005 and 2004 because there is no potentially dilutive securities. (p) Comprehensive Income We have adopted the Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. We are disclosing this information on our Consolidated Statements of Stockholders' Equity (Deficiency). Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners.
3. Equipment -------------------------------------------------------------------- March 31 December 31 2006 2005 -------------------------------------------------------------------- Computer equipment $ 2,508 $ 2,508 Office equipment 13,583 13,583 Telecommunication equipment 1,875 1,875 -------------------------------------------------------------------- 17,966 17,966 Accumulated depreciation and amortization (17,600) (17,287) -------------------------------------------------------------------- $ 366 $ 679 ====================================================================
4. Stock Options Outstanding In 1997, our Board of Director approved a stock option plan ("the Plan") to offer an inducement to obtain services of our key employees, directors and consultants. The maximum number of shares issuable under the Plan in any calendar year shall be an amount equal to 15% of the issued and outstanding common stock on January 1 of each year. Under the Plan, the exercise price of an incentive stock option must be at least equal to 100% of the fair market value of the common stock on the date of grant (110% of fair market value in the case of options granted to employees who hold more than 10% of our capital stock on the date of grant). The exercise price of a non-qualified stock option must not be less than the par value of a share of the common stock on the date of the grant. The term of an incentive or non-qualified stock option is not to exceed five years. There were no stock options granted during the three months ended March 31, 2006 and the fiscal year 2005 and there are no stock options outstanding at March 31, 2006 and December 31, 2005. 5. Common shares outstanding As at March 31, 2006 our authorized capital stock consists of 50,000,000 common shares with a par value of $0.001 per share. There were 44,218,522 common shares issued and outstanding at March 31, 2006 (December 31, 2005 - 19,534,431). 9 6. Related Party Transactions Related party transactions not disclosed elsewhere in these financial statements include: During the three month period ended March 31, 2006, consulting fees of $8,246 (2005 - $0) were paid to directors. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties. ITEM 2. MANAGEMENT'S' DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (A) General This portion of the Quarterly Report provides management's discussion and analysis of the financial condition and results of operations to enable a reader to assess material changes in financial condition and results of operations as at and for the three month period ended March 31, 2006, in comparison to the corresponding prior-year period. This MD&A has been prepared as of April 19, 2006. This MD&A is intended to supplement and complement the unaudited interim consolidated financial statements and notes thereto, prepared in accordance with US GAAP, for the three month periods ended March 31, 2006 (collectively, the "Financial Statements"), which are included in this Quarterly Report. The reader is encouraged to review the Financial Statements in conjunction with your review of this MD&A. This MD&A should be read in conjunction with both the annual audited financial statements for the years ended December 31, 2005 and the related annual MD&A included in the December 31, 2005 Form 10-KSB on file with the US Securities and Exchange Commission. Certain notes to the Financial Statements are specifically referred to in this MD&A and such notes are incorporated by reference herein. All dollar amounts in this MD&A are in US dollars, unless otherwise specified. For the purposes of preparing this MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Aurora Gold Corporation's shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision, or if it would significantly alter the total mix of information available to investors. Materiality is evaluated by reference to all relevant circumstances, including potential market sensitivity. This document contains numerous forward-looking statements relating to our business. The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Operating, exploration and financial data, and other statements in this document are based on information we believe reasonable, but involve significant uncertainties as to future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, changes that could result from our future acquisition of new mining properties or businesses, the risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), regulatory and permitting matters, and risks inherent in the ownership and operation of, or investment in, mining properties or businesses in foreign countries. Actual results and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise. (B) Significant developments during the three month period ended March 31, 2006 and Subsequent Events During 2006 we have been evaluating our property holdings in order to determine whether to implement exploration programs on our existing properties or to acquire interests in new properties. 10 Between September 5, 2005 and December 31, 2005 we signed seven Memorandum of Understanding ("MOU") covering the Nova Porto, Santa Clara, Ouro Mil, Santa Isabel, Sao Domingos, Sao Joao and Piranhas properties located in the Municipality of Itaituba, Tapajos gold province, State of Para, Brazil. In April 2006 we signed an MOU covering the Branca de Neve property the Municipality of Itaituba, Tapajos gold province, State of Para, Brazil. The MOUs provided us a review period, ranging from two months to six months, to access the mineral potential of the properties. During the three month period ended March 31, 2006 we signed five option agreements covering the Nova Porto, Ouro Mil, Santa Isabel, Sao Domingos and Sao Joao mineral exploration licences located in the Municipality of Itaituba, in the Tapajos gold province of the State of Para, Brazil. The Piranhas MOU provides Aurora Gold Mineracao Ltda with a 180 day review period to access the gold potential of the property. If Aurora Gold Mineracao decides to proceed with acquiring a 100 percent interest in the title to the mineral rights then Aurora Gold Mineracao would give notice to the vendors of its intention to acquire title to the mineral rights at least five days prior to the expiration of the aforementioned period. Aurora Gold Mineracao and the Vendors would then enter into an Option Agreement for the Assignment and transfer of the mineral rights. The terms of the Piranhas option agreement, as specified in the MOU, allow Aurora Gold Mineracao to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Piranhas project mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: June 30, 2006 - USD $30,000; July 21, 2006 - USD $70,000; July 21, 2007 - USD $120,000; July 21, 2008 - USD $180,000; July 21, 2009 - USD $1,600,000 for a total of USD $2,000,000. The vendor will have a 1.5% Net Smelter Royalty. The option agreement can be terminated at any time upon written notice to the vendor and Aurora Gold Minera o will be free of any and all payment commitments yet to be due. The Branca de Neve MOU provides Aurora Gold Mineracao Ltda with a review period to access the gold potential of the property. If Aurora Gold Mineracao decides to proceed with acquiring a 100 percent interest in the title to the mineral rights then Aurora Gold Mineracao would give notice to the vendors of its intention to acquire title to the mineral rights at least five days prior to the expiration of the aforementioned period. Aurora Gold Mineracao and the Vendors would then enter into an Option Agreement for the Assignment and transfer of the mineral rights. The terms of the Branco de Neve option agreement, as specified in the MOU, allow Aurora Gold Mineracao to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Branco de Neve property mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: April 12, 2006 - R$35,000 (Reals - Brazilian currency); October 12, 2006 - R$35,000; April 12, 2007 - R$35,000; October 12, 2007 - R$35,000; April 12, 2008 - R$35,000; October 12, 2008 - R$500,000 for a total of R$675,000. The vendor will have a 0.75% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment of R$500,000. The option agreement can be terminated at any time upon written notice to the vendor and Aurora Gold Mineracao will be free of any and all payment commitments yet to be due The Novo Porto option agreement allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Novo Porto property mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: December 25, 2005 - USD $2,500; January 15, 2006 - USD $10,000; May 30, 2006 - USD $37,500; May 30, 2007 - USD $50,000; May 30, 2008 - USD $75,000; May 30, 2009 - USD $1,850,000 for a total of USD $2,025,000. The agreement was not formally executed until 2006 and the initial payment of $2,500 due December 25, 2005 was not paid until 2006. The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due. 11 In March 2006 we decided not to follow-up our preliminary exploration program on the Novo Porto property and have decided not to exercise our option to acquire the property. The Ouro Mil option agreement allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Ouro Mil property mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: January 20, 2006 - USD $30,000; June 20 2006 - USD $70,000; June 20, 2007 USD $120,000; June 20, 2008 - USD $180,000; December 20, 2008 - USD $1,500,000 for a total of USD $1,900,000. The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000.The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due. The Santa Isabel option agreement allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Santa Isabel property mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: January 21, 2006 - USD $25,000; July 21, 2006 - USD $60,000; July 21, 2007 - USD $80,000; July 21, 2008 - USD $100,000; July 21, 2009 - USD $1,500,000 for a total of USD $1,765,000. The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due. The Sao Domingos option agreement allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Sao Domingos property mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: January 30, 2006 - USD $31,500; July 30, 2006 - USD $67,500; July 30, 2007 USD $112,500; July 30, 2008 - USD $139,500; December 30, 2008 - USD $675,000 for a total of USD $1,026,000. The vendor will have a 2.0% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $500,000. The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due. The Sao Joao option agreement allows us to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Sao Joao property mineral rights via structured cash payments. The total option agreement payments for the licence are structured as follows: April 12, 2006 - USD $20,000; September 12, 2006 - USD $25,000; September 12, 2007 - USD $60,000; September 12, 2008 - USD $80,000; September 12, 2009 - USD $1,250,000 for a total of USD $1,435,000. The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and we will be free of any and all payment commitments yet to be due. In January 2006, we closed a private placement of our common shares for net proceeds of $3,900,000. The private placement was done with individuals and companies who reside outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). (C) Exploration and Development We conduct our exploration and property acquisition activities through our head office which is located at 30 Ledgar Road, Balcatta, Western Australia, 6021 Australia. The telephone number is (+61 8) 9240-2836. The Field office for our exploration activities in Brazil is located at Estrada Do Bis, 476, Bairro, Bom Jardim, Itaituba, in the Tapajos gold province of the State of Para, Brazil. 12 We are currently concentrating our exploration activities in Brazil and Canada. We are also examining data relating to the potential acquisition of other exploration properties in Mexico and South America. We have signed option agreements on five exploration licences located in the Municipality of Itaituba, in the Tapajos gold province of the State of Para, Brazil and also own or control unpatented mining claims in British Columbia, Canada. Our strategy is to concentrate our investigations into: (i) Existing operations where an infrastructure already exists; (ii) Properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) Grass-roots exploration opportunities. For the three months ended March 31, 2006 we recorded exploration expenses of $428,270 (2005 - $2,061). The following is a breakdown of the exploration expenses by property: Brazil $426,025 (2005 - $0) and Canada, Kumealon property $2,245 (2005 - $2,036). We have commenced reconnaissance exploration programs on each of the properties. The properties Nova Porto, Ouro Mil, Santa Isabel, Sao Joao and Sao Domingo's properties are located in the southern part of the rich and largely unexplored Tapajos gold province. We have conducted preliminary investigations of the Sao Joao property area, which has confirmed the existence of mineralised quartz veins and stockwork systems within these Intrusive Granite Suites and will continue to evaluate the property. A soil sampling program was completed over the Nova Porto property area. The grid was laid out on a line spacing of 200m for the east west lines with sampling at 50m intervals along these lines. Concurrently geological mapping was conducted on and around the zones associated with the southern extension of the fault. A literature review was carried out on the Santa Isabel property resulting in a compilation of previous soil sampling and mapping. Limited rock chip sampling confirmed the existence of mineralisation. A limited rock chip and laterite program was carried out over the Ouro Mil site to confirm the potential for economic mineralisation. The Ouro Mil site was also inspected for the potential of a future logistical centre. Sao Domingo's property was selected to locate our field office. The site was selected due to the access to power, phone and a well developed current infrastructure. From the Sao Domingos field office our other properties can be easily accessed and serviced by boat, vehicle and aircraft. Limited rock chip sampling was carried out over several outcrops and previous workings on the Sao Domingos property. A visual inspection of the rock chips confirms the lithologies correlated to other known mineralised lithologies common to gold producing areas near to the Sao Domingos properties. Limited rock chip sampling was carried out over several outcrops and previous workings on the Branco de Neve property. A visual inspection of the rock chips confirms the lithologies correlated to other known mineralised lithologies common to gold producing areas near to the Branco de Neve property. Our properties are in the exploration stage only and are without a known body of Mineral Reserves. Our primary objective is to explore for gold, silver, base metals and industrial minerals and, if warranted, to develop those existing mineral properties. Our secondary objective is to locate, evaluate, and acquire other mineral properties, and to finance their exploration and development through equity financing, by way of joint venture or option agreements or through a combination of both. Development of the properties will follow only if satisfactory exploration results are obtained. Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration and development activities will result in any discoveries of commercially viable bodies of mineralization. The long-term profitability of our operations will be, in part, directly related to the cost and success of its exploration programs, which may be affected by a number of factors. 13 (D) Results of Operations Three Months Ended March 31, 2006 versus Three Months Ended March 31, 2005 For the three months ended March 31, 2006 we recorded a net loss of $549,587 (2005 - $5,473) or $0.01 per share (2005 - $0.00). General and administrative expenses - For the three month period ended March 31, 2006 we recorded expenses of $121,317 (2005 - $3,412). The 2006 amount includes, professional fees - accounting $20,075 (2005 - $474) and legal $27,702 (2005 - $0). Exploration expenditures - For the three month period ended we recorded exploration expenses of $428,270 (2005 - $2,061). The following is a breakdown of the exploration expenses by property: Brazil $426,025 (2005 - $0) and Canada, Kumealon property $2,245 (2005 - $2,036). Amortization expenditures - For the three month period ended March 31, 2006 we recorded depreciation costs of $313 (2005 - $1,086). (E) Capital Resources and Liquidity March 31, 2006 versus March 31, 2005: At March 31, 2006, we had cash of $3,522,180 (2005 - $922) and working capital of $3,529,237 (2005 working capital deficiency - $193,207) respectively. Total liabilities as of March 31, 2006 were $39,853 (2005 - $194,329) a decrease of $154,476. In February 2006, we closed a private placement of 8,000,000 of our common shares at $0.50 per common share for net proceeds of $3,900,000. For the three months ended March 31, 2006 we recorded a loss of $549,587 ($0.01 per share), compared to a loss of $5,473 ($0.00 per share) in 2005 Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As discussed in note 1 to the financial statements, we have incurred recurring operating losses and require additional funds to meet our obligations and maintain our operations. Without cash flow from operations, we may need to obtain additional funds (presumably through equity offerings and/or debt borrowing) in order, if warranted, to implement additional exploration programs on our properties. Failure to obtain such additional financing may result in a reduction of our interest in certain properties or an actual foreclosure of its interest. We have no agreements or understandings with any person as to such additional financing. Our exploration properties have not commenced commercial production and we have no history of earnings or cash flow from its operations. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its property, there is no assurance that any such activity will generate funds that will be available for operations. (F) Plans for the Year 2006 and 2007 During the next 12 months we intend to raise additional funds through equity offerings and/or debt borrowing to meet its administrative/general operating expenses and to conduct work on its exploration property. There is, of course, no assurance that it will be able to do so. We will concentrate our exploration activities on the Brazilian Tapajos properties and examine data relating to the potential acquisition or joint venturing of additional mineral properties in either the exploration or development stage in Brazil, Canada and other South American countries. Additional employees will be hired on a consulting basis as required by the exploration properties. 14 Our exploration work program in 2006 on the Brazilian Tapajos properties will entail surface mapping of geology, sampling of soils on a grid basis to delineate geochemical anomalies, stream sediment sampling and geophysical surveying. We are setting up a field operations center at the S o Domingos property and intend to initially focus exploration on anomalies associated with the S o Domingos Property. S o Domingo was selected based on the proximity to our other properties, and the logistics currently in place. Access to S o Domingo is by light aircraft to a well-maintained strip, by road along the government maintained Trans Garimpeiro highway, and by boat along the multitude of waterways in the Amazon Basin. Exploration campaigns will be launched from S o Domingo to the other properties and serviced by road and river access. Initially exploration will entail mapping the outcrop geology and spoils from shafts of previous workers in order to confirm lithologies and structural trends noted on government maps. Currently three anomalous areas have been identified, from rock chip sampling, as warranting further investigation. We will conduct a soil sampling program, and further rock chip sampling over the anomalous areas and has drafted the proposed grid. This work will be initiated during the second quarter of 2006 when weather conditions will be more conducive. Concurrently, we intend to initiate drilling on the Santa Isabel property in response to the high grade rock chip results collected from previous workings on outcropping mineralised quartz veins. Drill hole locations are currently being assessed and negotiations with drilling contractors are nearing completion. Drilling is expected to begin during mid April. We will also continue to evaluate the Ouro Mil and S o Jo o properties by mapping and sampling the quartz veins and structures in order to set up and orientate the soil grids. The data assembled from this work will be used to determine whether: (i) further exploration and diamond core drilling is warranted and if so the sites for initial holes; or (ii) whether certain claim blocks should be surrendered. Our exploration work program in 2006 on the British Columbia Kumealon limestone property will entail surface mapping of geology, sampling of soils on a grid basis to delineate geochemical anomalies, stream sediment sampling and geophysical surveying. The data assembled from this work will be used to determine whether: (i) further exploration and diamond core drilling is warranted and if so the sites for initial holes; or (ii) whether certain claim blocks should be surrendered. (G) Application of Critical Accounting Policies The preparation of our financial statements requires us to use estimates and assumptions that affect the reported amounts of assets and liabilities as well as revenues and expenses. Our accounting policies are described in note 2 to our consolidated financial statements. Our accounting policies relating to depreciation and amortization of property, plant and equipment are critical accounting policies that are subject to estimates and assumptions regarding future activities. Our policy regarding exploration costs is that exploration costs are charged to operations as incurred until such time that proven reserves are discovered. From that time forward, we will capitalize all costs to the extent that future cash flow from mineral reserves equals or exceeds the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. As at March 31, 2006 and December 31, 2005, we did not have proven reserves. Costs of initial acquisition of mineral rights and concessions are capitalized until the properties are abandoned or the right expires. Exploration activities conducted jointly with others are reflected at our proportionate interest in such activities Generally accepted accounting principles require us to consider at the end of each accounting period whether or not there has been an impairment of the capitalized property, plant and equipment. This assessment is based on whether factors that may indicate the need for a write-down are present. If we determine there has been impairment, then we would be required to write-down the recorded value of our property, plant and equipment costs which would reduce our earnings and net assets. 15 (H) Off-balance Sheet Arrangements and Contractual Obligations We do not have any off-balance sheet arrangements or contractual obligations that are likely to have or are reasonably likely to have a material 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 have not been disclosed in our financial statements. (I) Market Risk Disclosures We have not entered into derivative contracts either to hedge existing risks or for speculative purposes. ITEM 3. Controls and Procedures Our principal executive and principal financial officers have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report (evaluation date) and have concluded that the disclosure controls and procedures are adequate and effective based upon their evaluation as of the evaluation date. There were no significant changes in our controls or in other factors that could significantly affect these internal controls subsequent to the date of the most recent evaluation. PART 11. OTHER INFORMATION ITEM 1. Legal Proceedings We are not party to any litigation, and has no knowledge of any pending or threatened litigation against us. ITEM 2. Changes in Securities In January 2006, we closed a private placement of 8,000,000 of our common shares at $0.50 per common share for net proceeds of $3,900,000. ITEM 3. Defaults Upon Senior Securities Not Applicable ITEM 4. Submission of Matters to a Vote of Security Holders Not Applicable ITEM 5. Other Information None. ITEM 6. Exhibits and Reports on Form 8-K ITEM 13. EXHIBITS (A) Exhibits
3.1.1 Certificate of Incorporation. (1). 3.1.2 Certificate of Amendment to the Certificate of Incorporation. (1) 3.1.3 Certificate of Restoration and Renewal of Certificate of Incorporation. (1) 16 3.2.1 By-laws. (1) 3.2.2 Amended and Restated By-laws. (1) 10.1.1 Consulting Agreement between Hans W. Biener of SupplyConsult GbR and Aurora Gold Corporation. (2) 10.1.2 Confidentiality Agreement between Hans W. Biener of SupplyConsult GbR and Aurora Gold Corporation. (2) 10.2.1 Assignment of Novo Porto and Santa Clara Memorandum of Understanding to Aurora Gold Corporation. (2) 10.2.2 Novo Porto Memorandum of Understanding. (2) 10.2.3. Declaration of Translator for translation of Novo Porto Memorandum of Understanding from Portuguese to English. (2) 10.2.4 Novo Porto Option Agreement. (6) 10.2.5 Declaration of Translator for translation of Novo Porto Option Agreement from Portuguese to English. (6) 10.2.6 Santa Clara Memorandum of Understanding. (2) 10.2.7 Declaration of Translator for translation of Santa Clara Memorandum of Understanding from Portuguese to English. (2) 10.3.1 Assignment of Ouro Mil Memorandum of Understanding to Aurora Gold Corporation. (2) 10.3.2 Ouro Mil Memorandum of Understanding. (2) 10.3.3 Declaration of Translator for translation of Ouro Mil Memorandum of Understanding from Portuguese to English. (2) 10.3.4 Ouro Mil Option Agreement. (6) 10.3.5 Declaration of Translator for translation of Ouro Mil Option Agreement from Portuguese to English. (6) 10.4.1 Assignment of Sao Domingos Memorandum of Understanding to Aurora Gold Corporation. (2) 10.4.2 Sao Domingos Memorandum of Understanding. (2) 10.4.3 Declaration of Translator for translation of Sao Domingos Memorandum of Understanding from Portuguese to English. (2) 10.4.4 Sao Domingos Option Agreement. (6) 10.4.5 Declaration of Translator for translation of Sao Domingos Option Agreement from Portuguese to English. (6) 10.5.1 Santa Isabel Option Agreement. (6) 10.5.2 Declaration of Translator for translation of Santa Isabel Option 10.6.1 Agreement from Portuguese to English. (*) Sao Joao Option Agreement. (6) 10.6.2 Declaration of Translator for translation of S o Jo o Option 10.7.1 Agreement from Portuguese to English. (6) Piranhas Memorandum of Understanding. (6) 10.7.2 Declaration of Translator for translation of Piranhas Memorandum of Understanding from Portuguese to English. (6) 16.1 Letter on change in certifying accountant. (3) 16.2 Letter on change in certifying accountant. (4) 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.1 Corporate Governance Principles. (5)
-------- 1. Incorporated by reference from Form 10SB12G filed on June 4, 1998 2. Incorporated by reference from Form SB-2 filed December 16, 2005 3. Incorporated by reference from Form 8-K filed on May 16, 2000 4. Incorporated by reference from Form 8-K filed on February 8, 2006 5. Incorporated by reference from Form 10-KSB filed on March 25, 2004 6. Incorporated by reference from Form 10-KSB filed on March 28, 2006 17 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Aurora Gold Corporation ------------------------- Registrant Date: April 19, 2006 BY: /s/ Klaus Eckhof --------------- ------------------ Klaus Eckhof Director Date: April 19, 2006 BY: /s/ Cameron Richardson --------------- ----------------------- Cameron Richardson Director In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: April 19, 2006 BY: /s/ Klaus Eckhof -------------- ------------------ Klaus Eckhof President, Chief Executive Officer and Director Date: April 19, 2006 BY: /s/ Cameron Richardson -------------- ----------------------- Cameron Richardson Chief Financial Officer and Director 18