10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q/A

AMENDMENT NO. 1

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2011

OR

  o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number:  333-134549

CALIFORNIA GOLD CORP.

(Exact Name of Registrant as Specified in its Charter)

Nevada	83-483725
(State of Incorporation)	(IRS Employer Identification No.)

4515 Ocean View Blvd., Suite 305, La Cañada, CA  91011

 (818) 542-6891

(Address of principal executive offices and telephone number)

Indicate whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the preceding 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer         o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
		(Do not check if a smaller  Reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o   No x

There were 109,451,260 shares of common stock issued and outstanding as of December 15, 2011.

CALIFORNIA GOLD CORP.

EXPLANATORY NOTE

This Amendment No. 1 to California Gold Corp.’s (the Company”) Quarterly Report on Form 10-Q for the period ended October 31, 2011 (“Form 10-Q”), as filed with the Securities and Exchange Commission on December 15, 2011, is being filed solely to furnish Exhibit 101 to the Form 10-Q as required by Rule 405 of Regulation S-T.  Exhibit 101 to this Amendment No. 1 to Form 10-Q furnishes the following items in eXtensible Business Reporting Language: (i) the Company’s consolidated balance sheets (unaudited) as of October 31, 2011 and January 31, 2011, (ii) the Company’s consolidated statements of expenses (unaudited) for the three and nine months ended October 31, 2011 and 2010 and the period from inception (April 19, 2004) to October 31, 2011, (iii) the Company’s consolidated statements of cash flows (unaudited) for the nine months ended October 31, 2011 and 2010 and the period from inception (April 19, 2004) to October 31, 2011 (unaudited), and (v) the notes to the Company’s consolidated financial statements (unaudited).

No changes have been made to the Form 10-Q other than the furnishing of Exhibit 101 described above. This Amendment No. 1 to Form 10-Q does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way disclosures made in the Form 10-Q.

1

ITEM 6.  EXHIBITS

The following exhibits are included with this quarterly report.

Exhibit
Number	Description
31.1*	Certification of Principal Executive and Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101 INS	XBRL Instance Document
101 SCH	XBRL Schema Document
101 CAL	XBRL Calculation Linkbase Document
101 LAB	XBRL Labels Linkbase Document
101 PRE	XBRL Presentation Linkbase Document
101 DEF	XBRL Definition Linkbase Document

The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document

____________________

* Previously filed.

** This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

2

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:     December 19, 2011	California Gold Corp.
	By:	/s/ James D. Davidson
		James D. Davidson
		President, Treasurer, Principal Executive Officer, Principal Financial Officer

3

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Oct. 31, 2011

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain amounts in prior periods have been reclassified to conform to current period presentation.

Acquisition-Related Costs

For the three and nine months ended October 31, 2011, the Company incurred certain costs related to the AuroTellurio Acquisition (as defined below in Note 4). Those costs included legal, valuation, travel, and other professional or consulting fees. The Company accounted for those acquisition-related costs under FASB ASC Topic 805, Business Combinations. The costs were recognized as mineral property expenses in the periods in which the costs were incurred and the services received. The Company recorded $85,387 and $215,795 in costs for the three and nine months ended October 31, 2011, respectively, and none for the three and nine months ended October 31, 2010.

Costs of acquisition and option costs of mining rights are capitalized upon acquisition. As of October 31, 2011 and January 31, 2010, the Company capitalized $47,500 and $20,000, respectively, of costs related to the first closing under the AuroTellurio Option Agreement conducted on August 4, 2011.

To determine if capitalized costs are in excess of their recoverable amount, periodic evaluation of the carrying value of capitalized costs and any related property and equipment costs are performed based upon expected future cash flows and/or estimated salvage value in accordance with ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets. As of October 31, 2011, no impairment was required for the Company’s capitalized mining rights.

Stock-Based Compensation

The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.

The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services.  Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

For the three and nine months ended October 31, 2011, the Company recorded $82,498 and $423,042, respectively, in stock-based compensation as a component of general and administrative expenses. The Company recorded $220,000 in stock-based compensation to a non-employee during the three and nine months ended October 31, 2010.

Net Earnings (Loss) Per Share

Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the three and nine months ended October 31, 2011, the Company excluded options and outstanding warrants to purchase 11,000,000 and 19,369,565 shares of common stock, respectively, as the effect would be anti-dilutive.

New Accounting Pronouncements

The Company does not expect adoption of the new accounting pronouncements will have a material effect on the Company’s consolidated financial statements.

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BASIS OF PRESENTATION

9 Months Ended

Oct. 31, 2011

BASIS OF PRESENTATION

NOTE 2 – BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements as of October 31, 2011 and 2010 and for the three and nine months then ended have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission and on the same basis as the annual audited financial statements. The consolidated financial statements as of and for the three and nine months ended October 31, 2011 and 2010 are unaudited. In the opinion of management, these consolidated financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The balance sheet at January 31, 2011 has been derived from audited financial statements; however, the notes to the consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended January 31, 2011 as filed with the SEC.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, CalGold de Mexico, S. de R.L. de C.V., formed to explore mining opportunities in Mexico. All material intercompany balances and transactions have been eliminated.

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CONSOLIDATED BALANCE SHEETS (USD $)	Oct. 31, 2011	Jan. 31, 2011
Current assets:
Cash	$ 1,064,399	$ 1,268,254
Due from third party	5,907
Prepaid expenses	18,812
Prepaid expenses - related party		33,784
Total current assets	1,089,118	1,302,038
Property and equipment, net	8,306
Mining rights	47,500	20,000
Total assets	1,144,924	1,322,038
Current liabilities:
Accounts payable	46,842	27,129
Accounts payable - related party	9,400	52,250
Derivative liabilities	2,159,709	2,305,770
Other accrued liabilities		2,500
Total current liabilities	2,215,951	2,387,649
Total liabilities	2,215,951	2,387,649
Commitments and contingencies
Stockholders' deficit:
Preferred stock, par value $0.001 per share, 22,000,000 shares authorized ; 22,000,000 shares issued and outstanding	22,000	22,000
Common stock, par value $0.001 per share, 300,000,000 shares authorized ; 109,451,260 and 92,701,260 shares issued and outstanding , respectively	109,451	92,701
Additional paid-in capital	1,955,049	1,678,791
Deficit accumulated during the exploration stage	(3,157,527)	(2,859,103)
Total stockholders' deficit	(1,071,027)	(1,065,611)
Total liabilities and stockholders' deficit	$ 1,144,924	$ 1,322,038

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)	9 Months Ended	90 Months Ended
	Oct. 31, 2011	Oct. 31, 2011
Proceeds from common and preferred stock issued, offering costs	$ 3,500	$ 3,500

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GENERAL ORGANIZATION AND BUSINESS

9 Months Ended

Oct. 31, 2011

GENERAL ORGANIZATION AND BUSINESS

NOTE 1 – GENERAL ORGANIZATION AND BUSINESS

California Gold Corp. (“California Gold” or the “Company”) is a Nevada corporation whose principal focus is the identification, acquisition, and development of rare and precious metals mining properties in the Americas. The Company is still in the exploration stage and has not generated any revenues from its mining properties to date.

The Company was incorporated on April 19, 2004 under the name of Arbutus Resources, Inc. On August 9, 2007, the Company changed its name to US Uranium, Inc. On March 9, 2009, the Company changed its name to California Gold Corp.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Oct. 31, 2011	Jan. 31, 2011
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	22,000,000	22,000,000
Preferred stock, shares issued	22,000,000	22,000,000
Preferred stock, shares outstanding	22,000,000	22,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	109,451,260	92,701,260
Common stock, shares outstanding	109,451,260	92,701,260

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SUBSEQUENT EVENTS

9 Months Ended

Oct. 31, 2011

SUBSEQUENT EVENTS

NOTE 11 – SUBSEQUENT EVENTS

The Company evaluates subsequent events through the date when financial statements are filed with the SEC.

Effective November 4, 2011, the Company has entered into a geophysical survey agreement with MPX Geophysics Ltd. (“MPX”), pursuant to which MPX will perform aerial surveys over the AuroTellurio Property by the end of the year or in yearly 2012 for an estimated amount of $69,260.

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Document and Entity Information	9 Months Ended
	Oct. 31, 2011	Dec. 15, 2011
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Trading Symbol	CLGL
Entity Registrant Name	CALIFORNIA GOLD CORP.
Entity Central Index Key	0001363573
Current Fiscal Year End Date	--01-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		109,451,260

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CONSOLIDATED STATEMENTS OF EXPENSES (USD $)	3 Months Ended		9 Months Ended		90 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011
Expenses:
Mineral property expenses	$ 85,387		$ 215,795		$ 293,897
Bad debt expense					559,483
Depreciation expense	440		503		503
General and administrative expenses	222,960	266,039	773,824	394,377	1,922,005
Total operating expenses	308,787	266,039	990,122	394,377	2,775,888
Loss from operations	(308,787)	(266,039)	(990,122)	(394,377)	(2,775,888)
Other income (expenses):
Interest income	571		1,603		1,894
Interest expense		(565)		(1,621)	(1,763)
Realized and unrealized gain (loss) on derivatives, net	176,140	(67,056)	690,095	(67,056)	(372,152)
Amortization of debt discount		(716)		(716)	(9,618)
Total other income (expenses)	176,711	(68,337)	691,698	(69,393)	(381,639)
Net loss	$ (132,076)	$ (334,376)	$ (298,424)	$ (463,770)	$ (3,157,527)
Loss per common share:
Loss per common share - basic and diluted	$ 0.00	$ (0.01)	$ 0.00	$ (0.01)
Weighted average number of common shares outstanding - basic and diluted	109,443,018	58,766,299	102,791,334	58,298,296

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DERIVATIVE LIABILITIES

9 Months Ended

Oct. 31, 2011

DERIVATIVE LIABILITIES

NOTE 6 – DERIVATIVE LIABILITIES

Derivative Warrant Instruments

In the December 2010 and January 2011 Unit Offering, the Company incurred liabilities for the estimated fair value of derivative warrant instruments in the form of warrants. The estimated fair value of the derivative warrant instruments was calculated using the Black-Scholes option pricing model and amounted to $1,323,133 at the grant dates as of December 22, 2010 and January 13, 2011. These estimates were re-valued as being $2,305,770 and $1,674,290 at the balance sheet dates as of January 31, 2011 and October 31, 2011, respectively. The Company recorded $128,981 and $631,480 change in value as unrealized gain in non-operating income for the three and nine months ended October 31, 2011, respectively.

The fair value of each warrant granted in the private placement offering has been estimated on the dates of grant using the Black-Scholes option pricing model, under the following assumptions:

Common stock issuable upon exercise of warrants		30,739,129
Market price of the Company’s common stock on the measurement dates	$	0.05 and 0.09
Exercise price	$	0.125
Risk free interest rate		0.475	%
Dividend yield		0.00	%
Volatility		257.95	%
Expected exercise term in years		1.5

In April 2011, the Company added to the Unit Offering a first over-allotment option. As such, the Company incurred liabilities for the estimated fair value of derivative warrant instruments in the form of warrants. The estimated fair value of the derivative warrant instruments was calculated using the Black-Scholes option pricing model and amounted to $71,973, $131,077, and $88,824 at the grant dates of April 7, 2011, April 13, 2011, and April 30, 2011, respectively. The April 2011 grants were re-valued as being $238,389 at the balance sheet date of October 31, 2011. The Company recorded a $22,123 and $53,485 change in value as unrealized gain in non-operating expense for the three and nine months ended October 31, 2011, respectively.

The fair value of each warrant granted in the private placement offering has been estimated on the dates of grant using the Black-Scholes option pricing model, under the following assumptions:

Common stock issuable upon exercise of warrants		4,000,000
Market price of the Company’s common stock on the measurement dates	$	0.08 and 0.10
Exercise price	$	0.125
Risk free interest rate range		0.61 – 0.81	%
Dividend yield		0.00	%
Volatility range		268.16 – 284.75	%
Expected exercise term in years		1.5

In June and July 2011, the Company closed its first and second over-allotment options. The Company incurred liabilities for the estimated fair value of derivative warrant instruments in the form of warrants. The estimated fair value of the derivative warrant instruments was calculated using the Black-Scholes option pricing model and amounted to $149,203 and $102,957 at the grant dates of June 15, 2011 and July 15, 2011, respectively. The grants were re-valued as being $247,030 at the balance sheet date of October 31, 2011. The Company recorded a $25,036 and $5,130 change in value as unrealized gain in non-operating expense for the three and nine months ended October 31, 2011.

The fair value of each warrant granted in the private placement offering has been estimated on the dates of grant using the Black-Scholes option pricing model, under the following assumptions:

Common stock issuable upon exercise of warrants		4,000,000
Market price of the Company’s common stock on the measurement dates	$	0.07 and 0.08
Exercise price	$	0.125
Risk free interest rate range		0.37 – 0.38	%
Dividend yield		0.00	%
Volatility range		315.50 – 317.98	%
Expected exercise term in years		1.5

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RELATED PARTY TRANSACTIONS

9 Months Ended

Oct. 31, 2011

RELATED PARTY TRANSACTIONS

NOTE 5 – RELATED PARTY TRANSACTIONS

Compensation of Officers and Directors

Officers and director fees totaled $13,500 and $0 for the three months ended October 31, 2011 and 2010, respectively, and $50,000 and $0 for the nine months ended October 31, 2011 and 2010, respectively. The total compensation of officers and directors was recorded as a component of general and administrative expenses.

Legal, Consulting and Other Professional Fees

Effective December 1, 2010, the Company has entered into a 12-month retainer agreement with a stockholder, pursuant to which the Company will pay a monthly fee of $5,500 for providing legal services relating to SEC regulatory compliance and reporting requirements. In May 2011, the Company signed an addendum to the retainer agreement for legal representation relating to the Mexivada acquisition. The Company reached the maximum payment of $50,000 per the addendum as of October 31, 2011.

For the three months ended October 31, 2011 and 2010, the Company’s professional legal fees totaled $59,445 and $40,088 respectively, and primarily related to SEC filings and other general corporate matters. For the nine months ended October 31, 2011 and 2010, the Company’s legal fees totaled $101,674 and $108,055, respectively, and primarily related to SEC filings, acquisitions, private placement offerings, and other general corporate matters. The legal fees incurred were included as a component of general and administrative expenses. A total of $9,400 outstanding payable for legal services provided was included in the Company’s consolidated balance sheets as of October 31, 2011, compared to $46,250 outstanding as of January 31, 2011. As of October 31, 2011 and January 31, 2011, the Company prepaid $0 and $22,000 for legal services rendered.

Additionally, the Company incurred consulting expenses with several of its stockholders, which provided the Company with regular and customary capital markets and corporate finance consulting advice. The Company incurred $0 and $11,783 in consulting fees during the three and nine months ended October 31, 2011. The $11,783 fees were recorded as a prepaid expense in the Company’s consolidated balance sheets as of January 31, 2011. In addition, the Company issued the 500,000 restricted shares of its common stock, $0.001 per share, on February 28, 2011, to one of its stockholders and recorded the $0 and $10,555 of stock-based compensation expense for the services provided to the Company in the three and nine months ended October 31, 2011. Consulting fees and the stock-based compensation expense were included as a component of general and administrative expenses in the Company’s consolidated statements of expenses.

On June 6, 2011, the Company entered into consulting agreement with another stockholder of the Company. The Company engaged the stockholder to provide certain consulting services related to the Company’s business for a minimum period through June 5, 2013 for a monthly compensation fee of $6,000. The Company incurred $18,000 and $30,000 in consulting fees related to this agreement for the three and nine months ended October 31, 2011, which were included as a component of general and administrative expenses.

In January 2011, the Company entered into an administrative services agreement with Incorporated Communications Services (“ICS”), a California corporation. George Duggan, the Company’s Chief Operations Officer, is the Vice President of ICS. Pursuant to the agreement with ICS, ICS will make available its address in La Canada, California to serve as the Company’s corporate headquarters and communications office, and provide the Company with basic administrative services, including coordinating and routing incoming telephone calls, handling investor inquiries, assisting in the preparation of press releases, developing an informational website and coordinating with the auditors and financial statement preparers. The Company pays ICS a monthly fee of $6,000 for these services. This agreement with ICS became effective January 1, 2011, runs for a term of 12 months and may be extended or terminated by the parties upon 60 days prior notice. The Company incurred $18,000 and $54,000 in management fees for the three and nine months ended October 31, 2011, which were included as a component of general and administrative expenses. Additionally, the Company reimbursed ICS for the expenses related to the services provided in the amount of $2,296 and $8,649 for the three and nine months ended October 31, 2011. As of October 31, 2011 and January 31, 2011, the outstanding payable to ICS was $0 and $6,000, respectively, recorded in the Company’s consolidated balance sheets.

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STOCK-BASED COMPENSATION

9 Months Ended

Oct. 31, 2011

STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

Shares for Services

The Company issued 500,000 restricted shares of common stock to one of its stockholders for consulting services rendered and recognized stock-based compensation expense of $0 and $10,555 during the three and nine months ended October 31, 2011. During the three and nine months ended October 31, 2010, the Company issued 4,000,000 common shares to the individual in payment for the services to be rendered and recorded $220,000 as stock-based compensation. The Company valued the shares based on market value on the date of the agreements.

Stock Options

The Company has a stock-based compensation plan known as the 2007 Stock Option Plan (the “Plan”). The Plan provides for the granting of incentive and non-qualified stock options to acquire common shares in the capital of California Gold Corp. The number of shares authorized under the Plan is 16,000,000. As of October 31, 2011, 5,000,000 shares remain available for future grants under the Plan.

On July 27, 2011, the Company granted options to purchase 11,000,000 shares of its common stock to its employees and outside consultants. These options have a 10-year term and were granted with an exercise price of $0.09. The one third of these options, or 3,666,667, vested on the date of the grant, with the remaining two thirds vesting on the first and second anniversaries of the date of grant. All vested options are exercisable, in full or in part, at any time after vesting, until termination. As of October 31, 2011, no options were exercised or forfeited. The Company recorded stock-based compensation expense attributable to options of $82,498 and $412,487 during the three and nine months ended October 31, 2011. As of October 31, 2011, there was approximately $577,481 of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over the period of 1.75 years.

Outstanding options had $0 intrinsic value at October 31, 2011, due to the exercise price being greater than the value of the Company’s common stock at the reporting date.

The fair value of options granted in July 2011 was measured at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Market price of the Company’s common stock on grant date	$	0.09
Risk free interest rate		3.01	%
Dividend yield		0.00	%
Volatility		260.65	%
Expected life	6 years
Expected forfeiture rate		0.00	%

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FAIR VALUE MEASUREMENTS

9 Months Ended

Oct. 31, 2011

FAIR VALUE MEASUREMENTS

NOTE 7 – FAIR VALUE MEASUREMENTS

As defined in FASB ASC Topic 820, fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Topic requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Pricing inputs other than quoted market prices included in Level 1 that are based on observable market data and are directly or indirectly observable for substantially the full term of the asset or liability. These include quoted market prices for similar assets or liabilities, quoted market prices for identical or similar assets in markets that are not active, adjusted quoted market prices, inputs from observable data such as interest rate and yield curves, volatilities or default rates observable at commonly quoted intervals or inputs derived from observable market data by correlation or other means.

Level 3: Pricing inputs that are unobservable or less observable from objective sources. Unobservable inputs should only be used to the extent observable inputs are not available. These inputs maintain the concept of an exit price from the perspective of a market participant and should reflect assumptions of other market participants. An entity should consider all market participant assumptions that are available without unreasonable cost and effort. These are given the lowest priority and are generally used in internally developed methodologies to generate management's best estimate of the fair value when no observable market data is available.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Certain assets and liabilities are reported at fair value on a recurring or nonrecurring basis in the Company’s consolidated balance sheets. The following methods and assumptions were used to estimate the fair values:

Cash, Prepaid assets, Mining rights (deposits), Accounts payable, and Accrued liabilities

The carrying amounts approximate fair value because of the short-term nature or maturity of the instruments.

Derivative liabilities

The Company’s determination of fair value of its derivative instruments incorporates various factors required under FASB Topic ASC 815. The fair values of the Company’s derivatives are valued using less observable data from objective sources as inputs into internal valuation models. Therefore, the Company considers the fair value of its derivatives to be Level 3 hierarchy. At October 31, 2011 and January 31, 2011, the aggregate Level 3 fair value of the derivative liabilities was $2,159,709 and $2,305,770, respectively.

The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as level 3 in the fair value hierarchy:

	Significant Unobservable Inputs (Level 3)
		Three Months Ended						Nine Months Ended
		October 31,			October 31,			October 31,			October 31,
		2011			2010			2011			2010
Balance as of July 31, 2011 and January 31, 2011		$	(2,335,849	)	$	-		$	(2,305,770	)	$	-
Change in fair value			176,140			-			690,095			-
Additions			-			(78,811	)		(544,034	)		(78,811	)
Ending balance as of October 31, 2011		$	(2,159,709	)	$	(78,811	)	$	(2,159,709	)	$	(78,811	)
Realized and unrealized gain (loss) on derivatives, net, included in earnings for the period ended October 31, 2011 and 2010	$		176,140			(67,056	)	$	690,095		$	(67,056	)

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EQUITY

9 Months Ended

Oct. 31, 2011

EQUITY

NOTE 8 – EQUITY

Private Placement Offering

On December 22, 2010, the Company sold to various persons (collectively, the “Investors”) 58,478,258 units of its securities (the “Units”) for gross proceeds of $1,461,956, at an offering price of $0.025 per Unit. Each of 36,478,258 of the Units consists of one common share and a warrant to purchase one-half share at $0.125 per whole share. Each of the remaining 22,000,000 Units consists of one share of the Company’s Series A Convertible Preferred Stock and warrants to purchase one-half of one share of common stock. The warrants will be exercisable from issuance until eighteen months after the closing of the PPO. 

On January 13, 2011, the Company sold an additional 5,000,000 Units for a total price of $125,000. The Company repurchased and cancelled 2,000,000 Units for $50,000.

In connection with the aforementioned over-allotment options, the Company sold an additional 8,000,000 Units for a total price of $200,000 in the quarter ended April 30, 2011. Additionally, the Company sold 8,000,000 units for a total purchase price of $200,000 in the quarter ended July 31, 2011.

As of July 31, 2011, cumulatively, the Company has sold a total of 77,478,258 Units for a total price of $1,936,956. The Company incurred closing costs of $19,000, resulting in net proceeds from the Offering of $1,917,956. The Company plans to apply the net proceeds of the closing primarily towards the AuroTellurio Acquisition (see Note 4), for the relief of certain outstanding accounts payable, and for working capital purposes.

AuroTellurio Acquisition

On August 4, 2011, in connection with the First Closing under the AuroTellurio Option Agreement, the Company issued to Mexivada 250,000 shares of its restricted common stock, at $0.001 per share. The issued stock was fair valued at $17,500 based on the market price on the date of issuance.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Oct. 31, 2011

COMMITMENTS AND CONTINGENCIES

NOTE 10 – COMMITMENTS AND CONTINGENCIES

In addition to $30,000 cash payment and 250,000 stock issuance made at the First Closing under the AuroTellurio Option Agreement on August 4, 2011 (see Note 4), assuming the Company exercises its right to acquire each of the four twenty percent (20%) interests in the AuroTelurio Property, the Company will make the following cash payments and share issuances to Mexivada: (i) $40,000 and 250,000 shares on the first anniversary of the Closing; (ii) $50,000 and 300,000 shares on the second anniversary of the Closing; (iii) $70,000 and 350,000 shares on the third anniversary of the Closing; and (iv) $100,000 and 500,000 shares on the fourth anniversary of the Closing. In connection with the AuroTellurio Option Agreement, the Company will pay an aggregate total of $290,000 in cash and 1,650,000 restricted shares of its common stock.

Under the terms of the AuroTellurio Option Agreement, the Company is also committed to incur $3,000,000 in cumulative exploration expenditures on the Property over a four year period at an investment rate of at least $750,000 per year. The Company will earn a 20% vested interest in the AuroTellurio Property in the first year of the AuroTellurio Option Agreement by investing $750,000 in an exploration program and up to an additional 60% interest in the Property, in blocks of 20% each, by investing an additional $750,000 in the exploration program in each of the following three years, or sooner, and meeting all of the other required terms of the AuroTellurio Option Agreement. Each 20% interest will vest earlier if each year’s cash and stock payments to Mexivada and $750,000 exploration expenditure investment are completed earlier than scheduled.

Under the terms of the Agreement, the Company will act as “Operator,” exclusively responsible, in consultation with Mexivada, for carrying out and administering exploration, development and mining work on the AuroTellurio Property. If costs of the exploration program exceed the agreed upon $3,000,000 investment, the Company will share additional costs with Mexivada on a proportionate share basis. Once the Company has earned its full 80% interest in the AuroTellurio Property, the Company will form a joint venture with Mexivada applicable to the further development and commercialization of the AuroTellurio Property.

The Company obtained a surface rights agreement with the landowner on whose property the La Viuda Concessions are located to conduct its mineral exploration program, effective June 17, 2011. The Company will pay the land owner $14,400 for each year in which the Company carries out exploration work on this land. The Company has begun Phase 1 of its exploration program and it is currently conducting mapping, trenching and sampling programs at the AuroTellurio Property. These activities will be followed by planned gravity and magnetic geophysical surveys in preparation for an initial 3,000-meter drilling program that is planned for implementation by the end of the year or in early 2012. As of the date of this filing, the Company incurred $311,631 since inception in its exploration and development expenditures, which are expensed as incurred.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended		90 Months Ended
	Oct. 31, 2011	Oct. 31, 2010	Oct. 31, 2011
Cash flows from operating activities:
Net loss	$ (298,424)	$ (463,770)	$ (3,157,527)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	503		503
Stock-based compensation	423,042	220,000	926,155
Amortization of debt discount		716	9,618
Unrealized and realized (gain) loss on derivatives, net	(690,095)	67,056	372,152
Changes in operating assets and liabilities:
Due from third party	(5,907)		(5,907)
Accounts payable	19,713	30,286	(11,505)
Accounts payable - related party	(42,850)	78,207	167,064
Accrued expenses	(2,500)		142
Interest accrued on notes payable from related party		1,621	1,621
Net cash used in operating activities	(581,546)	(65,884)	(1,716,495)
Cash flows from investing activities:
Purchase of property and equipment	(8,809)		(8,809)
Acquisition of mining rights	(10,000)		(30,000)
Net cash used in investing activities	(18,809)		(38,809)
Cash flows from financing activities:
Proceeds from related party loans		66,500	92,430
Proceeds from common and preferred stock issued, net of offering costs of $3,500	396,500		2,790,273
Payments from cancellation of common stock			(63,000)
Net cash provided by financing activities	396,500	66,500	2,819,703
Net increase (decrease) in cash	(203,855)	616	1,064,399
Cash - beginning of period	1,268,254	373
Cash - end of period	1,064,399	989	1,064,399
Noncash investing and financing activities:
Issuance of common stock for convertible notes			3,660
Re-class of derivatives related to convertible notes			91,365
Common stock cancellation			61,700
Issuance of common stock for acquisition of mining rights	17,500		17,500
All Other
Changes in operating assets and liabilities:
Prepaid expenses	(18,812)		(18,812)
Related Party Transactions
Changes in operating assets and liabilities:
Prepaid expenses	33,784
Noncash investing and financing activities:
Contributed capital		374	374
Related party note receivable write-off			557,927
Derivative
Noncash investing and financing activities:
Debt discount due to derivative liabilities		9,618	9,618
Issuance of derivative warrant instruments	544,035		1,867,168
Stockholders
Noncash investing and financing activities:
Contributed capital			$ 157,665

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MINING RIGHTS

9 Months Ended

Oct. 31, 2011

MINING RIGHTS

NOTE 4 – MINING RIGHTS

On February 11, 2011, the Company entered into a property option agreement (the “AuroTelurio Option Agreement”) with Mexivada Mining Corp. (“Mexivada”) to acquire up to an 80% interest in Mexivada’s concessions comprising its AuroTelurio tellurium-gold-silver property (the “La Viuda Concessions,” the “AuroTelurio Property” or the “Property”) in Mexico.

Under the terms of the AuroTelurio Option Agreement, the Company will acquire up to an 80% legal and beneficial ownership interest in the AuroTelurio Property by making certain cash payments and share issuances to Mexivada and incurring certain exploration expenditures on the Property. See Note 10 for the Company’s commitments under the AuroTelurio Option Agreement.

Mexivada and its Mexican subsidiary hold only the mineral rights in the AuroTellurio Property, which rights were granted by the government of Mexico. Neither Mexivada nor its Mexican subsidiary owns the real property rights to the land underlying the La Viuda Concessions. Prior to the first closing under the AuroTellurio Option Agreement on August 4, 2011, the Company obtained a surface rights agreement with the landowner on whose property the La Viuda Concessions are located to conduct its mineral exploration program. The agreement became effective June 17, 2011, runs for a term of 12 months and may be extended for two additional years under the same terms. The Company will pay the land owner $14,400 for each year in which the Company carries out exploration work on this land.

On August 4, 2011, the Company conducted the first closing (the “First Closing”) under the AuroTellurio Option Agreement. The purchase price for the First Closing was $30,000 in cash and 250,000 restricted shares of common stock of the Company, fair valued at $17,500 based on the market price on the date of issuance. The $30,000 in cash includes the $20,000 deposits paid to Mexivada in December 2010 in connection with signing the binding offer letter agreement, which provided the Company with additional time to perform its due diligence, raise a financing, and prepare a definite purchase agreement. At the closing, the Company paid the remaining $10,000 in cash and issued 250,000 shares of common stock to Mexivada.

In exchange, the Company received from Mexivada four fully executed title deeds, each transferring to the Company a twenty percent (20%) interest in the La Viuda Concessions comprising the AuroTellurio Property, to be held in escrow by the Company's counsel until fully vested in accordance with their terms. If the Company defaults on its commitments under the AuroTelurio Option Agreement or otherwise determines not to proceed with the acquisition of the AuroTelurio Property, all unvested interests and related title deeds in the AuroTelurio Property will be returned to Mexivada.