Nevada
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98-0546715
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
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x Yes o No
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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).
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x Yes o No
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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o Yes x No
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Exhibit
Number
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Description
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(3)
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Articles of Incorporation and Bylaws
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3.1
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Articles of Incorporation (Incorporated by reference to the Registration Statement on Form SB-2, previously filed with the SEC on October 3, 2007).
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3.2
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Bylaws (Incorporated by reference to the Registration Statement on Form SB-2, previously filed with the SEC on October 3, 2007).
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3.3
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Articles of Merger dated effective June 15, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on June 17, 2011)
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3.4
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Certificate of Change dated effective June 15, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on June 17, 2011)
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(10)
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Material Contracts
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10.1
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Mineral Property Option Acquisition Agreement dated June 13, 2011 with J2 Mining Ventures Ltd. (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on June 16, 2011)
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10.2
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Form of subscription agreement (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on June 24, 2011)
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10.3
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Form of warrant certificate (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on June 24, 2011)
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10.4
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Assignment of Mineral Property Option Agreement With J2 Mining and Wyomex LLC dated June 30, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 8, 2011)
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10.5
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Employment Agreement with Andrew Brodkey dated June 30 30, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 8, 2011)
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10.6
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Consulting Agreement with Kriyah Consultants, LLC dated June 30, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 8, 2011)
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10.7
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Consulting Agreement with Sage Associates, Inc. dated June 30, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 8, 2011)
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10.8
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Consulting Agreement with J2 Mining dated June 30, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 8, 2011)
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10.9
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Stock Purchase Agreement dated June 28, 2011 (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 8, 2011)
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10.10
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Option Agreement dated effective July 12, 2011 between Titan Iron Ore Corp. and Globex Mining Enterprises Inc. (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on July 28, 2011)
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10.11
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Retainer Agreement dated effective November 1, 2011 between Titan Iron Ore Corp. and Wolfe Axelrod Weinberger Associates LLC. (Incorporated by reference to the Current Report on Form 8-K, previously filed with the SEC on November 7, 2011)
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10.12
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Form of subscription agreement (Incorporated by reference to the Current Report on Form 8-K previously filed with the SEC on January 12, 2012)
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10.13
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Form of warrant certificate (Incorporated by reference to the Current Report on Form 8-K previously filed with the SEC on January 12, 2012)
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10.14
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Asset Purchase Agreement between the Company and Wyomex (Incorporated by reference to the Current Report on Form 8-K previously filed with the SEC on April 11, 2012)
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10.15
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Note between the Company and Wyomex (Incorporated by reference to the Current Report on Form 8-K previously filed with the SEC on April 11, 2012)
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10.16
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Mortgage between the Company and Wyomex (Incorporated by reference to the Current Report on Form 8-K previously filed with the SEC on April 11, 2012)
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10.17
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Form of Stock Option Agreement (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on June 22, 2012)
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10.18
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Consulting and Professional Service Agreement dated effective September 5, 2012 between Titan Iron Ore Corp. and NuWa Group, LLC. (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on September 14, 2012)
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10.19
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Form of Securities Purchase Agreement (Equity Line of Credit) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on October 19, 2012)
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10.20
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Form of Registration Rights Agreement (Equity Line of Credit) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on October 19, 2012)
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10.21
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Form of Securities Purchase Agreement (Debenture) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on October 19, 2012)
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10.22
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Form of Debenture (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on October 19, 2012)
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10.23
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Form of Warrant (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on October 19, 2012)
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10.24
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Form of Piggyback Registration Rights Agreement (Debenture) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on October 19, 2012)
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10.25
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First Amendment to Securities Purchase Agreement dated January 9, 2013 (Equity Line of Credit) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on February 21, 2013)
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10.26
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First Amended and Restated Securities Purchase Agreement dated February 19, 2013 (Equity Line of Credit) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on February 21, 2013)
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10.27
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First Amended and Restated Registration Rights Agreement dated February 19, 2013 (Equity Line of Credit) (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on February 21, 2013)
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10.28
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Payroll Services Agreement with Kriyah Consultants, LLC dated June 30, 2011 (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 5, 2013)
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10.29
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Securities Purchase Agreement with Asher Enterprises, Inc. (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 5, 2013)
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10.30
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Convertible Note with Asher Enterprises, Inc. (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 5, 2013)
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10.31
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Securities Purchase Agreement with GCA Strategic Investment Fund Limited (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 5, 2013)
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10.32
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Convertible Note with GCA Strategic Investment Fund Limited (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 5, 2013)
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10.33
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First Amendment to the First Amended and Restated Securities Purchase Agreement with Ascendiant Capital Partners, LLC (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 5, 2013)
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10.34
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Binding Letter of Intent for the purchase of the Sunrise Mine Property dated April 15, 2013 (incorporated by reference to the current report on Form 8-K, previously filed with the SEC on April 16, 2013)
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(31)
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Rule 13a-14(a)/15d-14(a) Certification
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31.1*
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Section 302 Certification under Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
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31.2*
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Section 302 Certification under Sarbanes-Oxley Act of 2002 of the Chief Financial Officer
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(32)
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Section 1350 Certification
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32.1*
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Section 906 Certifications under Sarbanes-Oxley Act of 2002
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(99) | Additional Exhibits |
99.1* | Temporary Hardship Exemption |
(101)
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XBRL
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101.INS**
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XBRL INSTANCE DOCUMENT
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101.SCH**
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XBRL TAXONOMY EXTENSION SCHEMA
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101.CAL**
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XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
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101.DEF**
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XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
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101.LAB**
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XBRL TAXONOMY EXTENSION LABEL LINKBASE
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101.PRE**
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XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
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11. MINERAL PROPERTY EXPLORATION COSTS
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 11 - MINERAL PROPERTY EXPLORATION COSTS | 11. MINERAL PROPERTY EXPLORATION COSTS
During the six months ended June 30, 2013 and 2012 the following project costs were incurred:
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STATEMENTS OF OPERATIONS (Unaudited) (USD $)
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3 Months Ended | 6 Months Ended | 73 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Income Statement [Abstract] | |||||
REVENUES | $ 0 | $ 0 | $ 0 | $ 0 | $ 4,855 |
OPERATING EXPENSES | |||||
Advertising | 0 | 657 | 0 | 1,314 | 25,385 |
General and administrative (Note 9) | 131,850 | 145,045 | 271,666 | 306,857 | 1,250,150 |
Impairment of mineral property acquisition costs (Note 3) | 0 | 0 | 0 | 0 | 50,124 |
Accretion on promissory note (Note 6) | 246,826 | 37,940 | 290,386 | 37,940 | 403,780 |
Financing costs | 32,830 | 0 | 43,036 | 0 | 51,427 |
Interest expense | 3,105 | 0 | 6,335 | 0 | 8,720 |
Investor relations | 12,447 | 29,101 | 22,394 | 59,341 | 272,127 |
Professional fees | 38,776 | 35,441 | 91,672 | 83,993 | 372,567 |
Mineral property exploration costs (Note 11) | 4,000 | 33,236 | 7,180 | 70,796 | 500,851 |
Stock-based compensation (Note 7) | 215,385 | 456,349 | 340,316 | 1,418,374 | 2,581,339 |
Travel | 4,131 | 4,223 | 4,616 | 9,420 | 20,403 |
TOTAL OPERATING EXPENSES | 689,350 | 741,992 | 1,077,601 | 1,988,035 | 5,536,873 |
LOSS FROM OPERATIONS | (689,350) | (741,992) | (1,077,601) | (1,988,035) | (5,532,018) |
OTHER INCOME (EXPENSES) | |||||
Gain on debt settlement | 0 | 0 | 0 | 0 | 17,631 |
Other income (expenses) | 0 | 0 | 0 | 0 | (1,167) |
NET LOSS AND COMPREHENSIVE LOSS | $ (689,350) | $ (741,992) | $ (1,077,601) | $ (1,988,035) | $ (5,515,554) |
BASIC LOSS PER SHARE | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.04) | |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 54,268,587 | 51,071,000 | 53,751,689 | 50,997,703 |
4. COMMON STOCK
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6 Months Ended |
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Jun. 30, 2013
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Notes to Financial Statements | |
NOTE 4 - COMMON STOCK | 4. COMMON STOCK
On January 10, 2013, the Company issued 818,930 shares of common stock as the third tranche of Commitment Shares pursuant to the Equity Line of Credit Agreement (Note 13).
On April 15, 2013, the Company issued 857,142 shares of common stock as the fourth tranche of Commitment Shares pursuant to the Equity Line of Credit Agreement (Note 13).
On April 15, 2013 the Company issued 53,333 shares of common stock as finders fees for a convertible note.
On May 15, 2013, the Company issued 248,298 shares of common stock to a convertible note holder for partial conversion of the note.
On May 23, 2013, the Company issued 150,000 shares of common stock to a consultant in exchange for investor relations services. |
7. STOCK-BASED COMPENSATION (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Stock-Based Compensation Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options outstanding |
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Continuity of the Company's stock options |
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12. CONVERTIBLE DEBENTURES
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6 Months Ended |
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |
NOTE 12 - CONVERTIBLE DEBENTURES | 12. CONVERTIBLE DEBENTURES
On October 18, 2012, the Company entered into securities purchase agreements with two investors and issued convertible debentures with a face value of $235,300, maturing October 18, 2013. The Company received net proceeds of $200,000 representing a 15% discount on the debentures. The debentures bear interest at 5% per annum and are to be paid in full on the maturity date, unless previously paid or converted into the Companys common stock. The debenture holders have the right to convert any unpaid principal portion and accrued interest at a conversion price per share equal to the lower of (i) $0.27 per share during the six months following the closing date, and $0.35 per share thereafter, or (ii) 70% of the daily VWAP of the Companys common stock for the 10 trading days preceding a conversion date. The holders must not convert more than 30% of the initial principal sum into shares of the Companys common stock at a price below $0.15 per share during any calendar month and must not convert more than 20% of the original principal sum into shares of the Companys common stock at a price below $0.11 per share during any calendar month. Pursuant to the debenture agreement, the Company issued 705,901 common stock purchase warrants to the debenture holders as interest expense. Each warrant is exercisable into one share of common stock at $0.25 per share for 3 years. In the event that there is no effective registration statement which registers the resale by the warrant holder of the shares underlying the warrants, the warrants may be exercised by means of a cashless exercise. On October 26, 2012, the Company issued 517,835 restricted shares of common stock on a cashless basis pursuant to the exercise of these warrants.
In accordance with ASC 470-20, Debt with Conversion and Other Options, the net proceeds of $200,000 were allocated based on the relative fair values of the convertible debenture and the warrants at time of issuance. The Company allocated $116,375 of the net proceeds to the warrants and recorded an equivalent discount. The Company then recognized the intrinsic value of the embedded beneficial conversion feature of $83,125 as additional-paid-in capital and an equivalent discount.
The Company recognized total discounts of $199,500, reducing the carrying value of the convertible debenture to $500. The discount is being accreted over the term of the convertible debenture to increase the carrying value to the face value of $235,300. During the period ended December 31, 2012, the Company recorded accretion of discount of $1,331 increasing the carrying value of the convertible debentures to $1,831.
On April 17, 2013, the Company repaid $120,003 in principal and $2,975 in interest. In accordance with ASC 470-20, the Company recognized unamortized discount of $114,215 as accretion expense upon the partial conversion of the note.
On May 15, 2013, the Company issued 248,298 shares of common stock upon the conversion of $15,000 in principal and $415 in interest. In accordance with ASC 470-20, the Company recognized unamortized discount of $13,725 as accretion expense upon the partial conversion of the note.
During the period ended June 30, 2013, the Company recorded accretion of discount of $24,435 increasing the carrying value of the convertible debentures to $19,203.
In connection with the convertible debentures, the Company paid finders fees consisting of $18,000 and the issuance of 52,943 finders warrants with a fair value of $23,389. The Company also incurred transaction costs of $31,126 related to the issuance of convertible debentures. These costs have been allocated between debt and equity based on the relative fair values. The finders fees have been included in debt issue costs and are being amortized over the term of the convertible debentures.
On April 1, 2013, the Company entered into a securities purchase agreement with Asher Enterprises Inc. (Asher), pursuant to which the Company sold to Asher a $53,000 face value 8% convertible note (Asher Note) with a maturity date of January 1, 2014. Interest accrues daily on the outstanding principal amount of the Asher Note at a rate per annual equal to 8% on the basis of a 365-day year. The Asher Note is convertible, in whole or in part, into common stock beginning six months after the issue date, at the holders option, at a 40% discount to the average of the five lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the Asher Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 130% if prepaid during the period commencing on the issue date through 60 days thereafter, (ii) 135% if prepaid 61 days following the closing through 90 days following the issue date, (iii) 140% if prepaid 91 days following the closing through 120 days following the issue date, (iv) 150% if prepaid 121 days following the issue date through 180 days following the issue date, and (v) 175% if prepaid 181 days following the issue date through the maturity date. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 22% per annum and the Asher Note becomes immediately due and payable. Should that occur the Company is liable to pay the holder 150% of the then outstanding principal and interest. Asher does not have the right to convert the Asher Note, to the extent that Asher and its affiliates would beneficially own in excess of 4.99% of the Companys outstanding common stock. The Company paid Asher $3,000 for its legal fees and expenses, and paid a 3rd party broker a $5,000 commission on the net amount received from Asher. The finders fees have been included in debt issue costs and are being amortized over the term of the convertible debenture.
The Company recognized the intrinsic value of the embedded beneficial conversion feature of $33,648 as additional-paid-in capital and an equivalent discount that reduced the carrying value of the convertible debt to $19,352. The discount is being accreted over the term of the convertible debenture to increase the carrying value to the face value of $53,000.
During the period ended June 30, 2013, the Company recorded accretion of discount of $7,572 increasing the carrying value of the convertible debentures to $26,924.
On April 2, 2013, the Company entered into a securities purchase agreement with GCA Strategic Investment Fund Limited (Global), pursuant to which the Company sold to Global a $235,000 face value, non-interest bearing convertible bridge note (Global Note) with a maturity date of September 20, 2013. The Global Note is convertible, in whole or in part, into common stock at any time after the issuance date, at the holders option, at a conversion price equal to the lesser of (i) 100% of the volume weighted average sales prices (VWAP), as reported by Bloomberg LP for the five (5) trading days immediately preceding the closing, and (ii) 70% of the average daily VWAPs for the common stock on the trading market during the ten (10) consecutive trading days immediately preceding the applicable conversion date. Global may not convert more than 33 1/3% of the initial principal amount into shares of common stock at a price below $0.08 during any calendar month. In the event the Company elects to prepay the Global Note in full or in part, the Company is required to pay principal, interest and any other amounts owing multiplied by 130%. The Global Note also contains a mandatory partial prepayment requirement should the Company obtain certain future net financings in excess of $300,000, and under other conditions. In connection with the Global securities purchase agreement, the Company agreed to prepare and file on or before the 30th day following the date of the securities purchase agreement a registration statement on form S-1 or otherwise covering the resale of the conversion shares under the Global Note. Subject to the limitations imposed by the SEC in accordance with Rule 415, Global shall have the right to sell the conversion shares under the registration statement. The Global Note contains certain penalties and liquidated damages provisions if the registration statement is filed by the Filing Date or not declared effective by the SEC within 90 days of the filing date. Global does not have the right to convert the note, to the extent that Global and its affiliates would beneficially own in excess of 9.99% of the Companys outstanding common stock.
The Company paid Global $15,000 for its legal fees and expenses, which has been included in deferred financing costs and is being amortized over the term of the term of the convertible debenture. The Company also paid a 3rd party broker a $20,000 commission on the net amount received from Global and 53,333 shares of restricted common stock based on 4% of the net amount received calculated at $0.15 per share. The finders fees have been included in debt issue costs and are being amortized over the term of the convertible debenture.
The Company recognized the intrinsic value of the embedded beneficial conversion feature of $33,648 as additional-paid-in capital and an equivalent discount. The Company recognized total discounts of $130,883, reducing the carrying value of the convertible debenture to $104,117. The discount is being accreted over the term of the convertible debenture to increase the carrying value to the face value of $235,000.
During the period ended June 30, 2013, the Company recorded accretion of discount of $54,460 increasing the carrying value of the convertible debenture to $158,577.
On June 26, 2013, the Company entered into a one year Promissory Note (the JMJ Note) with JMJ Financial (JMJ). The JMJ Note provides for tranches of financing of up to $275,000 in the aggregate and all amounts funded by JMJ bear a 10% Original Issue Discount (OID) fee , and are interest-free for 90 days from date of each funding, following which said amounts bear a one-time interest charge of 12%. The Company has the right to prepay without penalty the amount of any funding within 90 days. JMJ has funded $75,000 at closing on June 26, 2013, (the Initial Funding). The parties must mutually agree on any additional amounts beyond the Initial Funding to be furnished under the provisions of the JMJ Note. The term of each funding under the JMJ Note is one year (the JMJ Maturity Date), upon which the outstanding principal amount for each funding is payable. Amounts funded plus OID and interest under the JMJ Note are convertible into common stock at any time after the issuance date, at the holders option, at a conversion price equal to the lesser of (i) $0.07, and (ii) 60% of the average of the two lowest closing prices in the 20 trading days previous to the conversion. JMJ does not have the right to convert the JMJ Note, to the extent that JMJ would beneficially own in excess of 4.99% of our outstanding common stock. The Company paid no legal fees, expenses, or commissions on the net amount received from JMJ.
The Company recognized the intrinsic value of the embedded beneficial conversion feature of $65,993 as additional-paid-in capital and an equivalent discount. The Company recognized total discounts of $74,326, reducing the carrying value of the convertible debenture to $9,007. The discount is being accreted over the term of the convertible debenture to increase the carrying value to the face value of $83,333.
During the period ended June 30, 2013, the Company recorded accretion of discount of $292 increasing the carrying value of the convertible debenture to $9,298.
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1. NATURE AND CONTINUANCE OF BUSINESS (Details Narrative) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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---|---|---|
Nature And Continuance Of Business Details Narrative | ||
Deficit accumulated during the exploration stage | $ 5,515,554 | $ 4,437,953 |
11. MINERAL PROPERTY EXPLORATION COSTS (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Mineral Property Exploration Costs Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of mineral property exploration costs |
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10. FAIR VALUE MEASUREMENT (Details) (Fair Value Measurements Recurring [Member], USD $)
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Jun. 30, 2013
|
---|---|
Assets | |
Cash | $ 12,255 |
Fair Value Inputs Level1 [Member]
|
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Assets | |
Cash | 12,255 |
Fair Value Inputs Level2 [Member]
|
|
Assets | |
Cash | 0 |
Fair Value Inputs Level3 [Member]
|
|
Assets | |
Cash | $ 0 |
6. PROMISSORY NOTE (Details) (USD $)
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Jun. 30, 2013
|
---|---|
Summary of estimated contractual principal payments due on the promissory note for the next five years | |
March 31, 2014 | $ 128,945 |
March 31, 2015 | 132,189 |
March 31, 2016 | 135,515 |
March 31, 2017 | 138,924 |
March 31, 2018 | 142,418 |
Total | $ 677,991 |
10. FAIR VALUE MEASUREMENT (Tables)
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Fair Value Measurement Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets measured at fair value on a recurring basis |
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Companys fiscal year end is December 31.
Interim Financial Statements The interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Securities and Exchange Commission (SEC) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Companys audited financial statements and notes thereto for the year ended December 31, 2012, included in the Companys Annual Report on Form 10-K filed on March 29, 2013, with the SEC.
The interim financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Companys financial position as at June 30, 2013 and the results of its operations and cash flows for the six months ended June 30, 2013 and June 30, 2012. The results of operations for the six months ended June 30, 2013 are not necessarily indicative of the results to be expected for future quarters or the full year ending December 31, 2013.
Use of Estimates The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, deferred income tax asset valuations, asset retirement obligations, financial instrument valuations, share based payments, other equity-based payments, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Revenue Recognition The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Advertising Costs The Companys policy regarding advertising is to expense advertising when incurred.
Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.
Impairment of Long-Lived Assets The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.
If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Companys stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Companys expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.
All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
Mineral Property Costs The Company is in the exploration stage and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized. The Company assesses the carrying costs for impairment, whenever events or changes in circumstances indicate that the carrying cost may not be recoverable under ASC 360, Property, Plant, and Equipment at each reporting date. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, will be capitalized. Such costs will be amortized using the units-of-production method over the estimated recoverable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Asset Retirement Obligations The Company records asset retirement obligations in accordance with ASC 410-20, Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. ASC 410-20 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at June 30, 2013, the Company has not incurred any asset retirement obligation related to the exploration of its mineral property option.
Comprehensive Loss ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. During the periods ended June 30, 2013 and December 31, 2012, the Company had no items that represent other comprehensive income.
Financial Instruments FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable inputs and minimize the use of unobservable inputs.
The Companys assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying values of cash, accounts payable, and due to related parties approximate fair values because of the short-term maturity of these instruments. The fair value of the Companys promissory note approximates carrying value as the underlying imputed interest rate approximates the estimated market rate. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Basic and Diluted Net Loss Per Share The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Shares underlying these securities totaled approximately 7,538,482 as of June 30, 2013.
Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Recent Accounting Pronouncements
Foreign Currency Matters In March 2013, ASC guidance was issued related to Foreign Currency Matters to clarify the treatment of cumulative translation adjustments when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The updated guidance also resolves the diversity in practice for the treatment of business combinations achieved in stages in a foreign entity. The update is effective prospectively for the Companys fiscal year beginning January 1, 2014. The Company does not expect the updated guidance to have an impact on the financial position, results of operations or cash flows.
The Company has implemented all other new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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5. SHARE PURCHASE WARRANTS
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Jun. 30, 2013
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NOTE 5 - SHARE PURCHASE WARRANTS | 5. SHARE PURCHASE WARRANTS
Details of share purchase warrants outstanding as of June 30, 2013 are:
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3. MINERAL PROPERTY OPTIONS
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6 Months Ended | |||||||||
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Jun. 30, 2013
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Notes to Financial Statements | ||||||||||
NOTE 3 - MINERAL PROPERTY OPTIONS | 3. MINERAL PROPERTY OPTIONS
Strong Creek and Iron Mountain Properties Effective June 30, 2011 and in connection with the entry into an agreement (the Acquisition Agreement) with J2 Mining Ventures Ltd. (J2 Mining) dated June 13, 2011, the Company completed the acquisition of a 100% right, title and interest in and to a properties (Strong Creek and Iron Mountain) option agreement (the Option Agreement) from J2 Mining with respect to an iron ore mineral property located in Albany County, Wyoming by entering into an assignment of mineral property option agreement with J2 Mining and Wyomex LLC (the Assignment Agreement), whereby the Company was assigned the 100% right, title and interest in and the Option Agreement from J2 Mining.
The Option Agreement assigned to the Company from J2 Mining on June 30, 2011, was originally entered into on May 26, 2011 between J2 Mining and Wyomex LLC, pursuant to which Wyomex LLC (Optionor), granted to J2 Mining, as optionee, an exclusive right and option to acquire 100% undivided legal and beneficial interests in and to certain unpatented lode mining claims, fee lands, leased lands, and other interests in real property situated in Albany County, Wyoming (the Wyoming Iron Complex). Pursuant to the Assignment Agreement, J2 Mining agreed to assign all its rights and interests in the property and the Option Agreement, and transfer all of its obligations under the Option Agreement, to the Company.
The term of the option commenced on May 26, 2011 and could be extended for a maximum of six successive one-month periods, at the sole election of the Company, through notice to Wyomex LLC and tender of $5,000 from the Company to Wyomex LLC for each of the first three additional months and $15,000 for each additional month for months four through six. As at June 30, 2013, total payments of $145,000 had been made.
Prior to December 31, 2011, the Company provided written notice to the Optionor of its intent to exercise its option. On April 10, 2012, the Company executed an asset purchase agreement to exercise its option for consideration of $7,000,000, consisting of the following:
On April 16, 2013 the Company announced that through a binding letter of intent (LOI) the Company has agreed to purchase the Sunrise Iron Mining Complex from New Sunrise, LLC, for a price of $12 million. Sunrise is an iron project located in Platte County, Wyoming, consisting of fee land and patented mining claims aggregating approximately 1400 acres.
In connection with the LOI, Titan paid New Sunrise a non-refundable deposit of $25,000, and Titan shall have 180 days to conduct due diligence investigations of the property. The parties shall enter into a formal Purchase Agreement and Closing shall occur no later than 60 days after the end of the due diligence period. Closing is subject to financing and other customary conditions.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)
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6 Months Ended |
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Jun. 30, 2013
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Summary Of Significant Accounting Policies Details Narrative | |
Anti Dilutive securities outstanding | 7,538,482 |
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