Form 10 Amendment No. 2
Table of Contents
Index to Financial Statements

Registration No. 000-54136

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 2

to

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

 

 

CONTANGO ORE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   27-3431051
(State or other jurisdiction of
incorporation or organization)		   (IRS Employer
Identification No.)

3700 Buffalo Speedway, Suite 960

Houston, Texas 77098

(Address of principal executive offices)

(713) 960-1901

(Registrant’s telephone number, including area code)

 

 

Securities to be registered pursuant to Section 12(b) of the Act:

 

Title of each class to be so registered

   

Name of each exchange on which

each class is to be registered

NONE

    N/A

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.01 par value

 

 

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.

 

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

 

 

 

Table of Contents
Index to Financial Statements

 

Item 1.

    BUSINESS      1   

Item 1A.

    RISK FACTORS      10   

Item 2.

    FINANCIAL INFORMATION      18   

Item 3.

    PROPERTIES      20   

Item 4.

    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      43   

Item 5.

    DIRECTORS AND EXECUTIVE OFFICERS      44   

Item 6.

    EXECUTIVE COMPENSATION      45   

Item 7.

    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE      48   

Item 8.

    LEGAL PROCEEDINGS      48   

Item 9.

    MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS      48   

Item 10.

    RECENT SALES OF UNREGISTERED SECURITIES      49   

Item 11.

    DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED      49   

Item 12.

    INDEMNIFICATION OF DIRECTORS AND OFFICERS      50   

Item 13.

    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA      50   

Item 14.

    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE      50   

Item 15.

    FINANCIAL STATEMENTS AND EXHIBITS      51   

All references to the “Company”, “CORE”, “we”, “our” and “us” used in this Registration Statement on Form 10 (“Form 10”) are to Contango ORE, Inc.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Registration Statement contains forward-looking statements regarding the Company that are based on the Company’s current expectations and includes statements regarding estimates of future production, future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as “expects”, “projects”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, “probable”, or “intends”, or stating that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved). Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, the risks associated with exploring for gold and rare earth materials (for example, risks involving unanticipated geological conditions related to exploring and mining; the uncertainty of any reserve estimates; the uncertainty of estimates and projections relating to any future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather such as the arctic freeze, extremely cold temperatures and natural disasters); uncertainties as to the availability and cost of financing; fluctuations in supply and demand for gold and rare earth elements; inability of our management team to execute its plans to meet its goals, and the possibility that government policies may change or governmental approvals may be delayed or withheld. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made, but they are open to a wide range of uncertainties and business risks, including the risks described under “Item 1A – Risk Factors.” The Company does not assume any obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.

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Index to Financial Statements

 

Item 1. BUSINESS.

General

The Company was formed on September 1, 2010 as a Delaware corporation registered to do business in Alaska for the purpose of engaging in exploration in the State of Alaska for (i) gold and associated minerals and (ii) rare earth elements. The Company is a wholly-owned subsidiary of Contango Oil & Gas Company (“Contango”).

Contango Mining Company (“Contango Mining”) was formed on October 15, 2009 as a Delaware corporation registered to do business in Alaska for the purpose of engaging in exploration in the State of Alaska for (i) gold and associated minerals and (ii) rare earth elements. Contango Mining is also a wholly-owned subsidiary of Contango. The Company will acquire properties held by Contango Mining, will succeed to the business of Contango Mining, and will assume all assets and liabilities of Contango Mining. As a result, references that describe the operations of the Company, include the operations of Contango Mining.

Contango Mining holds leasehold interests in approximately 647,000 acres from the Tetlin Village Council, the council formed by the governing body for the Native Village of Tetlin, an Alaska Native Tribe (“Tetlin Lease”) and holds 12,000 acres in unpatented mining claims from the State of Alaska for the exploration of gold and associated minerals (together with the Tetlin Lease, the “Gold Properties”). Contango Mining also holds interests in and to 3,520 acres in unpatented Federal mining claims and 97,280 acres in unpatented mining claims from the State of Alaska for the exploration of rare earth elements (the “REE Properties”, and together with the Gold Properties, the “Properties”). Contango Mining acquired a 50% interest in the Properties from Juneau Exploration, L.P., (“JEX”) in exchange for $1 million and a 1% overriding royalty interest under a Joint Exploration Agreement dated as of September 29, 2009 (the “Joint Exploration Agreement”). As of September 15, 2010, Contango Mining acquired the remaining 50% interest in the Properties in exchange for increasing the overriding royalty interest in the Properties payable to JEX to 3%, and JEX and Contango Mining terminated the Joint Exploration Agreement.

Distribution of Company Stock

The Company anticipates that Contango will distribute the Company’s common stock to Contango’s stockholders of record as of October 15, 2010, promptly after the effective date of this Form 10 (the “Distribution”) on the basis of one share of common stock for each ten (10) shares of Contango’s common stock then outstanding. Immediately prior to the Distribution, Contango Mining will assign the Properties and related assets and liabilities to Contango, which will contribute the Properties and related assets together with $3.5 million in cash to the Company pursuant to the terms of a Contribution Agreement between Contango and the Company (“Contribution Agreement”).

Our Business

We are a Houston-based company, whose primary business is to explore in the State of Alaska for (i) gold ore and associated minerals, and (ii) rare earth elements. We expect to initially have three part time employees.

We have leased or have control over properties in the State of Alaska totaling approximately 759,800 acres for the exploration of gold and associated minerals and rare earth elements. We anticipate that from time to time we will acquire additional acreage in Alaska for the exploration of gold and associated minerals and rare earth elements through leases or obtaining additional mining claims. Our exploration strategy is predicated upon two core beliefs: (1) that the only competitive advantage in a commodity-based business is to be among the lowest cost producers and (2) that virtually all the mining industry’s value creation occurs through the discovery of mineral deposits that can be developed to the state of a commercially viable producing mine. While we do not

 

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have previous experience in the gold or rare earth element industries, we plan to focus our business strategy on the following elements:

Using our limited capital availability to increase our reward/risk potential on selective prospects. We will concentrate our risk investment capital in our prospects in Alaska. We have leased approximately 647,000 acres and control another 12,000 acres consisting of 126 unpatented State of Alaska mining claims in Eastern Alaska for the exploration of gold and associated minerals. We also own 3,520 acres consisting of 176 unpatented Federal mining claims and 97,280 acres consisting of 608 unpatented State of Alaska mining claims for the exploration of rare earth elements.

Exploration prospects are inherently risky as they require large amounts of capital with no guarantee of success. Furthermore, we may never achieve a competitive advantage in the conduct of our business, since it is unlikely that our Properties will have commercially viable mineral deposits. Should the Properties prove to have known deposits, or mineral ore, we will be required to develop our own mining operations or contract with third parties to mine our mineral ore. We may only become a low cost producer if the mineral ore is of high quality and the cost of the infrastructure necessary to mine the mineral ore is low relative to other producers, including those competitors located in China if rare earth elements are mined.

Our strategic initiatives are to undertake cost efficient and effective exploration activities to discover mineralization and potential mineral reserves which may enhance the value of our properties. If we are successful in our exploration activities, we may consider a joint venture or sales of our Properties to qualified mining companies. Under the terms of the Contribution Agreement, Contango will fund the Company with $3.5 million to pay for exploration and development costs of our gold and rare earth element prospects.

Alliance with JEX. JEX is a private company formed primarily for the purpose of assembling natural gas and oil prospects. Contango has previously contracted with JEX to conduct exploration activities for oil and gas reserves primarily in the Gulf of Mexico. JEX has been responsible in securing and negotiating the Tetlin Lease and assisting in obtaining the Properties and initially engaged Avalon Development Corporation, an Alaska-domiciled domestic corporation (“Avalon”) to conduct mineral exploration activities of the Tetlin Properties. JEX will continue to assist us in acquiring additional acreage in Alaska and provide other consulting services to the Company. We do not have a written agreement with JEX which contractually obligates them to provide us with their services. We anticipate providing JEX with an additional overriding royalty interest in property where JEX assists in the acquisition of such property.

Consulting Services Provided by Avalon. We have entered into a Professional Services Agreement with Avalon to conduct certain geological consulting services and exploration activities on the Properties. Avalon is a Fairbanks, Alaska based mineral exploration consulting firm, which has conducted mineral exploration in Alaska since 1985. Avalon’s mineral exploration services include pre-field planning, in-progress evaluation/modification and post-field critical review. Avalon’s exploration team has identified or conducted discovery drilling on several gold deposits in Alaska and has completed digital geographic information systems (“GIS”) compilations of the Tintina Gold Belt, a regional-scale mineral province stretching from southwestern Alaska to the southern Yukon Territory. Avalon also has experience exploring for copper, nickel and platinum group elements (“Cu-Ni-PGE”) deposits and also created a comprehensive GIS compilation of PGE prospects in Alaska, an internally-owned database that contains data on over 200 PGE occurrences in Alaska. In 2002, Avalon expanded its digital database to the identification and acquisition of rare earth element prospects in Alaska. Avalon will continue to work in conjunction with the Company to identify new properties and will conduct the initial exploration for such properties.

If any exploratory work on the Properties should prove successful, the Company could develop a wholly-owned mining operation entity to conduct mining operations, contract with mining companies to extract mineral ore from our Properties or enter into a joint venture with or sale of our Properties to an established mining company.

 

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Structuring Incentives to Drive Behavior. We believe that equity ownership aligns the interests of our consultants, executives and directors with those of our stockholders. Immediately prior to the Distribution, the Company’s directors and officers will receive restricted shares of common stock equal to 4.5% of the aggregate shares of common stock being distributed to the stockholders of Contango. The Company’s directors and officers initially will not receive any cash compensation for their work for the Company. Following the Distribution, the Company’s directors and executive officers will beneficially own or have voting control over approximately 22% of our common stock. In addition, our major consultant for geological and exploration activities, Avalon will receive restricted shares of our common stock equal to 1.5% of the aggregate shares of common stock being distributed to the stockholders of Contango. All shares of restricted stock will vest over three years, beginning with the one-year anniversary of the date the shares were granted.

Maximize Value Creation per Share. We believe that the primary objective of a business is to maximize value creation per share. As a result, we intend to limit the number of new shares issued in any future fund raising and keep grants of stock options to our directors, officers and Avalon to a minimum.

We are an exploration stage company, and none of the Properties that we own or control contain any known reserves or mineralized material. The Properties are at an early stage of exploration, and even if mineral reserves are discovered, they may not be commercially viable. A significant amount of additional work and at least another two years is likely required in the exploration of our Properties before any determination as to the economic feasibility of a mining venture can be made. Due to the harsh climate in Alaska, our work months are restricted to May through October.

Exploration and Mining Property

Exploration and mining rights in Alaska may be acquired in the following manner: public lands, private fee lands, unpatented Federal or State of Alaska mining claims, patented mining claims, and tribal lands. The primary sources for acquisition of these lands are the United States government, through the Bureau of Land Management and the United States Forest Service, the Alaskan state government, tribal governments, and individuals or entities who currently hold title to or lease government and private lands.

The Federal government owns public lands that are administered by the Bureau of Land Management or the United States Forest Service. Ownership of the subsurface mineral estate can be acquired by staking a twenty (20) acre mining claim granted under the General Mining Law of 1872, as amended (the “General Mining Law”). The Federal government still owns the surface estate even though the subsurface can be controlled with a right to extract through claim staking. Private fee lands are lands that are controlled by fee-simple title by private individuals or corporations. These lands can be controlled for mining and exploration activities by either leasing or purchasing the surface and subsurface rights from the private owner. Patented mining claims are claims that were staked under the General Mining Law, and through application and approval the owners were granted full private ownership of the surface and subsurface estate by the Federal government. These lands can be acquired for exploration and mining through lease or purchase from the owners. In order to acquire a patent, an applicant must, among other things, prove that improvements have been made on the land of not less than $500, pay a fee of five dollars ($5) per acre, and identify and describe the mineral deposit located in the land. Unpatented mining claims located on public land owned by another entity can be controlled by leasing or purchasing the claims outright from the owners.

With respect to unpatented mining claims, the Federal or applicable state government continues to hold the fee interest in real property while allowing private parties to stake claims for exploration, development and commercial extraction of minerals with rights of ingress and egress on the real property. Unpatented claims give the claimant the exclusive right to explore for and to develop the underlying minerals and use the surface for such purpose. However, the claimant does not own title to either the minerals or the surface, and the claim is subject to annual assessment work requirements and the payment of annual rental fees which are established by the governing authority of the land on which the claim is located. Unpatented mining claims are generally

 

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considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain, due to the complex Federal and state laws and regulations that supplement the General Mining Law. Also, unpatented mining claims and related rights, including rights to use the surface are subject to challenges by third parties or contests by the Federal or applicable state government. In addition, there are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims. Our mining claims on land belonging to the State of Alaska have no opportunity to be patented. Rights to deposits of minerals on Alaska state land that is open to claim staking may be acquired by discovery, location and recording as prescribed in Alaska state statutes (AS 38.05.185 – 38.05.280). The State of Alaska requires holders of unpatented mining claims to perform annual assessment work and pay an annual fee on the claims in order to maintain the claimant’s title to the mining rights in good standing. State of Alaska unpatented mining claims are subject to a title reservation of 3% net profits royalty for all mineral production on net mining income of $100,000 or more. Mining claims located on State of Alaska lands cannot be deeded to the claimant.

Tribal lands are those lands that are under control by sovereign Native American tribes or Alaska Native corporations established by the Alaska Native Claims Settlement Act of 1971 (ANSCA). Areas that show promise for exploration and mining can be leased or joint ventured with the tribe controlling the land.

State of Alaska Exploration

Contango Mining was formed October 15, 2009 for the purpose of engaging in mineral exploration in Alaska. JEX entered into the Tetlin Lease in the State of Alaska with the Tetlin Village Council effective as of July 15, 2008 in order to conduct exploration activities for gold ore and other associated minerals and sold a 50% interest in the Tetlin Lease to Contango Mining in exchange for $1 million and a 1% overriding royalty interest. Pursuant to the Joint Exploration Agreement, Contango Mining was obligated to fund the next $2 million of exploration and related work expenditures on the Tetlin Properties. As of September 15, 2010 we acquired the remaining 50% interest in the Tetlin Lease from JEX in exchange for increasing the overriding royalty interest held by JEX to three percent (3%). The terms of each transaction, including price, between JEX and Contango Mining were based upon arm’s-length negotiations. Following the Distribution, the Company will have an interest in approximately 759,800 acres, 659,000 acres upon which predecessors of the Company commenced conducting gold exploration activities beginning in 2009, and 100,800 acres upon which the Company will conduct rare earth mineral exploration activities. See Item 3 – “Properties” for additional information regarding the Properties.

JEX originally entered into the Tetlin Lease to explore for oil, gas and other mineral reserves. In conducting preliminary drilling work on the Tetlin Properties, JEX began to explore the Tetlin Properties for mineral deposits and engaged Avalon to continue exploratory drilling activities. We believe JEX expended approximately $1 million on exploratory activities and related work before JEX sold a 50% leasehold interest in the Tetlin Properties to Contango Mining in exchange for $1 million and a 1% overriding royalty interest.

With respect to the acquisition of our REE Properties, Contango developed an interest in rare earth elements because of the increasing demand for products using rare earth elements, and based upon the preliminary surveys conducted by the United States Geological Survey and subsequently reviewed and analyzed by Avalon, Contango and JEX staked state and Federal mining claims and has engaged Avalon to conduct preliminary exploratory activities for rare earth elements in Alaska.

Gold Mining

In 2009, exploration activities were conducted over our leasehold interests in Alaska, which consists of approximately 647,000 acres leased from the Tetlin Village Council (the “Tetlin Properties”), 11,360 acres of State of Alaska unpatented mining claims near Tok, Alaska, which are contiguous with the Tetlin Properties and another 640 acres of State of Alaska unpatented mining claims that are non-contiguous with the Tetlin Properties but are located on the same trend of mineral ore. In our 2009 exploration program, we collected a total of 1,096

 

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rock, soil, pan concentrate and stream silt samples from our Tetlin Properties. Of this total, 348 samples showed measurable amounts of gold with 30 samples showing measured gold of 500 parts per billion (“ppb”) or higher.

In our 2010 exploration program, we collected a total of 1,884 rock, soil, pan concentrate and stream silt samples from our Tetlin Properties. Of this total, 910 samples showed measurable amounts of gold with 54 samples showing gold concentrations greater than 500 ppb. We also ran ground geophysical surveys with induced polarization (IP) which measures the conductivity/resistivity of underlying sub-surface rocks. Conductivity indicates the presence of metals. Based on our geology and IP results, we are reviewing our options for our 2011 exploration program. Our current plan is to fly airborne magnetic, electromagnetic, and radiometrics early next summer.

Gold is used for jewelry, coinage and bullion as well as various industrial and electronic applications. Gold can be readily sold on numerous markets throughout the world. Benchmark prices are generally based on the average London Bullion Market Association price for a specified month near the month of shipment.

Rare Earth Elements

The term “rare earth” is actually a misnomer. Rare earth elements are not in fact rare, as they are found in low concentrations throughout the earth’s crust. There are relatively few locations, however, where rare earth elements (“REEs”) are currently being economically mined and processed outside of China. Our decision to explore for REEs is based on our belief that REEs will become increasingly valuable as the world moves to embrace alternative “green” forms of energy such as wind turbines and advanced batteries which require REEs for component parts.

REEs have unique properties that have applications in several technologies, including:

 

  •  

Clean-Energy Technologies: hybrid and electric vehicles, and wind turbines

 

  •  

Defense and Homeland Security Applications: aircraft control, lasers, global positioning systems, radar, sonar, guided missiles and smart bombs

 

  •  

High-Technology Applications: microwaves, MRI testing, color televisions, motion picture studio lighting and projection

Demand for REEs is expected to increase due to increased demand for existing products that utilize rare earth elements as well as continued development of additional technologies that require application of REEs. Currently, China accounts for over 90% of the global supply for REEs and the oxides produced from REEs, and the Chinese government has begun to restrict exports of REEs and require that manufacturing of rare earth metals take place within China.

Our decision to focus our rare earth element exploration efforts in Alaska is based, in part, upon several surveys performed by the United States Geological Survey (the “USGS”) in the 1970s and 1980s. The two primary sources of public-sector geochemical data which we and Avalon used to identify potential mineral prospects are the Alaska Mineral Resource Appraisal Program (“AMRAP”) and the National Uranium Resource Evaluation program (“NURE”), both of which were conducted in Alaska in the 1970s and 1980s. The AMRAP included geologic mapping, airborne geophysics and geochemical sampling. The program did not analyze for gold during the initial study, although analyses for important gold pathfinder elements such as arsenic, bismuth and tungsten were completed. These programs were run on a quadrangle by quadrangle basis resulting in multiple folios published by the USGS over multiple years. Geochemical data from the AMRAP and other USGS programs has been compiled in a digital database referred to as the RASS database (Rock Analysis Storage System, Open File Report 99-433), available from the USGS at http://pubs.usgs.gov/of/1999/of99-433/. The NURE program was funded by the United States Department of Energy primarily as a geochemical study to define new uranium sources in the United States. The original NURE samples were collected and analyzed in the

 

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1970s but were re-analyzed in the late 1990s using more modern analytical techniques. These digital data are available in Open File Report 97-492 from the USGS at http://pubs.usgs.gov/of/1997/ofr-97-0492/. The surveys we and Avalon examined indicated anomalous uranium samples as well as anomalous zirconium, beryllium, tantalum, and niobium, which are commonly found near deposits of rare earth elements.

In 2011 we expect to begin exploratory work for rare earth elements over the 100,800 acres we control in Alaska. Our exploration activities will include the following: geological surveying, geochemical sampling, geophysical surveying, geochemical evaluation for rare earth elements and two-dimensional and three-dimensional electromagnetic exploration in order to determine the existence and location of any rare earth elements.

We hold the following Federal unpatented mining claims: (i) 49 unpatented mining claims near Stone Rock Bay, Alaska, totaling 980 acres, and (ii) 127 unpatented mining claims near Salmon Bay, totaling 2,540 acres, which are located near Bokan Mountain. We also control 608 State of Alaska unpatented mining claims, totaling 97,280 acres, located in the interior of Alaska. The Company believes that there has been limited exploration targeted specifically at REEs in Alaska historically, with the exception of Bokan Mountain, located on the Prince of Wales Island in Southeast Alaska.

REEs consist of the 15 elements with atomic numbers 57 to 71 (the “Lanthanide Series”), plus the elements Scandium (atomic number 21) and Yttrium (atomic number 39). REEs are separated into two categories, light rare earths (“LREEs”, consisting of atomic numbers 57-62), and heavy rare earths (“HREEs”, consisting of atomic numbers 63-71, plus Yttrium (atomic number 39)).

The following table ranks the REEs in the order of their relative abundance in the earth’s crust:

 

Rare-Earth Element, Symbol

    Abundance
(parts per million)		      Atomic
Number		  

Cerium, Ce

      46.0         58   

Yttrium, Y

      28.0         39   

Neodymium, Nd

      24.0         60   

Lanthanum, La

      18.0         57   

Samarium, Sm

      6.5         62   

Gadolinium, Gd

      6.4         64   

Praseodymium, Pr

      5.5         59   

Scandium, Sc

      5.0         21   

Dysprosium, Dy

      4.5         66   

Ytterbium, Yb

      2.7         70   

Erbium, Er

      2.5         68   

Holmium, Ho

      1.2         67   

Europium, Eu

      1.1         63   

Terbium, Tb

      0.9         65   

Lutetium, Lu

      0.8         71   

Thulium, Tm

      0.2         69   

Promethium, Pm

      0.0         61   

Consulting Services provided by Avalon Development Corporation

The Company is a party to a Professional Services Agreement with Avalon to provide certain geological consulting services and exploration activities with respect to the Properties. In connection with the Distribution, the Company intends to enter into an Amended and Restated Professional Services Agreement with Avalon (the “PSA”). Pursuant to the PSA, Avalon will continue to provide certain geological consulting services and exploration activities. The Company pays Avalon on a per diem basis and reimburses Avalon for its expenses

 

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pursuant to the PSA. As additional compensation, Avalon will also receive restricted shares of common stock equal to 1.5% of the aggregate shares of common stock being distributed to the stockholders of Contango. The shares will vest over three years beginning with the one-year anniversary of the date the shares were granted. Avalon has conducted mineral exploration in Alaska since 1985. Its team of engineers and geoscientists combined with its geographic information systems (GIS) database allows Avalon to synthesize existing geological, geochemical and geophysical data and identify specific target areas for ground evaluation and/or acquisition. Avalon expects to assign approximately 5 engineers and geologists to conduct exploration activities on the Properties. Work schedules will vary widely from a 7 day per week, 30-day minimum schedule for field related geologists and geological engineers to 40-hours per week schedules for geographic information system and management staff. Because the Company does not have experience exploring or evaluating gold or rare earth element prospects in Alaska, we will rely on Avalon’s experience in the State of Alaska to determine whether our exploration activities will be likely to develop commercially viable deposits.

Marketing and Pricing

Should our exploratory drilling activities prove to be successful, the Company expects to mine ore and derive its revenue principally from the sale of gold and associated minerals or rare earth elements. We may also enter into joint ventures or sell some or all of our Properties to qualified mining companies. We do not currently have a market for any minerals that may be derived from our Properties. As a result, the Company’s revenues are expected to be determined, to a large degree, by the success of our exploration and any subsequent mining activities and by prevailing prices for gold and rare earth elements. Market prices are dictated by supply and demand, and the Company cannot predict or control the price it will receive for gold ore and rare earth elements.

Adverse Climate Conditions

Climate conditions will affect the Company’s ability to conduct exploration activities and mine any ore from its Properties in Alaska. While exploratory drilling and related activities may only be conducted from May to October on certain of our Properties, the Company believes development work and any subsequent mining may be conducted year-round.

Competition

We currently face strong competition for the acquisition of exploration-stage properties as well as extraction of any minerals in Alaska. Numerous larger mining companies actively seek out and bid for mining prospects as well as for the services of third party providers and supplies, such as mining equipment and transportation equipment. Our competitors in the exploration, development, acquisition and mining business will include major integrated mining companies as well as numerous smaller mining companies, almost all of which have significantly greater financial resources and in-house technical expertise. In addition, we will compete with others in efforts to obtain financing to explore our mineral properties.

While there are few rare earth mining companies in the United States, the global rare earth mining and processing markets are competitive. China currently accounts for over 90% of rare earth mineral production and manufacturing, and should our rare earth mining efforts prove to be successful, we may not be able to implement the processing technologies and capabilities that our Chinese counterparts have already established. Our Chinese competitors may have greater financial resources, as well as other strategic advantages to maintain, improve and expand their mining programs. In addition, Chinese domestic economic policies may allow domestic companies to produce at relatively lower costs.

Competitive conditions may be substantially affected by various forms of legislation and regulation considered from time to time by the government of the United States and the State of Alaska, as well as factors that we cannot control, including international political conditions, overall levels of supply and demand for minerals, and currency fluctuations.

 

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Government Regulation

Our mineral exploration activities are generally affected by various laws and regulations, including environmental, conservation, tax and other laws and regulations relating to the exploration of minerals. Various Federal and Alaskan laws and regulations often require permits for exploration activities and also cover extraction of minerals. In addition, our Tetlin Properties are located on land leased from the Tetlin Village Council. Federally recognized Native American tribes are independent governments, with sovereign powers, except as those powers may have been limited by treaty or by the United States Congress. Such tribes maintain their own governmental systems and often their own judicial systems and have the right to tax, and to require licenses and to impose other forms of regulation and regulatory fees, on persons and businesses operating on their lands. As sovereign nations, federally recognized Native American tribes are generally subject only to federal regulation. States do not have the authority to regulate them, unless such authority has been specifically granted by Congress, and state laws generally do not directly apply to them and to activities taking place on their lands, unless they have a specific agreement or compact with the state or Federal government allowing for the application of state law. We will continue to use our best efforts to ensure that the Company is in compliance with all applicable laws and regulations but the denial of permits required to explore for or mine ore may prevent us from realizing revenues arising from the presence of minerals on our properties.

Environmental Regulation

Mining operations are subject to local, state and Federal regulation governing environmental quality and pollution control, including air quality standards, greenhouse gas, waste management, reclamation and restoration of properties, plant and wildlife protection, handling and disposal of radioactive substances, and employee health and safety. Extraction of mineral ore is subject to stringent environmental regulation by state and federal authorities, including the Environmental Protection Agency. Such regulation can increase the cost of planning, designing, installing and operating mining facilities or otherwise delay, limit or prohibit planned operations.

Significant fines and penalties may be imposed for failure to comply with environmental laws. Some environmental laws provide for joint and several strict liability for remediation of releases of hazardous substances. In addition, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances.

Some REE deposits contain naturally occurring radioactive substances, such as thorium and uranium. The mining of REEs that contain such radioactive substances involves the handling and disposal of such substances, and accordingly we may be subject to extensive safety, health and environmental laws, regulations and permits regarding radioactive substances. Significant costs, obligations or liabilities may be incurred with respect to such requirements, and any future changes in such requirements (or the interpretation or enforcement thereof) may have a material adverse effect on our business or results of operations. Furthermore, our drilling programs may also use hazardous materials and generate hazardous and naturally occurring radioactive wastes. These and similar unforeseen impacts that our operations may have on the environment, as well as human exposure to hazardous or radioactive materials or wastes associated with our operations, could have a material adverse effect on our business, reputation, results of operation and financial condition.

The Federal Mine Safety and Health Act of 1977 and regulations promulgated thereunder as well as the State of Alaska Department of Labor and Workforce Development impose a variety of health and safety standards on numerous aspects of employee working conditions related to mineral extraction and processing operations, including the training of personnel, operating procedures and operating equipment. In addition, the Company may be subject to additional state and local mining standards. The Company believes that it currently is in compliance with applicable mining standards; however, we cannot predict whether changes in standards or the interpretation or enforcement thereof will have a material adverse effect on our business, financial condition or otherwise impose restrictions on our ability to conduct mining operations.

 

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Federal legislation and regulations adopted and administered by the U.S. Environmental Protection Agency, Forest Service, Bureau of Land Management, Fish and Wildlife Service, Mine Safety and Health Administration, and other federal agencies, legislation such as the Federal Clean Water Act, Clean Air Act, National Environmental Policy Act, Endangered Species Act, and Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and various laws and regulations administered by the State of Alaska, have a direct bearing on exploration and mining operations conducted in Alaska. These regulations will make the process for preparing and obtaining approval of a plan of operations much more time-consuming, expensive, and uncertain. Plans of operation will be required to include detailed baseline environmental information and address how detailed reclamation performance standards will be met. In addition, all activities for which plans of operation are required will be subject to a new standard of review by the U.S. Bureau of Land Management, which must make a finding that the conditions, practices or activities do not cause substantial irreparable harm to significant scientific, cultural, or environmental resource values that cannot be effectively mitigated.

CERCLA generally imposes joint and several strict liability for costs of investigation and remediation and for natural resource damages, with respect to the release of hazardous substances (as designated under CERCLA) into the environment. CERCLA also authorizes the EPA, and in some cases, third parties, to take action in response to threats to the public health or the environment and to seek to recover from the potentially responsible parties the costs of such action. Our mining operations may generate wastes that fall within CERCLA’s definition of Hazardous Substances.

Employees

The Company expects to have three part-time employees. Mr. Peak is the Chairman, Chief Executive Officer and President of the Company and will be responsible for the management of the Company. Mr. Castro is the Vice President, Chief Financial Officer and Secretary of the Company and will be responsible for the financial affairs of the Company. Ms. Makalskaya is the Vice President and Controller of the Company and will be responsible for the Company’s accounting. The Company expects that Mr. Peak will devote seven (7) hours per week to the Company’s business and Mr. Castro and Ms. Makalskaya will each devote fifteen (15) hours per week to the Company’s business. The Company also expects to use the services of independent consultants and contractors, including JEX, to perform various professional services, including land acquisition, legal, environmental and tax services. JEX will have two employees who are a land man and an engineer, respectively, and will devote an aggregate of 8 hours per week to the Company’s business. In addition, the Company expects to utilize the services of independent contractors, including Avalon, to perform geological, exploration and drilling operation services and independent third party engineering firms to evaluate any reserves.

Available Information

You may read and copy all or any portion of this registration statement and the exhibits and schedules that were filed with this registration statement without charge at the office of the Securities and Exchange Commission (the “SEC”) in Public Reference Room, 100 F Street NE, Washington, DC, 20549. Copies of the registration statement may be obtained from the SEC at prescribed rates from the Public Reference Section of the SEC at the above address. Information regarding the operation of the public reference rooms may be obtained by calling the SEC at 1-800-SEC-0330. In addition, registration statements and certain other filings made with the SEC electronically are publicly available through the SEC’s website at http://www.sec.gov. This registration statement, including all exhibits and amendments to the registration statement, has been filed electronically with the SEC.

Upon effectiveness of this registration statement, we will become subject to the information and periodic reporting requirements of the Securities and Exchange Act of 1934, as amended, and, in accordance therewith, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the public reference facilities and web site of the SEC.

 

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We intend to furnish our stockholders with annual reports on Form 10-K containing audited consolidated financial statements and make available quarterly reports for the first three fiscal quarters of each fiscal year containing unaudited interim consolidated financial information.

 

Item 1A. RISK FACTORS

In addition to other information set forth elsewhere in this Registration Statement, you should carefully consider the following factors when evaluating the Company. An investment in the Company is subject to risks inherent in our business. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic industry conditions. The value of an investment in the Company may decrease, resulting in loss. The risk factors below are not all inclusive.

Risks Relating to Our Business

We have no revenue to date from our mining properties, which may negatively impact our ability to achieve our business objectives.

Since the acquisition of the Properties in the fall of 2009 and spring of 2010, we and our predecessors have conducted only very limited exploration activities and to date have not, discovered any commercially viable mineral deposits. Our ability to become profitable will be dependent on the receipt of revenues from the extraction of minerals greater than our operational expenses. We and our predecessors have carried on our business of exploring our Properties at a loss since our inception and expect to continue to incur losses unless and until such time as one of our Properties enters into commercial production and generates sufficient revenues to fund our continuing operations. The amounts and timing of expenditures will depend on the progress of ongoing exploration, the results of consultants’ analysis and recommendations, the rate at which operating losses are incurred, and other factors, many of which are beyond our control. Whether any mineral deposits we discover would be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, market prices for the minerals, and governmental regulations. If we cannot discover commercially viable deposits or commence actual mining operations, we may never generate revenues and will never become profitable.

The Properties in which we have an interest do not have any proven or probable reserves and we may never identify any commercially exploitable mineralization.

None of our Properties have any proven or probable reserves. To date, we have engaged in only limited preliminary exploration activities on the Properties, and our exploration activities of our REE Properties are based upon prior preliminary surveys conducted by the Federal government. Accordingly, we do not have sufficient information upon which to assess the ultimate success of our exploration efforts. There is no assurance that we may ever locate any mineral resources on our Properties or if we find mineral resources, they may not be in economic quantities. Additionally, even if we find minerals in sufficient quantities to warrant recovery, such recovery may not be economically profitable. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. Unusual or unexpected geologic formations and the inability to obtain suitable or adequate machinery, equipment or labor are risks involved in the conduct of exploration programs. If we do not establish reserves, we will be required to curtail or suspend our operations, in which case the market value of our common stock will decline, and you may lose all of your investment.

The probability of an individual prospect ever having reserves is extremely remote.

The probability of finding economic mineral reserves on any of our Properties is extremely small. It is common to spend millions of dollars on a potential project and complete many phases of exploration and still not obtain mineral reserves that can be economically exploited. Therefore, the chances of our Properties ever having mineral reserves and recovering any funds spent on exploration is extremely remote.

 

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Our Properties are located in the remote regions of Alaska and exploration activities may be limited by climate and limited access and existing infrastructure.

Our focus is on the exploration of our Properties in the State of Alaska. The arctic climate limits exploration activities to May to October. In addition, the remote location of our Gold Properties as well as our REE Properties may limit access and increase exploration expenses. Higher costs associated with exploration activities and limitation on the annual periods in which we can carry on exploration activities will increase the costs and time associated with our planned exploration activities and could negatively affect the value of our Properties and securities.

We are highly dependent on the technical services provided by our consultant, Avalon, including the operation and maintenance of the Properties and exploratory drilling activities, and could be seriously harmed if Avalon terminated the services with us or became otherwise unavailable.

Because we expect to have only three part-time employees, none of whom are mineral geoscientists or have experience in the mining industry, we will depend upon our consultant, Avalon, for the success of our exploration projects and expect to remain so for the foreseeable future. Our ability to continue conducting exploration activities is in large part dependent upon the efforts of our consultant. As a result, we have little control over the exploratory operations on the Properties. In addition, highly qualified explorationists and engineers are difficult to attract and retain. As a result, the loss of the services of our consultant could have a material adverse effect on us and could prevent us from pursuing our business plan.

We are dependent on the services provided by JEX, including the acquisition of additional acreage, and could be seriously harmed if JEX terminated its services or became otherwise unavailable.

We are dependent upon JEX for assistance in acquiring additional acreage for our exploration projects in Alaska and expect to remain so for the foreseeable future. We do not have a written agreement with JEX which contractually obligates them to provide us with their services in the future. As a result, the loss of the services of JEX could have a material adverse effect on us and could prevent us from pursuing our business plan.

Our ability to successfully execute our business plan is dependent on our ability to obtain adequate financing.

Our business plan, which includes the drilling of exploration prospects, will require substantial capital expenditures. We will require financing to fund our planned explorations and will soon be required to raise additional capital. Our ability to raise capital will depend on many factors, including the status of our exploration program and the status of various capital and industry markets at the time we seek such capital. Accordingly, we cannot be certain that financing will be available to us on acceptable terms, if at all. In the event additional capital resources are unavailable, we may be required to curtail our exploration and development activities or be forced to sell some of our Properties in an untimely fashion or on less than favorable terms.

Concentrating our capital investment in the State of Alaska increases our exposure to risk.

We expect to focus our capital investments in gold and rare earth mineral prospects in the State of Alaska. However, our exploration prospects in Alaska may not lead to any revenues or we may not be able to drill for mineral deposits at anticipated finding and development costs due primarily to financing and environmental uncertainties. Should we be able to make an economic discovery on our Properties, we would then be solely dependent upon a single mining operation for our revenue and profits.

We will rely on the accuracy of the estimates in reports provided to the Company by outside consultants and engineers.

We have no in house mineral engineering capability, and therefore will rely on the accuracy of reserve reports provided to us by our independent third party consultants. If those reports prove to be inaccurate, our

 

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financial reports could have material misstatements. Further, we will use the reports of our independent consultants in our financial planning. If the reports prove to be inaccurate, we may also make misjudgments in our financial planning.

Exploration activities involve a high degree of risk, and our participation in exploratory drilling activities may not be successful.

Our future success will largely depend on the success of our exploration drilling program. Participation in exploration drilling activities involves numerous risks, including the significant risk that no commercially marketable minerals will be discovered. The mining of minerals and the manufacture of mineral products involves numerous hazards, including:

 

  •  

Ground or slope failures;

 

  •  

Pressure or irregularities in formations affecting ore or wall rock characteristics;

 

  •  

Equipment failures or accidents;

 

  •  

Adverse climate conditions;

 

  •  

Compliance with governmental requirements and laws, present and future;

 

  •  

Shortages or delays in the availability and delivery of equipment; and

 

  •  

Lack of adequate infrastructure, including access to roads, electricity and available housing.

Poor results from our drilling activities would materially and adversely affect our future cash flows and results of operations.

We have no assurance of title to our Properties.

We hold approximately 109,280 acres in the form of State of Alaska unpatented mining claims, for both gold and REE exploration. We also hold approximately 3,520 acres in unpatented U.S. Federal mining claims. Unpatented mining claims are unique property interests, in that they are subject to the paramount title of, the State of Alaska or the U.S. Federal government, as applicable, and rights of third parties to uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 – 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 – 86.600. The validity of all State of Alaska unpatented mining claims is dependent upon inherent uncertainties and conditions. These uncertainties relate to matters such as:

 

  •  

The existence and sufficiency of a discovery of valuable minerals;

 

  •  

Proper posting and marking of boundaries in accordance with state statutes;

 

  •  

Making timely payments of annual rentals for the right to continue to hold the mining claims in accordance with state statutes;

 

  •  

Whether sufficient annual assessment work has been timely and properly performed; and

 

  •  

Possible conflicts with other claims not determinable from descriptions of records.

The validity of an unpatented mining claim also depends on (1) the claim having been located on Alaska state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting stakes in the ground, (2) compliance with all applicable state statutes in terms of the contents of claim location notices or certificates and the timely filing and recording of the same, (3) timely payment of annual claim rental fees, and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable minerals, the ground covered by an unpatented mining claim is open to location by others unless the

 

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owner is in actual possession of and diligently working the claim. The unpatented state mining claims we own or control may be invalid, or the title to those claims may not be free from defects. In addition, the validity of our claims may be contested by the Alaska state government or challenged by third parties.

With respect to our Tetlin Properties, we retained title lawyers to conduct a general examination of title to the mineral interest prior to executing the lease. Prior to conducting any mining activity, however, we will obtain a full title review of the applicable lease to identify more fully any deficiencies in title to the lease and, if there are deficiencies, to identify measures necessary to cure those defects to the extent reasonably possible. However, such deficiencies may not be cured by us. It does happen, from time to time, that the examination made by title lawyers reveals that the title to the Properties are defective, having been obtained in error from a person who is not the rightful owner of the mineral interest desired. In these circumstances, we may not be able to proceed with our exploration and development of the lease site or may incur costs to remedy a defect. It may also happen, from time to time, that we may elect to proceed with drilling despite defects to the title identified in a title opinion.

We have entered into the Tetlin Lease with a Native American tribe for the exploration of gold and associated minerals. The enforcement of contractual rights against Native American tribes with sovereign powers may be difficult.

Federally recognized Native American tribes are independent governments with sovereign powers, except as those powers may have been limited by treaty or the United States Congress. Such tribes maintain their own governmental systems and often their own judicial systems and have the right to tax, and to require licenses and to impose other forms of regulation and regulatory fees, on persons and businesses operating on their lands. As sovereign nations, federally recognized Native American tribes are generally subject only to federal regulation. States do not have the authority to regulate them, unless such authority has been specifically granted by Congress, and state laws generally do not directly apply to them and to activities taking place on their lands, unless they have a specific agreement or compact with the state or Federal government allowing for the application of state law. Our Tetlin Lease provides that it will be governed by applicable federal law and the law of the State of Alaska. We cannot assure you, however, that this choice of law clause would be enforceable, leading to uncertain interpretation of our rights and remedies under the Tetlin Lease.

Federally recognized Native American tribes also generally enjoy sovereign immunity from lawsuit similar to that of the states and the United States federal government. In order to sue a Native American tribe (or an agency or instrumentality of a Native American tribe), the Native American tribe must have effectively waived its sovereign immunity with respect to the matter in dispute. Moreover, even if a Native American tribe effectively waives its sovereign immunity, there exists an issue as to the forum in which a lawsuit can be brought against the tribe. Federal courts are courts of limited jurisdiction and generally do not have jurisdiction to hear civil cases relating to matters concerning Native American lands or the internal affairs of Native American governments. Federal courts may have jurisdiction if a federal question is raised by the lawsuit, which is unlikely in a typical contract dispute. Diversity of citizenship, another common basis for federal court jurisdiction, is not generally present in a suit against a tribe because a Native American tribe is not considered a citizen of any state. Accordingly, in most commercial disputes with tribes, the jurisdiction of the federal courts, may be difficult or impossible to obtain. Our Tetlin Lease contains a provision in which the Tetlin Village Council expressly waives its sovereign immunity to the limited extent necessary to permit judicial review in the courts in Alaska of certain issues affecting the Tetlin Lease.

Competition in the mineral exploration industry is intense, and the Company is smaller and has a much more limited operating history than most of its competitors.

We will compete with a broad range of mining companies with far greater resources in our exploration activities. Several mining companies concentrate drilling efforts on one type of mineral and thus may enjoy economies of scale and other efficiencies. However, our drilling strategies include both mining of gold ore and rare earth elements. As a result, we may not be able to compete with such companies. We will also compete for

 

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the equipment and labor required to operate and to develop our Properties if our exploration activities are successful. Most of our competitors have substantially greater financial resources than we do. These competitors may be able to evaluate, bid for and purchase a greater number of properties and prospects than we can. In addition, most of our competitors have been operating for a much longer time than we have and have substantially larger staffs. Gold and rare earth minerals processing requires complex and sophisticated processing technologies. We have no experience in the minerals processing industry.

We have only owned mining properties since the acquisition by our predecessors of the Properties in 2009 and 2010. Furthermore, no member of our management has any technical training or experience in minerals exploration or mining. Because of our limited operating history, we have limited insight into trends that may emerge and affect our business. We may make errors in predicting and reacting to relevant business trends and will be subject to the risks, uncertainties and difficulties frequently encountered by early-stage companies in evolving markets such as ours. We may not be able to compete effectively with more experienced companies or in such a highly competitive environment.

With respect to our rare earth mining activities, the Chinese have been exploring for, mining and producing rare earth minerals long before our entry into the industry, and therefore have far greater financial capabilities, as well as other processing technologies and resources to improve and expand their facilities. Additionally, the Chinese have enjoyed economies of scale and favorable domestic policies. We may not be able to overcome any strategic advantages our Chinese competitors may have over us.

The mining industry is historically a cyclical industry and market fluctuations in the prices of minerals could adversely affect our business.

Prices for minerals tend to fluctuate significantly in response to factors beyond our control. These factors include:

 

  •  

global economic conditions;

 

  •  

domestic and foreign tax policy;

 

  •  

the price of foreign imports of gold and rare earth elements, and products derived from the foregoing;

 

  •  

the cost of exploring for, producing and processing mineral ore;

 

  •  

available transportation capacity; and

 

  •  

the overall supply and demand for minerals.

Changes in commodity prices would directly affect revenues and may reduce the amount of funds available to reinvest in exploration and development activities. Reductions in mineral prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Declining metal prices may also impact our operations by requiring a reassessment of the commercial feasibility of any of our drilling programs.

Because our sole source of revenue will be the sale of gold and rare earth minerals if our exploration efforts are successful, changes in demand for, and the market price of, gold and rare earth minerals could significantly affect our profitability. The value and price of our common stock may be significantly affected by declines in the prices of gold and rare earth minerals and products.

Gold prices fluctuate widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the relative value of the United States dollar against foreign currencies on the world market, global and regional supply and demand for gold, and the political and economic conditions of gold producing countries throughout the world.

 

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Demand for rare earth minerals may also be impacted by fluctuations in demand for downstream products incorporating rare earth minerals, including wind power technology and hybrid and electric vehicles. Lack of growth in the clean technology or automotive industries may adversely affect the demand for rare earth minerals. The success of our business also depends on the creation of new products that may incorporate rare earth minerals. A prolonged or significant economic contraction in the United States or worldwide could also put downward pressure on market prices of rare earth minerals and products.

An increase in the global supply of minerals may adversely affect our business.

The pricing and demand for gold and rare earth minerals is affected by a number of factors beyond our control, including global economic conditions and the global supply and demand for gold and rare earth minerals and products. Increases in the amount of gold and rare earth minerals sold by our competitors may result in price reductions, reduced margins and we may not be able to compete effectively against current and future competitors.

We depend upon our management team and our consultant, Avalon.

The successful implementation of our business strategy and handling of other issues integral to the fulfillment of our business strategy depends, in part, on our management team, as well as our consultant, Avalon, and its geoscientists, geologists, engineers and other professionals engaged by Avalon. The loss of key members of our management team or the professional staff at Avalon could have a material adverse effect on our business, financial condition and operating results.

We do not have a loan facility with any financial institutions and as a result may not have sufficient capital to operate our business.

We currently do not have a loan facility with any financial institutions. The Company will have a limited amount of cash to fund its operations. Without additional funds to support the Company’s exploratory drilling activities, we may deplete our cash resources and cease operations.

Risks Related to Environmental Regulation

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

Our exploratory mining operations are subject to numerous laws and regulations governing our operations and the discharge of materials into the environment, including the Federal Clean Water Act, Clean Air Act, Endangered Species Act, and the Comprehensive Environmental Response, Compensation, and Liability Act. Federal initiatives are often also administered and enforced through state agencies operating under parallel state statutes and regulations. Failure to comply with such rules and regulations could result in substantial penalties and have an adverse effect on us. These laws and regulations may:

 

  •  

Require that we obtain permits before commencing drilling;

 

  •  

Restrict the substances that can be released into the environment in connection with drilling activities; and

 

  •  

Limit or prohibit drilling activities on protected areas.

Under these laws and regulations, we could be liable for personal injury and clean-up costs and other environmental and property damages, as well as administrative, civil and criminal penalties. We maintain only limited insurance coverage for sudden and accidental environmental damages. Accordingly, we may be subject to liability, or we may be required to cease production from properties in the event of environmental damages. These laws and regulations have been changed frequently in the past. In general, these changes have imposed

 

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more stringent requirements that increase operating costs or require capital expenditures in order to remain in compliance. Any such changes could have an adverse effect on our business, financial condition and results of operations.

We are subject to the Federal Mine Safety and Health Act of 1977 and regulations promulgated thereto, which impose stringent health and safety standards on numerous aspects of our operations.

Our mining operations in Alaska are subject to the Federal Mine Safety and Health Act of 1977, which impose stringent health and safety standards on numerous aspects of mineral extraction and processing operations, including the training of personnel, operating procedures, operating equipment and other matters. Our failure to comply with these standards could have a material adverse effect on our business, financial condition or otherwise impose significant restrictions on our ability to conduct mining operations.

We may be unable to obtain, maintain or renew permits necessary for the development or operation of any mining activities, which could have a material adverse effect on our business, financial condition or results of operation.

We must obtain a number of permits that impose strict conditions, requirements and obligations relating to various environmental and health and safety matters in connection with our current and future operations. To obtain certain permits, we may be required to conduct environmental studies, collect and present data to governmental authorities and the general public pertaining to the potential impact of our current and future operations upon the environment and take steps to avoid or mitigate the impact. The permitting rules are complex and have tended to become more stringent over time. Accordingly, permits required for our operations may not be issued, maintained or renewed in a timely fashion or at all, or may be conditioned upon restrictions which may impede our ability to operate efficiently. The failure to obtain certain permits or the adoption of more stringent permitting requirements could have a material adverse effect on our business, our plans of operation, and properties in that we may not be able to proceed with our exploration, development or mining programs.

Risks Related to This Offering and Ownership of Our Common Stock

Anti-takeover provisions of our certificate of incorporation, bylaws and Delaware law could adversely affect potential acquisition by third parties.

Our certificate of incorporation, bylaws and the Delaware General Corporation Law contain provisions that may discourage unsolicited takeover proposals. These provisions could have the effect of inhibiting fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts, preventing changes in our management or limiting the price that investors may be willing to pay for shares of common stock. Among other things, these provisions:

 

  •  

Limit the personal liability of directors;

 

  •  

Limit the persons who may call special meetings of stockholders;

 

  •  

Prohibit stockholder action by written consent;

 

  •  

Establish advance notice requirements for nominations for election of the board of directors and for proposing matters to be acted on by stockholders at stockholder meetings;

 

  •  

Require us to indemnify directors and officers to the fullest extent permitted by applicable law; and

 

  •  

Impose restrictions on business combinations with some interested parties.

The market for our common stock is limited.

There is currently no public market for our common stock. We anticipate the trading market for our common stock will be limited. Our common stock is or will be eligible for trading on the OTC Bulletin Board

 

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exchange, but is not eligible for trading on any regional securities exchange or the Nasdaq National Market. A more active trading market for our common stock may never develop, or if such a market develops, it may not be sustained.

We anticipate our common stock will be thinly traded following the Distribution.

Following the Distribution, we anticipate that approximately 1.6 million shares of our common stock will be outstanding and held by approximately 5,000 shareholders, with directors and officers owning or have voting control over approximately 22% of our common stock. Since we anticipate our common stock will be thinly traded after the Distribution, the purchase or sale of relatively small common stock positions may result in disproportionately large increases or decreases in the price of our common stock.

We do not intend to pay dividends in the foreseeable future.

For the foreseeable future, we intend to retain any earnings to finance the development of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our Board of Directors and will be dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors considers relevant. Accordingly, investors must rely on sales of their common stock after any price appreciation, which may never occur, as the only way to realize a return on their investment.

 

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Item 2. FINANCIAL INFORMATION.

This “Financial Information” section should be read in conjunction with Item 13—“Financial Statements and Supplementary Data.”

Selected Historical Financial Data

The Company is a new company that, after the Distribution, expects to hold leases and mining claims for the exploration of gold deposits and associated minerals and rare earth elements. Because we have only recently begun operations, our historical financial information and operating data may not provide an accurate indication of our present financial condition or what the future results of operations are likely to be. The data should be read in conjunction with the financial statements and related notes and other financial information appearing elsewhere in this Registration Statement.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes and other information included elsewhere in this Registration Statement.

Overview

The Company is a Houston-based, independent company which upon completion of the Distribution, expects to hold certain mineral property interests for the conduct of exploratory drilling activities in the State of Alaska. The Company has no operating history and its prospects are subject to the risk and uncertainties frequently encountered by companies in the early stages of development.

The financial data and discussion of our financial condition and results of operations provided herein assume that the Distribution has occurred and the Company holds 100% of the Properties.

Liquidity and Capital Resources

The Company acquired certain interests in prospective gold and rare earth mineral properties located in the State of Alaska from Contango. The Company is in the initial stage of conducting exploration activities on its Properties, and our longer term liquidity could be impaired to the extent our exploration efforts are not successful in generating commercially viable mineral deposits on the Properties.

Liquidity. We expect our initial source of funding to be cash contributed by Contango. Pursuant to the Contribution Agreement, Contango is required to make a capital contribution in the amount of $3.5 million to fund costs and expenses of the Company. In the future, the Company may require additional funding from other funding sources, including possible equity offerings which could cause substantial dilution of our common stock, possible borrowings from financial institutions and possible offerings of debt securities. Any such debt financing would, however, increase our leverage and add to our need for cash to service such debt. Our ability to raise additional capital will depend on the results of our exploration program and the status of various capital and industry markets at the time such additional capital is sought. Accordingly, there can be no assurances that capital will be available to us from any source or that, if available, it will be on terms acceptable to us.

Capital Budget. For the next twelve months, our capital expenditure budget calls for us to invest approximately $2 million for exploratory drilling and other exploration activities on our Gold Properties and on our REE Properties. Our 2011 exploration program will be conducted in three phases as follows:

 

  •  

Tetlin—Airborne Geophysics: Based on the results of geologic mapping, geochemical sampling and ground-based induced polarization studies completed on the Tetlin Properties in 2009 and 2010, a

 

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helicopter-supported airborne geophysical survey is planned for the Tetlin Properties in the spring of 2011. This program will include helicopter-supported airborne magnetics and multi-frequency electromagnetics over portions of the Tetlin Properties where previous exploratory activities have encountered gold and/or copper mineralization. The processed data will be evaluated by one or more geophysical contractors and mineral target prioritization will be completed. These data, in conjunction with previously gathered data, will serve as a basis to define and prioritize exploration drilling targets for follow-up in the summer and fall of 2011. Total estimated all-in cost of the program is budgeted at $500,000, including airborne data collection and reduction, data interpretation, logistical support and final prospect targeting.

 

  •  

Tetlin—Diamond Drilling: Previous work at Tetlin has defined several drilling targets. Airborne geophysical data will be used to expand the information on these high priority areas and prioritize the targets for exploration drilling. The exploration drilling program, to commence during the summer of 2011, will entail diamond core drilling to determine the depth extent and nature of gold and copper mineralization encountered by surface sampling. All cores will be logged, digitally photographed, split with a Haley core saw and one-half of each interval will be submitted for geochemical analysis. The remaining half core will be retained for future use. All cores will be assayed for gold by fire assay techniques with each sample also analyzed for a multi-element suite by inductively coupled plasma (“ICP”) methods using 4-acid digestion procedures. The estimated cost of this drilling program, including labor, assays, accommodations, heavy equipment rental, drilling, fuel and all consumables is $1 million.

 

  •  

Rare Earth Elements—Reconnaissance: A team of Avalon geologists and technicians will conduct first-pass reconnaissance exploration of the REE Properties. As of the date of the Distribution, no field work has been conducted on the Company’s REE Properties. The team will conduct geologic mapping, geochemical sampling and other tasks designed to determine the presence and magnitude of rare earth element mineralization on the REE Properties. All geochemical samples will be assayed for gold by fire assay techniques with each sample also analyzed for a multi-element suite, including the rare earth elements, by inductively coupled plasma-mass spectronomy or equivalent methods using 4-acid digestion procedures. The estimated cost of this program, including labor, assays, accommodations, claim maintenance fees, helicopter and fixed-wing support, fuel and all consumables is $500,000.

We will plan our 2012 and 2013 exploration programs based upon the results of our 2011 exploration program. As of the date of the Distribution, Contango has contributed $3,500,000 to the Company in order to fund our 2011 planned explorations, but the Company may need to raise additional debt and/or equity to fund future minerals exploration programs. There can be no assurance the Company will be able to raise such additional capital.

We will also incur general and administrative expenses, which may include legal fees, audit fees, consultant fees, insurance, and other operating expenses.

Results of Operations

The Company is a newly-formed company that has not commenced mining or producing commercially marketable minerals. To date, we have not generated any revenue from mineral sales or operations. We have no recurring source of revenue and our ability to continue as a going concern is dependent on our ability to raise capital to fund our future exploration and working capital requirements.

In the future, we may generate revenue from a combination of mineral sales and other payments resulting from any commercially recoverable minerals from our properties. We do not expect to generate revenue from mineral sales in the foreseeable future. If our Properties fail to contain any proven reserves, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected. Other potential sources of cash, or relief of demand for cash, include external debt, the sale of shares of

 

19

Table of Contents
Index to Financial Statements

our stock, joint ventures, or alternative methods such as mergers or sale of our assets. No assurances can be given, however, that we will be able to obtain any of these potential sources of cash. We will need to generate significant revenues to achieve profitability and we may never do so.

Off-Balance Sheet Arrangements

Contractual Obligations

The Tetlin Lease provides for an initial term of ten (10) years, and so long after such initial term as we continue conducting exploration or mining operations on the Tetlin Properties. While the Company is required to spend $350,000 per year annually for ten years in exploration costs pursuant to the Tetlin Lease, the Company anticipates that exploration expenditures through the 2010 exploration program will satisfy this requirement because exploration funds spent in any year in excess of $350,000 are credited toward future years’ exploration cost requirements. The Tetlin Lease also provides that we will pay the Tetlin Village Council a production royalty of from 3% to 5% should we deliver to a purchaser on a commercial basis precious metals, non-precious metals or hydrocarbons derived from the Tetlin Properties.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations is based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have identified below the policies that are of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management. The Company analyzes its estimates, including those related to its mineral reserve estimates, on a periodic basis and bases its estimates on historical experience, independent third party engineers and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the Company’s financial statements:

Mineral Property Interests, Exploration and Development Costs: Mineral property interests include interests in the exploration stage mineral properties acquired. The amount capitalized includes costs paid to acquire mineral property interest as well as the costs paid to the State of Alaska to obtain the lease rights. Exploration costs are expensed as incurred. Development costs are expensed as incurred until the Company obtains proven and probable reserves within its commercially minable properties. Costs of abandoned projects are charged to earnings upon abandonment. Properties determined to be impaired are written-down to the estimated fair value. The Company periodically evaluates whether events or changes in circumstances indicate that the carrying value of mineral property interests and related property, plant and equipment may not be recoverable.

Stock-Based Compensation. The Company applies the fair value based method to account for stock-based compensation. Under this method, we will measure and recognize compensation expense for all stock-based payments at fair value. Management is required to make assumptions including stock price volatility and employee turnover that are utilized to measure compensation expense. The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model.

 

Item 3. PROPERTIES.

Upon completion of the Distribution, our Properties will be located in the State of Alaska. Our principal properties will consist of mineral leases and unpatented mining claims.

We believe that we hold good title to our Properties in accordance with standards generally accepted in the minerals industry. As is customary in both the gold and rare earths industry, we conduct only a perfunctory title

 

20

Table of Contents
Index to Financial Statements

examination at the time we acquire a property. Before we begin any mining activities, however, we will conduct a full title examination and perform curative work on any defects that we deem significant.

Lease with Tetlin Village Council

JEX entered into the Tetlin Lease with the Tetlin Village Council, effective as of June 15, 2008. An undivided 50% leasehold interest was sold to Contango Mining pursuant to the Joint Exploration Agreement dated as of September 29, 2009 in exchange for $1 million and a 1% overriding royalty interest. JEX transferred its remaining 50% leasehold interest to Contango Mining as of September 15, 2010 in exchange for an increased overriding royalty aggregating 3%. The Tetlin Lease covers approximately 647,000 acres of land, provides for an initial term of ten (10) years, and so long after such initial term as we continue conducting exploration or mining operations on the Tetlin Properties. While the Company is required to spend $350,000 per year annually for ten years in exploration costs pursuant to the Tetlin Lease, the Company anticipates that exploration expenditures through the 2010 exploration program will satisfy this requirement because exploration funds spent in any year in excess of $350,000 are credited toward future years’ exploration cost requirements. The Tetlin Lease also provides that we will pay the Tetlin Village Council a production royalty should we deliver to a purchaser on a commercial basis precious metals, non-precious metals or hydrocarbons derived from the Tetlin Properties.

Gold Mining Claims

Our State of Alaska unpatented mining claims for gold and associated minerals are set forth in the tables below.

LAD CLAIMS

TRIPLE Z PROJECT, ALASKA

All State of Alaska claims located in the Fairbanks Recording District, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL_#

1

    Lad 1    160    18N    15E    3    Copper River    666952

2

    Lad 2    160    18N    15E    2    Copper River    666953

3

    Lad 3    160    18N    15E    10    Copper River    666954

4

    Lad 4    160    18N    15E    11    Copper River    666955

TOK CLAIMS

TETLIN PROJECT, ALASKA

All State of Alaska claims located in the Fairbanks Recording District, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

1

    TOK 1    40    16N    13E    9    Copper River    614253

2

    TOK 2    40    16N    13E    9    Copper River    614254

3

    TOK 3    40    16N    13E    9    Copper River    614255

4

    TOK 4    40    16N    13E    9    Copper River    614256

5

    TOK 5    160    16N    13E    8    Copper River    614257

6

    TOK 6    160    16N    13E    9    Copper River    614258

7

    TOK 7    40    16N    13E    9    Copper River    614259

8

    TOK 8    40    16N    13E    9    Copper River    614260

9

    TOK 9    40    16N    13E    9    Copper River    614261

10

    TOK 10    40    16N    13E    9    Copper River    614262

11

    TOK 11    40    16N    13E    10    Copper River    614263

12

    TOK 12    40    16N    13E    10    Copper River    614264

13

    TOK 13    160    16N    12E    13    Copper River    614265

 

21

Table of Contents
Index to Financial Statements

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

14

    TOK 14    160    16N    13E    18    Copper River    614266

15

    TOK 15    160    16N    13E    18    Copper River    614267

16

    TOK 16    160    16N    13E    17    Copper River    614268

17

    TOK 17    160    16N    13E    17    Copper River    614269

18

    TOK 18    160    16N    13E    16    Copper River    614270

19

    TOK 19    40    16N    13E    16    Copper River    614271

20

    TOK 20    40    16N    13E    16    Copper River    614272

21

    TOK 21    40    16N    13E    15    Copper River    614273

22

    TOK 22    40    16N    13E    16    Copper River    614274

23

    TOK 23    40    16N    13E    16    Copper River    614275

24

    TOK 24    40    16N    13E    15    Copper River    614276

25

    TOK 25    160    16N    12E    14    Copper River    614277

26

    TOK 26    160    16N    12E    13    Copper River    614278

27

    TOK 27    160    16N    12E    13    Copper River    614279

28

    TOK 28    160    16N    13E    18    Copper River    614280

29

    TOK 29    160    16N    13E    18    Copper River    614281

30

    TOK 30    160    16N    13E    17    Copper River    614282

31

    TOK 31    160    16N    13E    17    Copper River    614283

32

    TOK 32    160    16N    13E    16    Copper River    614284

33

    TOK 33    40    16N    13E    16    Copper River    614285

34

    TOK 34    40    16N    13E    16    Copper River    614286

35

    TOK 35    160    16N    12E    23    Copper River    614287

36

    TOK 36    160    16N    12E    23    Copper River    614288

37

    TOK 37    160    16N    12E    24    Copper River    614289

38

    TOK 38    160    16N    12E    24    Copper River    614290

39

    TOK 39    160    16N    13E    19    Copper River    614291

40

    TOK 40    160    16N    13E    19    Copper River    614292

41

    TOK 41    160    16N    13E    20    Copper River    614293

42

    TOK 42    160    16N    13E    20    Copper River    614294

43

    TOK 43    40    16N    13E    21    Copper River    614295

44

    TOK 44    40    16N    13E    21    Copper River    614296

45

    TOK 45    40    16N    13E    21    Copper River    614297

46

    TOK 46    40    16N    13E    21    Copper River    614298

47

    TOK 47    160    16N    12E    22    Copper River    614299

48

    TOK 48    160    16N    12E    23    Copper River    614300

49

    TOK 49    160    16N    12E    23    Copper River    614301

50

    TOK 50    160    16N    12E    24    Copper River    614302

51

    TOK 51    160    16N    12E    24    Copper River    614303

52

    TOK 52    160    16N    13E    19    Copper River    614304

53

    TOK 53    160    16N    13E    19    Copper River    614305

54

    TOK 54    160    16N    13E    20    Copper River    614306

55

    TOK 55    160    16N    13E    20    Copper River    614307

56

    TOK 56    40    16N    13E    21    Copper River    614308

57

    TOK 57    40    16N    13E    21    Copper River    614309

58

    TOK 58    40    16N    13E    21    Copper River    614310

59

    TOK 59    40    16N    13E    21    Copper River    614311

60

    TOK 60    40    16N    13E    21    Copper River    614312

61

    TOK 61    160    16N    12E    27    Copper River    614313

62

    TOK 62    160    16N    12E    27    Copper River    614314

63

    TOK 63    160    16N    12E    26    Copper River    614315

64

    TOK 64    160    16N    12E    26    Copper River    614316

 

22

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

65

    TOK 65    160    16N    12E    25    Copper River    614317

66

    TOK 66    40    16N    12E    25    Copper River    614318

67

    TOK 67    40    16N    12E    25    Copper River    614319

68

    TOK 68    40    16N    12E    25    Copper River    614320

69

    TOK 69    40    16N    12E    25    Copper River    614321

70

    TOK 70    40    16N    13E    30    Copper River    614322

71

    TOK 71    40    16N    13E    30    Copper River    614323

72

    TOK 72    40    16N    13E    30    Copper River    614324

73

    TOK 73    40    16N    13E    30    Copper River    614325

74

    TOK 74    160    16N    13E    30    Copper River    614326

75

    TOK 75    160    16N    13E    29    Copper River    614327

76

    TOK 76    160    16N    13E    29    Copper River    614328

77

    TOK 77    40    16N    13E    28    Copper River    614329

78

    TOK 78    40    16N    13E    28    Copper River    614330

79

    TOK 79    40    16N    13E    28    Copper River    614331

80

    TOK 80    40    16N    13E    28    Copper River    614332

81

    TOK 81    40    16N    13E    28    Copper River    614333

82

    TOK 82    40    16N    13E    28    Copper River    614334

83

    TOK 83    160    16N    12E    28    Copper River    614335

84

    TOK 84    160    16N    12E    27    Copper River    614336

85

    TOK 85    160    16N    12E    27    Copper River    614337

86

    TOK 86    160    16N    12E    26    Copper River    614338

87

    TOK 87    160    16N    12E    26    Copper River    614339

88

    TOK 88    160    16N    12E    25    Copper River    614340

89

    TOK 89    40    16N    12E    25    Copper River    614341

90

    TOK 90    40    16N    12E    25    Copper River    614342

91

    TOK 91    40    16N    13E    29    Copper River    614343

92

    TOK 92    40    16N    13E    29    Copper River    614344

93

    TOK 93    40    16N    13E    29    Copper River    614345

94

    TOK 94    40    16N    13E    29    Copper River    614346

95

    TOK 95    40    16N    13E    28    Copper River    614347

96

    TOK 96    160    16N    12E    33    Copper River    614348

97

    TOK 97    160    16N    12E    33    Copper River    614349

98

    TOK 98    160    16N    12E    34    Copper River    614350

99

    TOK 99    40    16N    12E    34    Copper River    614351

100

    TOK 100    40    16N    12E    34    Copper River    614352

101

    TOK 101    40    16N    12E    34    Copper River    614353

102

    TOK 102    40    16N    12E    34    Copper River    614354

103

    TOK 103    40    16N    12E    35    Copper River    614355

104

    TOK 104    40    16N    12E    35    Copper River    614356

105

    TOK 105    40    16N    12E    35    Copper River    614357

106

    TOK 106    40    16N    12E    35    Copper River    614358

107

    TOK 107    40    16N    12E    35    Copper River    614359

108

    TOK 108    40    16N    12E    35    Copper River    614360

109

    TOK 109    40    16N    12E    35    Copper River    614361

110

    TOK 110    40    16N    12E    36    Copper River    614362

111

    TOK 111    40    16N    12E    36    Copper River    614363

112

    TOK 112    40    16N    12E    36    Copper River    614364

113

    TOK 113    40    16N    12E    36    Copper River    614365

114

    TOK 114    160    16N    12E    32    Copper River    614366

115

    TOK 115    160    16N    12E    32    Copper River    614367

 

23

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

116

    TOK 116    160    16N    12E    33    Copper River    614368

117

    TOK 117    160    16N    12E    33    Copper River    614369

118

    TOK 118    40    16N    12E    34    Copper River    614370

119

    TOK 119    40    16N    12E    34    Copper River    614371

120

    TOK 120    40    16N    12E    34    Copper River    614372

121

    TOK 121    40    16N    12E    34    Copper River    614373

122

    TOK 122    40    16N    12E    34    Copper River    614374

REE Mining Claims

Our State of Alaska and Federal mining claims for rare earth elements are set forth in the tables below.

ALT CLAIMS

ALATNA PROJECT, ALASKA

All State of Alaska claims located in the Fairbanks Recording District, Wiseman Quadrangle, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL_#

1

    ALT 1    160    28N    23W    5    Fairbanks    701674

2

    ALT 2    160    28N    23W    5    Fairbanks    701675

3

    ALT 3    160    28N    23W    4    Fairbanks    701676

4

    ALT 4    160    28N    23W    4    Fairbanks    701677

5

    ALT 5    160    28N    23W    3    Fairbanks    701678

6

    ALT 6    160    28N    23W    3    Fairbanks    701679

7

    ALT 7    160    28N    23W    2    Fairbanks    701680

8

    ALT 8    160    28N    23W    8    Fairbanks    701681

9

    ALT 9    160    28N    23W    8    Fairbanks    701682

10

    ALT 10    160    28N    23W    9    Fairbanks    701683

11

    ALT 11    160    28N    23W    9    Fairbanks    701684

12

    ALT 12    160    28N    23W    10    Fairbanks    701685

13

    ALT 13    160    28N    23W    10    Fairbanks    701686

14

    ALT 14    160    28N    23W    11    Fairbanks    701687

15

    ALT 15    160    28N    23W    8    Fairbanks    701688

16

    ALT 16    160    28N    23W    8    Fairbanks    701689

17

    ALT 17    160    28N    23W    9    Fairbanks    701690

18

    ALT 18    160    28N    23W    9    Fairbanks    701691

19

    ALT 19    160    28N    23W    10    Fairbanks    701692

20

    ALT 20    160    28N    23W    10    Fairbanks    701693

21

    ALT 21    160    28N    23W    11    Fairbanks    701694

22

    ALT 22    160    28N    23W    17    Fairbanks    701695

23

    ALT 23    160    28N    23W    17    Fairbanks    701696

24

    ALT 24    160    28N    23W    16    Fairbanks    701697

25

    ALT 25    160    28N    23W    16    Fairbanks    701698

26

    ALT 26    160    28N    23W    15    Fairbanks    701699

27

    ALT 27    160    28N    23W    15    Fairbanks    701700

28

    ALT 28    160    28N    23W    14    Fairbanks    701701

29

    ALT 29    160    28N    23W    17    Fairbanks    701702

30

    ALT 30    160    28N    23W    17    Fairbanks    701703

31

    ALT 31    160    28N    23W    16    Fairbanks    701704

32

    ALT 32    160    28N    23W    16    Fairbanks    701705

33

    ALT 33    160    28N    23W    15    Fairbanks    701706

 

24

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL_#

34

    ALT 34    160    28N    23W    15    Fairbanks    701707

35

    ALT 35    160    28N    23W    14    Fairbanks    701708

36

    ALT 36    160    28N    23W    20    Fairbanks    701709

37

    ALT 37    160    28N    23W    20    Fairbanks    701710

38

    ALT 38    160    28N    23W    21    Fairbanks    701711

39

    ALT 39    160    28N    23W    21    Fairbanks    701712

40

    ALT 40    160    28N    23W    22    Fairbanks    701713

41

    ALT 41    160    28N    23W    22    Fairbanks    701714

42

    ALT 42    160    28N    23W    23    Fairbanks    701715

43

    ALT 43    160    28N    24W    33    Fairbanks    701716

44

    ALT 44    160    28N    24W    33    Fairbanks    701717

45

    ALT 45    160    28N    24W    34    Fairbanks    701718

46

    ALT 46    160    28N    24W    34    Fairbanks    701719

47

    ALT 47    160    28N    24W    35    Fairbanks    701720

48

    ALT 48    160    28N    24W    35    Fairbanks    701721

49

    ALT 49    160    28N    24W    36    Fairbanks    701722

50

    ALT 50    160    27N    25W    2    Fairbanks    701723

51

    ALT 51    160    27N    25W    2    Fairbanks    701724

52

    ALT 52    160    27N    25W    1    Fairbanks    701725

53

    ALT 53    160    27N    25W    1    Fairbanks    701726

54

    ALT 54    160    27N    24W    6    Fairbanks    701727

55

    ALT 55    160    27N    24W    6    Fairbanks    701728

56

    ALT 56    160    27N    24W    5    Fairbanks    701729

57

    ALT 57    160    27N    24W    5    Fairbanks    701730

58

    ALT 58    160    27N    24W    4    Fairbanks    701731

59

    ALT 59    160    27N    24W    4    Fairbanks    701732

60

    ALT 60    160    27N    24W    3    Fairbanks    701733

61

    ALT 61    160    27N    24W    3    Fairbanks    701734

62

    ALT 62    160    27N    24W    2    Fairbanks    701735

63

    ALT 63    160    27N    24W    2    Fairbanks    701736

64

    ALT 64    160    27N    24W    1    Fairbanks    701737

65

    ALT 65    160    27N    25W    2    Fairbanks    701738

66

    ALT 66    160    27N    25W    2    Fairbanks    701739

67

    ALT 67    160    27N    25W    1    Fairbanks    701740

68

    ALT 68    160    27N    24W    6    Fairbanks    701741

69

    ALT 69    160    27N    24W    5    Fairbanks    701742

70

    ALT 70    160    27N    24W    5    Fairbanks    701743

71

    ALT 71    160    27N    24W    4    Fairbanks    701744

72

    ALT 72    160    27N    24W    4    Fairbanks    701745

73

    ALT 73    160    27N    24W    3    Fairbanks    701746

74

    ALT 74    160    27N    24W    3    Fairbanks    701747

75

    ALT 75    160    27N    24W    2    Fairbanks    701748

76

    ALT 76    160    27N    24W    2    Fairbanks    701749

77

    ALT 77    160    27N    24W    1    Fairbanks    701750

78

    ALT 78    160    27N    25W    11    Fairbanks    701751

79

    ALT 79    160    27N    25W    11    Fairbanks    701752

80

    ALT 80    160    27N    25W    12    Fairbanks    701753

81

    ALT 81    160    27N    24W    9    Fairbanks    701754

82

    ALT 82    160    27N    24W    10    Fairbanks    701755

83

    ALT 83    160    27N    24W    10    Fairbanks    701756

84

    ALT 84    160    27N    24W    11    Fairbanks    701757

 

25

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL_#

85

    ALT 85    160    27N    24W    11    Fairbanks    701758

86

    ALT 86    160    27N    24W    12    Fairbanks    701759

87

    ALT 87    160    27N    24W    10    Fairbanks    701760

88

    ALT 88    160    27N    24W    10    Fairbanks    701761

89

    ALT 89    160    27N    24W    11    Fairbanks    701762

90

    ALT 90    160    27N    24W    11    Fairbanks    701763

91

    ALT 91    160    27N    24W    12    Fairbanks    701764

92

    ALT 92    160    21N    26E    16    Kateel River    701765

93

    ALT 93    160    21N    26E    16    Kateel River    701766

94

    ALT 94    160    21N    26E    15    Kateel River    701767

95

    ALT 95    160    21N    26E    15    Kateel River    701768

96

    ALT 96    160    21N    26E    14    Kateel River    701769

97

    ALT 97    160    21N    26E    14    Kateel River    701770

98

    ALT 98    160    21N    26E    21    Kateel River    701771

99

    ALT 99    160    21N    26E    21    Kateel River    701772

100

    ALT 100    160    21N    26E    22    Kateel River    701773

101

    ALT 101    160    21N    26E    22    Kateel River    701774

102

    ALT 102    160    21N    26E    23    Kateel River    701775

103

    ALT 103    160    21N    26E    23    Kateel River    701776

104

    ALT 104    160    21N    26E    21    Kateel River    701777

105

    ALT 105    160    21N    26E    21    Kateel River    701778

106

    ALT 106    160    21N    26E    22    Kateel River    701779

107

    ALT 107    160    21N    26E    22    Kateel River    701780

108

    ALT 108    160    21N    26E    23    Kateel River    701781

109

    ALT 109    160    21N    26E    23    Kateel River    701782

110

    ALT 110    160    21N    26E    28    Kateel River    701783

111

    ALT 111    160    21N    26E    28    Kateel River    701784

112

    ALT 112    160    21N    26E    27    Kateel River    701785

113

    ALT 113    160    21N    26E    27    Kateel River    701786

114

    ALT 114    160    21N    26E    26    Kateel River    701787

115

    ALT 115    160    21N    26E    26    Kateel River    701788

116

    ALT 116    160    21N    26E    28    Kateel River    701789

117

    ALT 117    160    21N    26E    28    Kateel River    701790

118

    ALT 118    160    21N    26E    27    Kateel River    701791

119

    ALT 119    160    21N    26E    27    Kateel River    701792

120

    ALT 120    160    21N    26E    26    Kateel River    701793

121

    ALT 121    160    21N    26E    26    Kateel River    701794

122

    ALT 122    160    21N    26E    33    Kateel River    701795

123

    ALT 123    160    21N    26E    33    Kateel River    701796

124

    ALT 124    160    21N    26E    34    Kateel River    701797

125

    ALT 125    160    21N    26E    34    Kateel River    701798

126

    ALT 126    160    21N    26E    35    Kateel River    701799

127

    ALT 127    160    21N    26E    35    Kateel River    701800

 

26

Table of Contents
Index to Financial Statements

SPK CLAIMS

SPOOKY PROJECT, ALASKA

All State of Alaska claims located in the Fort Gibbon and Rampart Recording Districts,

Tanana Quadrangle, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

1

    SPK 1    160    11N    18W    27    Fairbanks    615106

2

    SPK 2    160    11N    18W    27    Fairbanks    615107

3

    SPK 3    160    11N    18W    26    Fairbanks    615108

4

    SPK 4    160    11N    18W    26    Fairbanks    615109

5

    SPK 5    160    11N    18W    25    Fairbanks    615110

6

    SPK 6    160    11N    18W    25    Fairbanks    615111

7

    SPK 7    160    11N    17W    30    Fairbanks    615112

8

    SPK 8    160    11N    17W    30    Fairbanks    615113

9

    SPK 9    160    11N    17W    29    Fairbanks    615114

10

    SPK 10    160    11N    17W    29    Fairbanks    615115

11

    SPK 11    160    11N    17W    28    Fairbanks    615116

12

    SPK 12    160    11N    17W    28    Fairbanks    615117

13

    SPK 13    160    11N    18W    27    Fairbanks    615118

14

    SPK 14    160    11N    18W    27    Fairbanks    615119

15

    SPK 15    160    11N    18W    26    Fairbanks    615120

16

    SPK 16    160    11N    18W    26    Fairbanks    615121

17

    SPK 17    160    11N    18W    25    Fairbanks    615122

18

    SPK 18    160    11N    18W    25    Fairbanks    615123

19

    SPK 19    160    11N    17W    30    Fairbanks    615124

20

    SPK 20    160    11N    17W    30    Fairbanks    615125

21

    SPK 21    160    11N    17W    29    Fairbanks    615126

22

    SPK 22    160    11N    17W    29    Fairbanks    615127

23

    SPK 23    160    11N    17W    28    Fairbanks    615128

24

    SPK 24    160    11N    17W    28    Fairbanks    615129

25

    SPK 25    160    11N    18W    32    Fairbanks    615130

26

    SPK 26    160    11N    18W    32    Fairbanks    615131

27

    SPK 27    160    11N    18W    33    Fairbanks    615132

28

    SPK 28    160    11N    18W    33    Fairbanks    615133

29

    SPK 29    160    11N    18W    34    Fairbanks    615134

30

    SPK 30    160    11N    18W    34    Fairbanks    615135

31

    SPK 31    160    11N    18W    35    Fairbanks    615136

32

    SPK 32    160    11N    18W    35    Fairbanks    615137

33

    SPK 33    160    11N    18W    36    Fairbanks    615138

34

    SPK 34    160    11N    18W    36    Fairbanks    615139

35

    SPK 35    160    11N    17W    31    Fairbanks    615140

36

    SPK 36    160    11N    17W    31    Fairbanks    615141

37

    SPK 37    160    11N    17W    32    Fairbanks    615142

38

    SPK 38    160    11N    17W    32    Fairbanks    615143

39

    SPK 39    160    11N    17W    33    Fairbanks    615144

40

    SPK 40    160    11N    17W    33    Fairbanks    615145

41

    SPK 41    160    11N    17W    34    Fairbanks    615146

42

    SPK 42    160    11N    18W    32    Fairbanks    615147

43

    SPK 43    160    11N    18W    32    Fairbanks    615148

44

    SPK 44    160    11N    18W    33    Fairbanks    615149

45

    SPK 45    160    11N    18W    33    Fairbanks    615150

46

    SPK 46    160    11N    18W    34    Fairbanks    615151

 

27

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

47

    SPK 47    160    11N    18W    34    Fairbanks    615152

48

    SPK 48    160    11N    18W    35    Fairbanks    615153

49

    SPK 49    160    11N    18W    35    Fairbanks    615154

50

    SPK 50    160    11N    18W    36    Fairbanks    615155

51

    SPK 51    160    11N    18W    36    Fairbanks    615156

52

    SPK 52    160    11N    17W    31    Fairbanks    615157

53

    SPK 53    160    11N    17W    31    Fairbanks    615158

54

    SPK 54    160    11N    17W    32    Fairbanks    615159

55

    SPK 55    160    11N    17W    32    Fairbanks    615160

56

    SPK 56    160    11N    17W    33    Fairbanks    615161

57

    SPK 57    160    11N    17W    33    Fairbanks    615162

58

    SPK 58    160    11N    17W    34    Fairbanks    615163

59

    SPK 59    160    10N    18W    5    Fairbanks    615164

60

    SPK 60    160    10N    18W    5    Fairbanks    615165

61

    SPK 61    160    10N    18W    4    Fairbanks    615166

62

    SPK 62    160    10N    18W    4    Fairbanks    615167

63

    SPK 63    160    10N    18W    3    Fairbanks    615168

64

    SPK 64    160    10N    18W    3    Fairbanks    615169

65

    SPK 65    160    10N    18W    2    Fairbanks    615170

66

    SPK 66    160    10N    18W    2    Fairbanks    615171

67

    SPK 67    160    10N    18W    1    Fairbanks    615172

68

    SPK 68    160    10N    18W    1    Fairbanks    615173

69

    SPK 69    160    10N    17W    6    Fairbanks    615174

70

    SPK 70    160    10N    17W    6    Fairbanks    615175

71

    SPK 71    160    10N    17W    5    Fairbanks    615176

72

    SPK 72    160    10N    17W    5    Fairbanks    615177

73

    SPK 73    160    10N    17W    4    Fairbanks    615178

74

    SPK 74    160    10N    17W    4    Fairbanks    615179

75

    SPK 75    160    10N    17W    3    Fairbanks    615180

76

    SPK 76    160    10N    17W    3    Fairbanks    615181

77

    SPK 77    160    10N    18W    5    Fairbanks    615182

78

    SPK 78    160    10N    18W    5    Fairbanks    615183

79

    SPK 79    160    10N    18W    4    Fairbanks    615184

80

    SPK 80    160    10N    18W    4    Fairbanks    615185

81

    SPK 81    160    10N    18W    3    Fairbanks    615186

82

    SPK 82    160    10N    18W    3    Fairbanks    615187

83

    SPK 83    160    10N    18W    2    Fairbanks    615188

84

    SPK 84    160    10N    18W    2    Fairbanks    615189

85

    SPK 85    160    10N    18W    1    Fairbanks    615190

86

    SPK 86    160    10N    18W    1    Fairbanks    615191

87

    SPK 87    160    10N    17W    6    Fairbanks    615192

88

    SPK 88    160    10N    17W    6    Fairbanks    615193

89

    SPK 89    160    10N    17W    5    Fairbanks    615194

90

    SPK 90    160    10N    17W    5    Fairbanks    615195

91

    SPK 91    160    10N    17W    4    Fairbanks    615196

92

    SPK 92    160    10N    17W    4    Fairbanks    615197

93

    SPK 93    160    10N    17W    3    Fairbanks    615198

94

    SPK 94    160    10N    17W    3    Fairbanks    615199

95

    SPK 95    160    10N    18W    8    Fairbanks    615200

96

    SPK 96    160    10N    18W    8    Fairbanks    615201

97

    SPK 97    160    10N    18W    9    Fairbanks    615202

 

28

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

98

    SPK 98    160    10N    18W    9    Fairbanks    615203

99

    SPK 99    160    10N    18W    10    Fairbanks    615204

100

    SPK 100    160    10N    18W    10    Fairbanks    615205

101

    SPK 101    160    10N    18W    11    Fairbanks    615206

102

    SPK 102    160    10N    18W    11    Fairbanks    615207

103

    SPK 103    160    10N    18W    12    Fairbanks    615208

104

    SPK 104    160    10N    18W    12    Fairbanks    615209

105

    SPK 105    160    10N    17W    7    Fairbanks    615210

106

    SPK 106    160    10N    17W    7    Fairbanks    615211

107

    SPK 107    160    10N    17W    8    Fairbanks    615212

108

    SPK 108    160    10N    17W    8    Fairbanks    615213

109

    SPK 109    160    10N    17W    9    Fairbanks    615214

110

    SPK 110    160    10N    17W    9    Fairbanks    615215

111

    SPK 111    160    10N    17W    10    Fairbanks    615216

112

    SPK 112    160    10N    17W    10    Fairbanks    615217

113

    SPK 113    160    10N    18W    8    Fairbanks    615218

114

    SPK 114    160    10N    18W    8    Fairbanks    615219

115

    SPK 115    160    10N    18W    9    Fairbanks    615220

116

    SPK 116    160    10N    18W    9    Fairbanks    615221

117

    SPK 117    160    10N    18W    10    Fairbanks    615222

118

    SPK 118    160    10N    18W    10    Fairbanks    615223

119

    SPK 119    160    10N    18W    11    Fairbanks    615224

120

    SPK 120    160    10N    18W    11    Fairbanks    615225

121

    SPK 121    160    10N    18W    12    Fairbanks    615226

122

    SPK 122    160    10N    18W    12    Fairbanks    615227

123

    SPK 123    160    10N    17W    7    Fairbanks    615228

124

    SPK 124    160    10N    17W    7    Fairbanks    615229

125

    SPK 125    160    10N    17W    8    Fairbanks    615230

126

    SPK 126    160    10N    17W    8    Fairbanks    615231

127

    SPK 127    160    10N    17W    9    Fairbanks    615232

128

    SPK 128    160    10N    17W    9    Fairbanks    615233

129

    SPK 129    160    10N    17W    10    Fairbanks    615234

130

    SPK 130    160    10N    17W    10    Fairbanks    615235

131

    SPK 131    160    10N    18W    17    Fairbanks    615236

132

    SPK 132    160    10N    18W    17    Fairbanks    615237

133

    SPK 133    160    10N    18W    16    Fairbanks    615238

134

    SPK 134    160    10N    18W    16    Fairbanks    615239

135

    SPK 135    160    10N    18W    15    Fairbanks    615240

136

    SPK 136    160    10N    18W    15    Fairbanks    615241

137

    SPK 137    160    10N    18W    14    Fairbanks    615242

138

    SPK 138    160    10N    18W    14    Fairbanks    615243

139

    SPK 139    160    10N    18W    13    Fairbanks    615244

140

    SPK 140    160    10N    18W    13    Fairbanks    615245

141

    SPK 141    160    10N    17W    18    Fairbanks    615246

142

    SPK 142    160    10N    17W    18    Fairbanks    615247

143

    SPK 143    160    10N    17W    17    Fairbanks    615248

144

    SPK 144    160    10N    17W    17    Fairbanks    615249

145

    SPK 145    160    10N    17W    16    Fairbanks    615250

146

    SPK 146    160    10N    17W    16    Fairbanks    615251

147

    SPK 147    160    10N    17W    15    Fairbanks    615252

148

    SPK 148    160    10N    17W    15    Fairbanks    615253

 

29

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

149

    SPK 149    160    10N    18W    17    Fairbanks    615254

150

    SPK 150    160    10N    18W    17    Fairbanks    615255

151

    SPK 151    160    10N    18W    16    Fairbanks    615256

152

    SPK 152    160    10N    18W    16    Fairbanks    615257

153

    SPK 153    160    10N    18W    15    Fairbanks    615258

154

    SPK 154    160    10N    18W    15    Fairbanks    615259

155

    SPK 155    160    10N    18W    14    Fairbanks    615260

156

    SPK 156    160    10N    18W    14    Fairbanks    615261

157

    SPK 157    160    10N    18W    13    Fairbanks    615262

158

    SPK 158    160    10N    18W    13    Fairbanks    615263

159

    SPK 159    160    10N    17W    18    Fairbanks    615264

160

    SPK 160    160    10N    17W    18    Fairbanks    615265

161

    SPK 161    160    10N    17W    17    Fairbanks    615266

162

    SPK 162    160    10N    17W    17    Fairbanks    615267

163

    SPK 163    160    10N    17W    16    Fairbanks    615268

164

    SPK 164    160    10N    17W    16    Fairbanks    615269

165

    SPK 165    160    10N    17W    15    Fairbanks    615270

166

    SPK 166    160    10N    17W    15    Fairbanks    615271

WLF CLAIMS

WOLF PROJECT, ALASKA

All State of Alaska claims located in the Fort Gibbon Recording District, Melozitna Quadrangle, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

1

    WLF 1    160    2S    23E    7    Kateel River    701959

2

    WLF 2    160    2S    23E    7    Kateel River    701960

3

    WLF 3    160    2S    23E    8    Kateel River    701961

4

    WLF 4    160    2S    23E    8    Kateel River    701962

5

    WLF 5    160    2S    23E    9    Kateel River    701963

6

    WLF 6    160    2S    23E    9    Kateel River    701964

7

    WLF 7    160    2S    23E    10    Kateel River    701965

8

    WLF 8    160    2S    23E    10    Kateel River    701966

9

    WLF 9    160    2S    23E    11    Kateel River    701967

10

    WLF 10    160    2S    23E    11    Kateel River    701968

11

    WLF 11    160    2S    23E    12    Kateel River    701969

12

    WLF 12    160    2S    23E    12    Kateel River    701970

13

    WLF 13    160    2S    24E    7    Kateel River    701971

14

    WLF 14    160    2S    24E    7    Kateel River    701972

15

    WLF 15    160    2S    24E    8    Kateel River    701973

16

    WLF 16    160    2S    24E    8    Kateel River    701974

17

    WLF 17    160    2S    23E    7    Kateel River    701975

18

    WLF 18    160    2S    23E    7    Kateel River    701976

19

    WLF 19    160    2S    23E    8    Kateel River    701977

20

    WLF 20    160    2S    23E    8    Kateel River    701978

21

    WLF 21    160    2S    23E    9    Kateel River    701979

22

    WLF 22    160    2S    23E    9    Kateel River    701980

23

    WLF 23    160    2S    23E    10    Kateel River    701981

24

    WLF 24    160    2S    23E    10    Kateel River    701982

25

    WLF 25    160    2S    23E    11    Kateel River    701983

26

    WLF 26    160    2S    23E    11    Kateel River    701984

 

30

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

27

    WLF 27    160    2S    23E    12    Kateel River    701985

28

    WLF 28    160    2S    23E    12    Kateel River    701986

29

    WLF 29    160    2S    24E    7    Kateel River    701987

30

    WLF 30    160    2S    24E    7    Kateel River    701988

31

    WLF 31    160    2S    24E    8    Kateel River    701989

32

    WLF 32    160    2S    24E    8    Kateel River    701990

33

    WLF 33    160    2S    23E    18    Kateel River    701991

34

    WLF 34    160    2S    23E    18    Kateel River    701992

35

    WLF 35    160    2S    23E    17    Kateel River    701993

36

    WLF 36    160    2S    23E    17    Kateel River    701994

37

    WLF 37    160    2S    23E    16    Kateel River    701995

38

    WLF 38    160    2S    23E    16    Kateel River    701996

39

    WLF 39    160    2S    23E    15    Kateel River    701997

40

    WLF 40    160    2S    23E    15    Kateel River    701998

41

    WLF 41    160    2S    23E    14    Kateel River    701999

42

    WLF 42    160    2S    23E    14    Kateel River    702000

43

    WLF 43    160    2S    23E    13    Kateel River    702001

44

    WLF 44    160    2S    23E    13    Kateel River    702002

45

    WLF 45    160    2S    24E    18    Kateel River    702003

46

    WLF 46    160    2S    24E    18    Kateel River    702004

47

    WLF 47    160    2S    24E    17    Kateel River    702005

48

    WLF 48    160    2S    24E    17    Kateel River    702006

49

    WLF 49    160    2S    23E    18    Kateel River    702007

50

    WLF 50    160    2S    23E    18    Kateel River    702008

51

    WLF 51    160    2S    23E    17    Kateel River    702009

52

    WLF 52    160    2S    23E    17    Kateel River    702010

53

    WLF 53    160    2S    23E    16    Kateel River    702011

54

    WLF 54    160    2S    23E    16    Kateel River    702012

55

    WLF 55    160    2S    23E    15    Kateel River    702013

56

    WLF 56    160    2S    23E    15    Kateel River    702014

57

    WLF 57    160    2S    23E    14    Kateel River    702015

58

    WLF 58    160    2S    23E    14    Kateel River    702016

59

    WLF 59    160    2S    23E    13    Kateel River    702017

60

    WLF 60    160    2S    23E    13    Kateel River    702018

61

    WLF 61    160    2S    24E    18    Kateel River    702019

62

    WLF 62    160    2S    24E    18    Kateel River    702020

63

    WLF 63    160    2S    24E    17    Kateel River    702021

64

    WLF 64    160    2S    24E    17    Kateel River    702022

65

    WLF 65    160    2S    23E    19    Kateel River    702023

66

    WLF 66    160    2S    23E    19    Kateel River    702024

67

    WLF 67    160    2S    23E    20    Kateel River    702025

68

    WLF 68    160    2S    23E    20    Kateel River    702026

69

    WLF 69    160    2S    23E    21    Kateel River    702027

70

    WLF 70    160    2S    23E    21    Kateel River    702028

71

    WLF 71    160    2S    23E    22    Kateel River    702029

72

    WLF 72    160    2S    23E    22    Kateel River    702030

73

    WLF 73    160    2S    23E    23    Kateel River    702031

74

    WLF 74    160    2S    23E    23    Kateel River    702032

75

    WLF 75    160    2S    23E    24    Kateel River    702033

76

    WLF 76    160    2S    23E    24    Kateel River    702034

77

    WLF 77    160    2S    24E    19    Kateel River    702035

 

31

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

78

    WLF 78    160    2S    24E    19    Kateel River    702036

79

    WLF 79    160    2S    24E    20    Kateel River    702037

80

    WLF 80    160    2S    24E    20    Kateel River    702038

81

    WLF 81    160    2S    23E    19    Kateel River    702039

82

    WLF 82    160    2S    23E    19    Kateel River    702040

83

    WLF 83    160    2S    23E    20    Kateel River    702041

84

    WLF 84    160    2S    23E    20    Kateel River    702042

85

    WLF 85    160    2S    23E    21    Kateel River    702043

86

    WLF 86    160    2S    23E    21    Kateel River    702044

87

    WLF 87    160    2S    23E    22    Kateel River    702045

88

    WLF 88    160    2S    23E    22    Kateel River    702046

89

    WLF 89    160    2S    23E    23    Kateel River    702047

90

    WLF 90    160    2S    23E    23    Kateel River    702048

91

    WLF 91    160    2S    23E    24    Kateel River    702049

92

    WLF 92    160    2S    23E    24    Kateel River    702050

93

    WLF 93    160    2S    24E    19    Kateel River    702051

94

    WLF 94    160    2S    24E    19    Kateel River    702052

95

    WLF 95    160    2S    24E    20    Kateel River    702053

96

    WLF 96    160    2S    24E    20    Kateel River    702054

97

    WLF 97    160    2S    23E    30    Kateel River    702055

98

    WLF 98    160    2S    23E    30    Kateel River    702056

99

    WLF 99    160    2S    23E    29    Kateel River    702057

100

    WLF 100    160    2S    23E    29    Kateel River    702058

101

    WLF 101    160    2S    23E    28    Kateel River    702059

102

    WLF 102    160    2S    23E    28    Kateel River    702060

103

    WLF 103    160    2S    23E    27    Kateel River    702061

104

    WLF 104    160    2S    23E    27    Kateel River    702062

105

    WLF 105    160    2S    23E    26    Kateel River    702063

106

    WLF 106    160    2S    23E    26    Kateel River    702064

107

    WLF 107    160    2S    23E    25    Kateel River    702065

108

    WLF 108    160    2S    23E    25    Kateel River    702066

109

    WLF 109    160    2S    24E    30    Kateel River    702067

110

    WLF 110    160    2S    24E    30    Kateel River    702068

111

    WLF 111    160    2S    24E    29    Kateel River    702069

112

    WLF 112    160    2S    24E    29    Kateel River    702070

113

    WLF 113    160    2S    23E    30    Kateel River    702071

114

    WLF 114    160    2S    23E    30    Kateel River    702072

115

    WLF 115    160    2S    23E    29    Kateel River    702073

116

    WLF 116    160    2S    23E    29    Kateel River    702074

117

    WLF 117    160    2S    23E    28    Kateel River    702075

118

    WLF 118    160    2S    23E    28    Kateel River    702076

119

    WLF 119    160    2S    23E    27    Kateel River    702077

120

    WLF 120    160    2S    23E    27    Kateel River    702078

121

    WLF 121    160    2S    23E    26    Kateel River    702079

122

    WLF 122    160    2S    23E    26    Kateel River    702080

123

    WLF 123    160    2S    23E    25    Kateel River    702081

124

    WLF 124    160    2S    23E    25    Kateel River    702082

125

    WLF 125    160    2S    24E    30    Kateel River    702083

126

    WLF 126    160    2S    24E    30    Kateel River    702084

127

    WLF 127    160    2S    24E    29    Kateel River    702085

128

    WLF 128    160    2S    24E    29    Kateel River    702086

 

32

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

129

    WLF 129    160    2S    23E    31    Kateel River    702087

130

    WLF 130    160    2S    23E    31    Kateel River    702088

131

    WLF 131    160    2S    23E    32    Kateel River    702089

132

    WLF 132    160    2S    23E    32    Kateel River    702090

133

    WLF 133    160    2S    23E    33    Kateel River    702091

134

    WLF 134    160    2S    23E    33    Kateel River    702092

135

    WLF 135    160    2S    23E    34    Kateel River    702093

136

    WLF 136    160    2S    23E    34    Kateel River    702094

137

    WLF 137    160    2S    23E    35    Kateel River    702095

138

    WLF 138    160    2S    23E    35    Kateel River    702096

139

    WLF 139    160    2S    23E    36    Kateel River    702097

140

    WLF 140    160    2S    23E    36    Kateel River    702098

141

    WLF 141    160    2S    24E    31    Kateel River    702099

142

    WLF 142    160    2S    24E    31    Kateel River    702100

143

    WLF 143    160    2S    24E    32    Kateel River    702101

144

    WLF 144    160    2S    24E    32    Kateel River    702102

145

    WLF 145    160    2S    23E    31    Kateel River    702103

146

    WLF 146    160    2S    23E    31    Kateel River    702104

147

    WLF 147    160    2S    23E    32    Kateel River    702105

148

    WLF 148    160    2S    23E    32    Kateel River    702106

149

    WLF 149    160    2S    23E    33    Kateel River    702107

150

    WLF 150    160    2S    23E    33    Kateel River    702108

151

    WLF 151    160    2S    23E    34    Kateel River    702109

152

    WLF 152    160    2S    23E    34    Kateel River    702110

153

    WLF 153    160    2S    23E    35    Kateel River    702111

154

    WLF 154    160    2S    23E    35    Kateel River    702112

155

    WLF 155    160    2S    23E    36    Kateel River    702113

156

    WLF 156    160    2S    23E    36    Kateel River    702114

157

    WLF 157    160    2S    24E    31    Kateel River    702115

158

    WLF 158    160    2S    24E    31    Kateel River    702116

159

    WLF 159    160    2S    24E    32    Kateel River    702117

160

    WLF 160    160    2S    24E    32    Kateel River    702118

161

    WLF 161    160    3S    23E    6    Kateel River    702119

162

    WLF 162    160    3S    23E    6    Kateel River    702120

163

    WLF 163    160    3S    23E    5    Kateel River    702121

164

    WLF 164    160    3S    23E    5    Kateel River    702122

165

    WLF 165    160    3S    23E    4    Kateel River    702123

166

    WLF 166    160    3S    23E    4    Kateel River    702124

167

    WLF 167    160    3S    23E    3    Kateel River    702125

168

    WLF 168    160    3S    23E    3    Kateel River    702126

169

    WLF 169    160    3S    23E    2    Kateel River    702127

170

    WLF 170    160    3S    23E    2    Kateel River    702128

171

    WLF 171    160    3S    23E    1    Kateel River    702129

172

    WLF 172    160    3S    23E    1    Kateel River    702130

173

    WLF 173    160    3S    24E    6    Kateel River    702131

174

    WLF 174    160    3S    24E    6    Kateel River    702132

175

    WLF 175    160    3S    24E    5    Kateel River    702133

176

    WLF 176    160    3S    24E    5    Kateel River    702134

177

    WLF 177    160    3S    23E    6    Kateel River    702135

178

    WLF 178    160    3S    23E    6    Kateel River    702136

179

    WLF 179    160    3S    23E    5    Kateel River    702137

 

33

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

180

    WLF 180    160    3S    23E    5    Kateel River    702138

181

    WLF 181    160    3S    23E    4    Kateel River    702139

182

    WLF 182    160    3S    23E    4    Kateel River    702140

183

    WLF 183    160    3S    23E    3    Kateel River    702141

184

    WLF 184    160    3S    23E    3    Kateel River    702142

185

    WLF 185    160    3S    23E    2    Kateel River    702143

186

    WLF 186    160    3S    23E    2    Kateel River    702144

187

    WLF 187    160    3S    23E    1    Kateel River    702145

188

    WLF 188    160    3S    23E    1    Kateel River    702146

189

    WLF 189    160    3S    24E    6    Kateel River    702147

190

    WLF 190    160    3S    24E    6    Kateel River    702148

191

    WLF 191    160    3S    24E    5    Kateel River    702149

192

    WLF 192    160    3S    24E    5    Kateel River    702150

193

    WLF 193    160    3S    23E    7    Kateel River    702151

194

    WLF 194    160    3S    23E    7    Kateel River    702152

195

    WLF 195    160    3S    23E    8    Kateel River    702153

196

    WLF 196    160    3S    23E    8    Kateel River    702154

197

    WLF 197    160    3S    23E    9    Kateel River    702155

198

    WLF 198    160    3S    23E    9    Kateel River    702156

199

    WLF 199    160    3S    23E    7    Kateel River    702157

200

    WLF 200    160    3S    23E    7    Kateel River    702158

201

    WLF 201    160    3S    23E    8    Kateel River    702159

202

    WLF 202    160    3S    23E    8    Kateel River    702160

SWF CLAIMS

SWIFT PROJECT, ALASKA

All State of Alaska claims located in the Kuskokwim Recording District, Lime Hills Quadrangle, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

1

    SWF 17    160    17N    28W    24    Seward    701801

2

    SWF 18    160    17N    28W    24    Seward    701802

3

    SWF 19    160    17N    27W    19    Seward    701803

4

    SWF 20    160    17N    27W    19    Seward    701804

5

    SWF 21    160    17N    27W    20    Seward    701805

6

    SWF 22    160    17N    28W    24    Seward    701806

7

    SWF 23    160    17N    28W    24    Seward    701807

8

    SWF 24    160    17N    27W    19    Seward    701808

9

    SWF 25    160    17N    27W    19    Seward    701809

10

    SWF 26    160    17N    27W    20    Seward    701810

11

    SWF 27    160    17N    27W    20    Seward    701811

12

    SWF 28    160    17N    28W    25    Seward    701812

13

    SWF 29    160    17N    28W    25    Seward    701813

14

    SWF 30    160    17N    27W    30    Seward    701814

15

    SWF 31    160    17N    27W    30    Seward    701815

16

    SWF 32    160    17N    27W    29    Seward    701816

17

    SWF 33    160    17N    27W    29    Seward    701817

18

    SWF 34    160    17N    28W    25    Seward    701818

19

    SWF 35    160    17N    28W    25    Seward    701819

20

    SWF 36    160    17N    27W    30    Seward    701820

 

34

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

21

    SWF 37    160    17N    27W    30    Seward    701821

22

    SWF 38    160    17N    27W    29    Seward    701822

23

    SWF 39    160    17N    27W    29    Seward    701823

24

    SWF 40    160    17N    27W    28    Seward    701824

25

    SWF 41    160    17N    28W    36    Seward    701825

26

    SWF 42    160    17N    28W    36    Seward    701826

27

    SWF 43    160    17N    27W    31    Seward    701827

28

    SWF 44    160    17N    27W    31    Seward    701828

29

    SWF 45    160    17N    27W    32    Seward    701829

30

    SWF 46    160    17N    27W    32    Seward    701830

31

    SWF 47    160    17N    27W    33    Seward    701831

32

    SWF 48    160    17N    27W    33    Seward    701832

33

    SWF 49    160    17N    28W    36    Seward    701833

34

    SWF 50    160    17N    28W    36    Seward    701834

35

    SWF 51    160    17N    27W    31    Seward    701835

36

    SWF 52    160    17N    27W    31    Seward    701836

37

    SWF 53    160    17N    27W    32    Seward    701837

38

    SWF 54    160    17N    27W    32    Seward    701838

39

    SWF 55    160    17N    27W    33    Seward    701839

40

    SWF 56    160    17N    27W    33    Seward    701840

41

    SWF 57    160    17N    27W    34    Seward    701841

42

    SWF 145    160    16N    27W    19    Seward    701842

43

    SWF 146    160    16N    27W    19    Seward    701843

44

    SWF 147    160    16N    27W    20    Seward    701844

45

    SWF 148    160    16N    27W    20    Seward    701845

46

    SWF 149    160    16N    27W    21    Seward    701846

47

    SWF 150    160    16N    27W    21    Seward    701847

48

    SWF 151    160    16N    27W    22    Seward    701848

49

    SWF 155    160    16N    28W    22    Seward    701849

50

    SWF 156    160    16N    28W    22    Seward    701850

51

    SWF 157    160    16N    28W    23    Seward    701851

52

    SWF 158    160    16N    28W    23    Seward    701852

53

    SWF 159    160    16N    28W    24    Seward    701853

54

    SWF 160    160    16N    28W    24    Seward    701854

55

    SWF 161    160    16N    27W    19    Seward    701855

56

    SWF 162    160    16N    27W    19    Seward    701856

57

    SWF 163    160    16N    27W    20    Seward    701857

58

    SWF 164    160    16N    27W    20    Seward    701858

59

    SWF 165    160    16N    27W    21    Seward    701859

60

    SWF 166    160    16N    27W    21    Seward    701860

61

    SWF 167    160    16N    27W    22    Seward    701861

62

    SWF 171    160    16N    28W    27    Seward    701862

63

    SWF 172    160    16N    28W    27    Seward    701863

64

    SWF 173    160    16N    28W    26    Seward    701864

65

    SWF 174    160    16N    28W    26    Seward    701865

66

    SWF 175    160    16N    28W    25    Seward    701866

67

    SWF 176    160    16N    28W    25    Seward    701867

68

    SWF 177    160    16N    27W    30    Seward    701868

69

    SWF 178    160    16N    27W    30    Seward    701869

70

    SWF 179    160    16N    27W    29    Seward    701870

71

    SWF 180    160    16N    27W    29    Seward    701871

 

35

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    ADL #

72

    SWF 181    160    16N    27W    28    Seward    701872

73

    SWF 182    160    16N    27W    28    Seward    701873

74

    SWF 183    160    16N    27W    27    Seward    701874

75

    SWF 187    160    16N    28W    27    Seward    701875

76

    SWF 188    160    16N    28W    27    Seward    701876

77

    SWF 189    160    16N    28W    26    Seward    701877

78

    SWF 190    160    16N    28W    26    Seward    701878

79

    SWF 191    160    16N    28W    25    Seward    701879

80

    SWF 192    160    16N    28W    25    Seward    701880

81

    SWF 193    160    16N    27W    30    Seward    701881

82

    SWF 194    160    16N    27W    30    Seward    701882

83

    SWF 195    160    16N    27W    29    Seward    701883

84

    SWF 196    160    16N    27W    29    Seward    701884

85

    SWF 197    160    16N    27W    28    Seward    701885

86

    SWF 198    160    16N    27W    28    Seward    701886

87

    SWF 199    160    16N    27W    27    Seward    701887

88

    SWF 203    160    16N    28W    34    Seward    701888

89

    SWF 204    160    16N    28W    34    Seward    701889

90

    SWF 205    160    16N    28W    35    Seward    701890

91

    SWF 206    160    16N    28W    35    Seward    701891

92

    SWF 207    160    16N    28W    36    Seward    701892

93

    SWF 208    160    16N    28W    36    Seward    701893

94

    SWF 209    160    16N    27W    31    Seward    701894

95

    SWF 210    160    16N    27W    31    Seward    701895

96

    SWF 211    160    16N    27W    32    Seward    701896

97

    SWF 212    160    16N    27W    32    Seward    701897

98

    SWF 213    160    16N    27W    33    Seward    701898

99

    SWF 214    160    16N    27W    33    Seward    701899

100

    SWF 215    160    16N    27W    34    Seward    701900

101

    SWF 219    160    16N    28W    34    Seward    701901

102

    SWF 220    160    16N    28W    34    Seward    701902

103

    SWF 221    160    16N    28W    35    Seward    701903

104

    SWF 222    160    16N    28W    35    Seward    701904

105

    SWF 223    160    16N    28W    36    Seward    701905

106

    SWF 224    160    16N    28W    36    Seward    701906

107

    SWF 225    160    16N    27W    31    Seward    701907

108

    SWF 226    160    16N    27W    31    Seward    701908

109

    SWF 227    160    16N    27W    32    Seward    701909

110

    SWF 228    160    16N    27W    32    Seward    701910

111

    SWF 229    160    16N    27W    33    Seward    701911

112

    SWF 230    160    16N    27W    33    Seward    701912

113

    SWF 231    160    16N    27W    34    Seward    701913

 

36

Table of Contents
Index to Financial Statements

SAL CLAIMS

SALMON BAY PROJECT, ALASKA

All unpatented Federal lode claims located in the Petersburg Recording District, Petersburg Quadrangle, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    AA #

1

    SAL 1    20    64S    78E    11    Copper River    92532

2

    SAL 2    20    64S    78E    11    Copper River    92533

3

    SAL 3    20    64S    78E    10    Copper River    92534

4

    SAL 4    20    64S    78E    11    Copper River    92535

5

    SAL 5    20    64S    78E    10    Copper River    92536

6

    SAL 6    20    64S    78E    11    Copper River    92537

7

    SAL 7    20    64S    78E    11    Copper River    92538

8

    SAL 8    20    64S    78E    10    Copper River    92539

9

    SAL 9    20    64S    78E    11    Copper River    92540

10

    SAL 10    20    64S    78E    11    Copper River    92541

11

    SAL 11    20    64S    78E    11    Copper River    92542

12

    SAL 12    20    64S    78E    10    Copper River    92543

13

    SAL 13    20    64S    78E    11    Copper River    92544

14

    SAL 14    20    64S    78E    11    Copper River    92545

15

    SAL 15    20    64S    78E    11    Copper River    92546

16

    SAL 16    20    64S    78E    12    Copper River    92547

17

    SAL 17    20    64S    78E    14    Copper River    92548

18

    SAL 18    20    64S    78E    13    Copper River    92549

19

    SAL 19    20    64S    78E    13    Copper River    92550

20

    SAL 20    20    64S    78E    14    Copper River    92551

21

    SAL 21    20    64S    78E    13    Copper River    92552

22

    SAL 22    20    64S    78E    14    Copper River    92553

23

    SAL 23    20    64S    78E    13    Copper River    92554

24

    SAL 24    20    64S    78E    13    Copper River    92555

25

    SAL 25    20    64S    78E    14    Copper River    92556

26

    SAL 26    20    64S    78E    13    Copper River    92557

27

    SAL 27    20    64S    78E    13    Copper River    92558

28

    SAL 28    20    64S    78E    14    Copper River    92559

29

    SAL 29    20    64S    78E    13    Copper River    92560

30

    SAL 30    20    64S    78E    13    Copper River    92561

31

    SAL 31    20    64S    78E    14    Copper River    92562

32

    SAL 32    20    64S    78E    13    Copper River    92563

33

    SAL 33    20    64S    78E    13    Copper River    92564

34

    SAL 34    20    64S    78E    13    Copper River    92565

35

    SAL 35    20    64S    78E    14    Copper River    92566

36

    SAL 36    20    64S    78E    14    Copper River    92567

37

    SAL 37    20    64S    78E    13    Copper River    92568

38

    SAL 38    20    64S    78E    13    Copper River    92569

39

    SAL 39    20    64S    78E    13    Copper River    92570

40

    SAL 40    20    64S    78E    14    Copper River    92571

41

    SAL 41    20    64S    78E    14    Copper River    92572

42

    SAL 42    20    64S    78E    13    Copper River    92573

43

    SAL 43    20    64S    78E    13    Copper River    92574

44

    SAL 44    20    64S    78E    13    Copper River    92575

45

    SAL 45    20    64S    78E    14    Copper River    92576

46

    SAL 46    20    64S    78E    14    Copper River    92577

 

37

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    AA #

47

    SAL 47    20    64S    78E    13    Copper River    92578

48

    SAL 48    20    64S    78E    13    Copper River    92579

49

    SAL 49    20    64S    78E    13    Copper River    92580

50

    SAL 50    20    64S    78E    23    Copper River    92581

51

    SAL 51    20    64S    78E    23    Copper River    92582

52

    SAL 52    20    64S    78E    24    Copper River    92583

53

    SAL 53    20    64S    78E    24    Copper River    92584

54

    SAL 54    20    64S    78E    24    Copper River    92585

55

    SAL 55    20    64S    78E    23    Copper River    92586

56

    SAL 56    20    64S    78E    23    Copper River    92587

57

    SAL 57    20    64S    78E    24    Copper River    92588

58

    SAL 58    20    64S    78E    24    Copper River    92589

59

    SAL 59    20    64S    78E    24    Copper River    92590

60

    SAL 60    20    64S    78E    23    Copper River    92591

61

    SAL 61    20    64S    78E    23    Copper River    92592

62

    SAL 62    20    64S    78E    24    Copper River    92593

63

    SAL 63    20    64S    78E    24    Copper River    92594

64

    SAL 64    20    64S    78E    24    Copper River    92595

65

    SAL 65    20    64S    78E    23    Copper River    92596

66

    SAL 66    20    64S    78E    23    Copper River    92597

67

    SAL 67    20    64S    78E    24    Copper River    92598

68

    SAL 68    20    64S    78E    24    Copper River    92599

69

    SAL 69    20    64S    78E    24    Copper River    92600

70

    SAL 70    20    64S    78E    25    Copper River    92601

71

    SAL 71    20    64S    78E    25    Copper River    92602

72

    SAL 72    20    64S    78E    25    Copper River    92603

73

    SAL 73    20    64S    79E    30    Copper River    92604

74

    SAL 74    20    64S    78E    25    Copper River    92605

75

    SAL 75    20    64S    78E    25    Copper River    92606

76

    SAL 76    20    64S    78E    25    Copper River    92607

77

    SAL 77    20    64S    79E    30    Copper River    92608

78

    SAL 78    20    64S    78E    25    Copper River    92609

79

    SAL 79    20    64S    78E    25    Copper River    92610

80

    SAL 80    20    64S    78E    25    Copper River    92611

81

    SAL 81    20    64S    79E    30    Copper River    92612

82

    SAL 82    20    64S    78E    25    Copper River    92613

83

    SAL 83    20    64S    78E    25    Copper River    92614

84

    SAL 84    20    64S    78E    25    Copper River    92615

85

    SAL 85    20    64S    79E    30    Copper River    92616

86

    SAL 86    20    64S    79E    30    Copper River    92617

87

    SAL 87    20    64S    78E    25    Copper River    92618

88

    SAL 88    20    64S    78E    25    Copper River    92619

89

    SAL 89    20    64S    78E    25    Copper River    92620

90

    SAL 90    20    64S    79E    30    Copper River    92621

91

    SAL 91    20    64S    78E    25    Copper River    92622

92

    SAL 92    20    64S    78E    25    Copper River    92623

93

    SAL 93    20    64S    78E    25    Copper River    92624

94

    SAL 94    20    64S    79E    30    Copper River    92625

95

    SAL 95    20    64S    78E    25    Copper River    92626

96

    SAL 96    20    64S    78E    25    Copper River    92627

97

    SAL 97    20    64S    78E    25    Copper River    92628

 

38

Table of Contents
Index to Financial Statements

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    AA #

98

    SAL 98    20    64S    79E    30    Copper River    92629

99

    SAL 99    20    64S    79E    30    Copper River    92630

100

    SAL 100    20    64S    78E    25    Copper River    92631

101

    SAL 101    20    64S    78E    25    Copper River    92632

102

    SAL 102    20    64S    78E    25    Copper River    92633

103

    SAL 103    20    64S    79E    30    Copper River    92634

104

    SAL 104    20    64S    79E    31    Copper River    92635

105

    SAL 105    20    64S    79E    31    Copper River    92636

106

    SAL 106    20    64S    79E    31    Copper River    92637

107

    SAL 107    20    64S    79E    31    Copper River    92638

108

    SAL 108    20    64S    79E    31    Copper River    92639

109

    SAL 109    20    64S    79E    31    Copper River    92640

110

    SAL 110    20    64S    79E    31    Copper River    92641

111

    SAL 111    20    64S    79E    32    Copper River    92642

112

    SAL 112    20    64S    79E    31    Copper River    92643

113

    SAL 113    20    64S    79E    31    Copper River    92644

114

    SAL 114    20    64S    79E    31    Copper River    92645

115

    SAL 115    20    64S    79E    32    Copper River    92646

116

    SAL 116    20    64S    79E    31    Copper River    92647

117

    SAL 117    20    64S    79E    31    Copper River    92648

118

    SAL 118    20    64S    79E    31    Copper River    92649

119

    SAL 119    20    64S    79E    32    Copper River    92650

120

    SAL 120    20    64S    79E    31    Copper River    92651

121

    SAL 121    20    64S    79E    31    Copper River    92652

122

    SAL 122    20    64S    79E    31    Copper River    92653

123

    SAL 123    20    64S    79E    32    Copper River    92654

124

    SAL 124    20    64S    79E    31    Copper River    92655

125

    SAL 125    20    64S    79E    31    Copper River    92656

126

    SAL 126    20    64S    79E    31    Copper River    92657

127

    SAL 127    20    65S    79E    1    Copper River    92658

GB, MC and SR CLAIMS

STONE ROCK BAY PROJECT, ALASKA

All unpatented Federal lode a claims located in the Ketchikan Recording District,

Prince Rupert Quadrangle and Dixon Entrance Quadrangle, Alaska

 

No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    AA #

1

    GB 1    20    81S    90E    21    Copper River    92522

2

    GB 2    20    81S    90E    21    Copper River    92523

3

    GB 3    20    81S    90E    21    Copper River    92524

4

    GB 4    20    81S    90E    21    Copper River    92525

5

    GB 5    20    81S    90E    28    Copper River    92526

6

    GB 6    20    81S    90E    28    Copper River    92527

7

    GB 7    20    81S    90E    28    Copper River    92528

8

    GB 8    20    81S    90E    28    Copper River    92529

9

    GB 9    20    81S    90E    28    Copper River    92530

10

    GB 10    20    81S    90E    28    Copper River    92531

11

    MC 1    20    82S    90E    4    Copper River    92483

12

    MC 2    20    82S    90E    4    Copper River    92484

13

    MC 3    20    82S    90E    4    Copper River    92485

14

    MC 4    20    82S    90E    4    Copper River    92486

 

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No.

   

Claim Name

    Acres    Township    Range    Section   

Meridian

    AA #

15

    MC 5    20    82S    90E    4    Copper River    92487

16

    MC 6    20    82S    90E    4    Copper River    92488

17

    MC 7    20    82S    90E    4    Copper River    92489

18

    MC 8    20    82S    90E    4    Copper River    92490

19

    MC 9    20    82S    90E    4    Copper River    92491

20

    MC 10    20    82S    90E    4    Copper River    92492

21

    MC 11    20    82S    90E    4    Copper River    92493

22

    MC 12    20    82S    90E    4    Copper River    92494

23

    MC 13    20    82S    90E    4    Copper River    92495

24

    MC 14    20    82S    90E    4    Copper River    92496

25

    MC 15    20    82S    90E    4    Copper River    92497

26

    SR 1    20    82S    90E    7    Copper River    92498

27

    SR 2    20    82S    90E    8    Copper River    92499

28

    SR 3    20    82S    90E    7    Copper River    92500

29

    SR 4    20    82S    90E    8    Copper River    92501

30

    SR 5    20    82S    90E    7    Copper River    92502

31

    SR 6    20    82S    90E    8    Copper River    92503

32

    SR 7    20    82S    90E    8    Copper River    92504

33

    SR 8    20    82S    90E    7    Copper River    92505

34

    SR 9    20    82S    90E    8    Copper River    92506

35

    SR 10    20    82S    90E    8    Copper River    92507

36

    SR 11    20    82S    90E    7    Copper River    92508

37

    SR 12    20    82S    90E    8    Copper River    92509

38

    SR 13    20    82S    90E    8    Copper River    92510

39

    SR 14    20    82S    90E    7    Copper River    92511

40

    SR 15    20    82S    90E    8    Copper River    92512

41

    SR 16    20    82S    90E    8    Copper River    92513

42

    SR 17    20    82S    90E    7    Copper River    92514

43

    SR 18    20    82S    90E    8    Copper River    92515

44

    SR 19    20    82S    90E    8    Copper River    92516

45

    SR 20    20    82S    90E    7    Copper River    92517

46

    SR 21    20    82S    90E    8    Copper River    92518

47

    SR 22    20    82S    90E    8    Copper River    92519

48

    SR 23    20    82S    90E    17    Copper River    92520

49

    SR 24    20    82S    90E    17    Copper River    92521

Location and Access of our Properties

Our Gold Properties are located in the eastern interior region of Alaska. Access to the Tetlin Properties and the Tetlin Project claims is available by road and access to public power is available. The Triple Z Project claims are accessible via an ATV trail from the public road. There is no commercial power available.

Our REE Properties are located throughout the State of Alaska. The Salmon Bay and Stone Rock Bay Project claims are located in the southeastern region of the state. Salmon Bay and Stone Rock are accessible only by aircraft or sea. No commercial sources of power are available. The Altana, Spooky and Wolf Project claims are located in the interior region and the Swift Project claims are located in western region of Alaska. The Alatna, Spooky, Wolf and Swift claims are accessible by aircraft only and no commercial sources of power are available.

In general, water rights are acquired on an as-needed basis from the State of Alaska Department of Natural Resources, Division of Mining, Land and Water. Potential water sources include both surface and subsurface

 

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waters. Water right applications can be either temporary (seasonal rights) or permanent, such as an operating mine would require. We will obtain water rights as necessary to carry out our exploration programs on our Properties. A temporary water use permit will be required as part of the drilling program envisioned for 2011. Such rights normally take approximately one month to acquire via permit.

Prior to JEX’s acquisition of the Properties, to the Company’s knowledge, the Properties had not been previously explored for minerals.

LOGO

 

41

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Index to Financial Statements

Fees

The following tables set forth the annual State of Alaska and Federal mining claim rental holding costs for the Company’s Alaska projects. Federal mining claim rents are due and payable in full by August 31 of each year and State of Alaska mining claim rents are due and payable by November 30 of each year.

 

Gold/Copper Claims:

    Triple Z      Tok/Tetlin      Totals  

# 160 Acre Claims

      4         54         58   

# 40 Acre Claims

      0         68         68   

# 20 Acre Fed claims

      0         0         0   

Total Acres

      640         11461         12,101   

State Claim Rents - 160-acre

    $ 560.00       $ 7,560.00       $ 8,120   

State Claim Rents - 40-acre

    $ 0.00       $ 2,380.00       $ 2,380   

Fed Claim Rents - 20-acre

    $ 0.00       $ 0.00       $ 0   
                          

Totals

    $ 560.00       $ 9,940.00       $ 10,500.00   
                          

 

REE Claims:

   Stone Rock     Swift River     Spooky     Wolf     Alatna     Salmon Bay     Totals  

# 160 Acre Claims

     0        113        166        202        127        0        608   

# 40 Acre Claims

     0        0        0        0        0        0        0   

# 20 Acre Fed claims

     49        0        0        0        0        127        176   

Total Acres

     980        18080        26560        32320        20320        2540        100,800   

State Claim Rents—160-acre

   $ 0.00      $ 15,820.00      $ 23,240.00      $ 28,280.00      $ 17,780.00      $ 0.00      $ 85,120   

State Claim Rents—40-acre

   $ 0.00      $ 0.00      $ 0.00      $ 0.00      $ 0.00      $ 0.00      $ 0   

Fed Claim Rents— 20-acre

   $ 6,860.00      $ 0.00      $ 0.00      $ 0.00      $ 0.00      $ 17,780.00      $ 24,640   
                                                       

Totals

   $ 6,860.00      $ 15,820.00      $ 23,240.00      $ 28,280.00      $ 17,780.00      $ 17,780.00      $ 109,760.00   
                                                       

Acquisition of Other Properties

The Company anticipates from time to time acquiring additional properties in Alaska for exploration. The acquisitions may include leases or similar rights from Alaska Native corporations or may include filing Federal or State of Alaska mining claims by staking claims for exploration and development. Acquiring additional properties will likely result in additional expense to the Company for minimum royalties, minimum rents and annual exploratory work requirements. The Company has entered into a Consulting Agreement with the Chief of the Native Village of Tetlin to assist the Company in acquiring additional properties on other Alaska native lands, as well as facilitating meetings with State of Alaska and Federal officials at a cost of $5,000 per month plus possible bonus payments.

Overriding Royalty Interest

In consideration of JEX’s assignment of all its interest in the Properties to Contango Mining, Contango Mining conveyed an overriding royalty interest to JEX which provides that JEX will receive an aggregate 3% of 8/8ths overriding royalty interest on all minerals mined from the Properties held by the Company as of September 15, 2010.

 

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Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Contango currently owns all of our outstanding shares of common stock. The following tables set forth the anticipated beneficial ownership of our common stock immediately following the Distribution by (i) those that we expect to be beneficial owners of more than five percent of our outstanding common stock immediately upon the Distribution, (ii) each of our directors and named executive officers, and (iii) all directors and executive officers as a group, in each case based on (A) information available to us concerning ownership of Contango common stock as of October 15, 2010 and (B) the distribution ratio of one share of our common stock for ten shares of the common stock of Contango. Immediately following the Distribution, we estimate that approximately 1.6 million shares of our common stock will be issued and outstanding, based upon the number of shares of common stock of Contango expected to be outstanding as of the record date.

Our 5% Stockholders

 

Title of Class

   

Name and Address of Beneficial Owner (1)

    Expected
Amount of
Ownership (2)		      Percent of
Outstanding
Shares		  

Common Stock

    Kenneth R. Peak      298,292         19 % 

Directors and Executive Officers

 

Title of Class

   

Name and Address of Beneficial Owner (1)

    Expected
Amount of
Ownership (2)		      Percent of
Outstanding
Shares		  
   Directors Who Are Not Employees      

Common Stock

    Joseph G. Greenberg      11,250         *   

Common Stock

    Joseph Compofelice      11,250         *   
   Executive Officers      

Common Stock

    Kenneth R. Peak      298,292         19 % 

Common Stock

    Sergio Castro      11,550         *   

Common Stock

    Yaroslava Makalskaya      11,250         *   
   Directors and Executives Combined      

Common Stock

    All current directors and executive officers as a group persons (5 persons)      343,592         22 % 

 

* Less than 1%.
(1) Unless otherwise noted, the address of the members of the Board and our executive officers is 3700 Buffalo Speedway, Suite 960, Houston, Texas 70098.
(2) Beneficial ownership is determined in accordance with the rules of the SEC. Shares of common stock underlying convertible securities, options and warrants that are currently exercisable or exercisable within 60 days of the date of the Distribution are deemed to be outstanding and to be beneficially owned by the person holding such securities, options or warrants for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. To the Company’s knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name.

 

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Item 5. DIRECTORS AND EXECUTIVE OFFICERS.

The following table sets forth certain information regarding the directors and executive officers of the Company as of October 15, 2010.

 

Name

    Age   

Position(s)

Kenneth R. Peak

    65    Chairman of the Board, President, Chief Executive Officer and Director

Sergio Castro

    41    Vice President, Chief Financial Officer and Secretary

Yaroslava Makalskaya

    41    Vice President and Controller

Joseph Compofelice

    61    Director

Joseph G. Greenberg

    49    Director

Kenneth R. Peak. Mr. Peak has been Chairman of the Board, President, Chief Executive Officer and a director of the Company since its inception as a wholly-owned subsidiary of Contango. Mr. Peak founded Contango in 1999 and is currently the Chairman and Chief Executive Officer of Contango. Mr. Peak entered the energy industry in 1973 as a commercial banker and held a variety of financial and executive positions in the oil and gas industry prior to founding Contango in 1999. Mr. Peak served as an officer in the U.S. Navy from 1968 to 1971. Mr. Peak received a BS in physics from Ohio University in 1967, and a MBA from Columbia University in 1972. He currently serves as a director of Patterson-UTI Energy, Inc., a provider of onshore contract drilling services to exploration and production companies in North America.

Sergio Castro. Mr. Castro has been Vice President, Chief Financial Officer and Secretary of the Company since its inception. Mr. Castro joined Contango in March 2006 as Treasurer, was appointed Vice President and Treasurer in April 2006 and Chief Financial Officer in June 2010. Prior to joining Contango, Mr. Castro was a Consultant for UHY Advisors TX, LP from 2004 to 2006. From 2001 to 2004, Mr. Castro was a lead credit analyst for Dynegy Inc. From 1997 to 2001, Mr. Castro worked as an auditor for Arthur Andersen LLP, where he specialized in energy companies. Mr. Castro was honorably discharged from the U.S. Navy in 1993 as an E-6, where he served onboard a nuclear powered submarine. Mr. Castro received a BBA in Accounting in 1997 from the University of Houston, graduating summa cum laude. Mr. Castro is a Certified Public Accountant and Certified Fraud Examiner.

Yaroslava Makalskaya. Ms. Makalskaya has been Vice President and Controller of the Company since its inception. Ms. Makalskaya has been Vice President and Controller of Contango since June 2010. Prior to joining Contango, Ms. Makalskaya was a director at the Transaction Services practice of PricewaterhouseCoopers from July 2008 to March 2010, where she assisted clients with IPOs, M&A transactions as well as advised clients with complex accounting and financial reporting issues. From 2001 to June 2008, Ms. Makalskaya was in the audit practice of PricewaterhouseCoopers, and from 1996 to 2001, in the audit practice of Arthur Andersen. Ms. Makalskaya holds a MS degree in economics from Novosibirsk State University in Russia. Ms. Makalskaya is a CPA and has over eighteen years of work experience in accounting and finance, including over thirteen years in public accounting.

Joseph Compofelice. Mr. Compofelice has been a director of the Company since its inception. Mr. Compofelice has served as Managing Director of Houston Capital Advisors, a boutique financial advisory, mergers and acquisitions investment service since January 2004. Mr. Compofelice served as Chairman of the Board of Trico Marine Service, a provider of marine support vessels serving the international natural gas and oil industry, from 2004 to 2010 and as its Chief Executive Officer from 2007 to 2010. Mr. Compofelice was President and Chief Executive Officer of Aquilex Services Corp., a service and equipment provider to the power generation industry, from October 2001 to October 2003. From February 1998 to October 2000 he was Chairman and CEO of CompX International Inc., a provider of components to the office furniture, computer and transportation industries. From March 1994 to May 1998 he was Chief Financial Officer of NL Industries, a chemical producer, Titanium Metals Corporation, a metal producer and Tremont Corp. Mr. Compofelice received his BS at California State University at Los Angeles and his MBA at Pepperdine University.

 

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Joseph G. Greenberg. Mr. Greenberg has been a director of the Company since its inception. Mr. Greenberg is founder and President of Alta Resources, L.L.C., an oil and natural gas exploration company. Prior to founding Alta Resources in 1999, Mr. Greenberg worked as an exploration geologist for Shell Oil Company and Edge Petroleum Company. Mr. Greenberg received a BS in Geology and Geophysics from Yale University in 1983, and a Masters in Geological Sciences from the University of Texas at Austin in 1986. He has over twenty-two years of diversified experience in domestic oil and gas exploration.

The Board of Directors is responsible for managing the Company in accordance with the provisions of the Company’s Bylaws and Certificate of Incorporation and applicable law. The number of directors which constitutes the Board of Directors is established by the Board, subject to a minimum of three and a maximum of seven directors. Except as otherwise provided by the Bylaws for filling vacancies on the Company’s Board of Directors, the Company’s directors are elected at the Company’s annual meeting of stockholders and hold office until their respective successors are elected, or until their earlier resignation or removal. Our executive officers are elected annually by the Board and serve until their successors are duly elected and qualified or until their earlier resignation or removal. There are no family relationships between our directors or executive officers.

The Board of Directors elected Mr. Peak as both Chairman and Chief Executive Officer for a number of reasons. Mr. Peak is the founder of the Company and will own approximately 19% of the Company’s common stock, making him the largest shareholder. Mr. Peak has been an active entrepreneur who founded Contango and built the business into a large successful oil and gas company with a market capitalization of approximately $800 million. However, by combining the position of Chairman and Chief Executive Officer, the Company may lose advantages in having a strong independent Board that is less influenced by the management of the Company.

 

Item 6. EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

Philosophy

The Company is an exploration stage organization without any source of revenue. It has three part-time employees. The Company will not pay any salaries or other benefits to its executive employees for the foreseeable future and until such time as the business of the Company may require cash compensation. The Company intends to implement an equity compensation program for its executive officers that will provide an incentive for such officers to achieve the Company’s business objectives.

Equity Awards

The Company’s equity compensation program for senior executive employees is expected to include two forms of long-term incentives: restricted stock and stock options. Award size and frequency will be based on each executive’s demonstrated level of performance and Company performance over time. All awards shall be made by the Company’s Compensation Committee (“Compensation Committee”) which shall be composed of independent directors of the Company. The Compensation Committee is expected to grant awards to all executives effective on the date of the Distribution and to review award levels annually thereafter. In making individual awards, the Compensation Committee will consider industry practices, the performance of each executive, the performance of the Company, the value of the executive’s previous awards and the Company’s views on executive retention and succession.

2010 Equity Compensation Plan

The Company’s Board of Directors is expected to adopt the Contango ORE, Inc. Equity Compensation Plan (the “Plan”). Under the Plan, the Compensation Committee can grant stock options, restricted stock awards stock appreciation rights or other stock-based awards to employees, consultants or non-employee directors of the Company. Pursuant to the terms of the Plan, 1,000,000 shares of unissued common stock are authorized and

 

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reserved for issue under nonqualified stock options, incentive stock options and restricted stock grants. The maximum aggregate number of shares of common stock of the Company with respect to which all grants may be made to any individual is 100,000 shares during any calendar year.

Options may be granted to employees, consultants and non-employee directors. Incentive stock options may be granted only to employees of the Company or its subsidiaries. Non-qualified stock options may be granted to employees, consultants or non-employee directors. The exercise price of the option shall be determined by the Compensation Committee and shall be equal to or greater than the fair market value of a share of the Company’s common stock on the date the option was granted. The Compensation Committee shall determine the term of options granted to participants under the Plan but in any event all options must be exercised no later than the ten years from the issue date. All options may only be exercised while a participant is employed as an employee or providing services as a consultant or non-employee director.

The Company may issue stock awards to employees, consultants and non-employee directors. Restricted stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period of restriction established by the Compensation Committee and specified in the award agreement granting the restricted stock.

Under the Plan, upon a change of control transaction, the Compensation Committee may take the following actions without the consent of any participant:

 

  •  

Determine that outstanding options and stock appreciation rights are fully exercisable, and that restrictions on stock awards or stock units shall lapse;

 

  •  

Require that participants surrender their outstanding options in exchange for payment by the Company;

 

  •  

Terminate all outstanding unexercised options after giving participants an opportunity to exercise them;

 

  •  

Determine that grants that remain outstanding after a change of control shall be converted to similar grants of the surviving corporation.

Under the Plan a “Change in Control” means any of the following events: (i) any person (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than Mr. Peak or his affiliates is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of our securities representing twenty-five percent (25%) or more of the combined voting power of our then outstanding securities; (ii) the consummation of a (A) merger or consolidation of the Company where the stockholders of the Company immediately prior to the merger or consolidation will not beneficially own shares entitling the stockholders to more than more than 50% of all votes in the election of directors, (B) a sale or other disposition of all or substantially all of the assets of the Company, or (C) a liquidation or dissolution of the Company, or (iii) directors are elected such that a majority of the members of the Board shall have been members for less than two years.

The Plan provides that no equity securities or options for equity securities may be hedged by executives of the Company.

Equity Award Mechanics

Equity awards are expected to be granted pursuant to the Plan and will be made by the Compensation Committee. Equity awards are expected to typically fall into two categories: annual awards and new hire and promotion awards. New hire and promotion awards are expected to be made on the date of hire or promotion, and annual awards are expected to be made in June. From time to time the Board of Directors may make grants at other times in connection with employee retention or otherwise.

All stock option awards will have a per share exercise price equal to the closing price of our common stock on the grant date. Stock option awards and restricted stock awards vest upon the passage of time. The

 

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Compensation Committee has not granted, nor do they intend in the future to grant, equity awards in anticipation of the release of material nonpublic information. Similarly, the Company has not timed, nor does it intend in the future to time, the release of material nonpublic information based upon equity award grant dates.

Deferred Compensation and Retirement Plans

The Company does not have a deferred compensation program, pension benefits, a retirement plan, or any sort of post retirement healthcare plan. Additionally, the Company does not have any potential post-employment payments such as termination or a change in control of the Company.

Perquisites and Other Benefits

The Company will review annually the perquisites that senior executives receive. In general, such perquisites, if any, are limited. The Company’s senior executives are entitled to few benefits, if any, that are not otherwise available to all of its employees.

Regulatory Considerations

It is the Company’s policy to make reasonable efforts to cause executive compensation to be eligible for deductibility under Section 162(m) of the Code. Under Section 162(m), the federal income tax deductibility of compensation paid to the Company’s Chief Executive Officer and to each of its four other most highly compensated executive officers may be limited to the extent that such compensation exceeds $1 million in any one year. Under Section 162(m), the Company may deduct compensation in excess of $1 million if it qualifies as “performance-based compensation”, as defined in Section 162(m).

Employment and Severance Agreements

We have no employment or severance agreement with any executive officer, except with Mr. Peak.

Employment Agreement with Mr. Peak

We expect to enter into a Chairman Agreement (the “Chairman Agreement”) with Mr. Peak prior to the Distribution in conjunction with his appointment as Chairman of the Company. Restricted shares of common stock equal to 1.50% of the aggregate shares of common stock being distributed to the stockholders of Contango will be issued to Mr. Peak as compensation for his services, which will vest over a period of three years, beginning with the one-year anniversary of the date the shares were granted. Mr. Peak will receive no salary or other compensation initially. Mr. Peak’s employment arrangement is for a term of one year, and for month-to-month thereafter, terminable upon 90 days’ written notice, but is reviewed on an annual basis for appropriate changes in salary, benefits or other employment matter. Pursuant to the terms of the Chairman Agreement, Mr. Peak is not permitted to have an ownership interest in any company that competes with the Company.

Compensation of Directors

Directors who are not employees are expected to be compensated initially in the form of Company equity. Effective on the date of Distribution, each outside director will receive restricted shares of common stock equal to .75% of the aggregate shares of common stock being distributed to the stockholders of Contango.

Compensation Review Process for Future Periods

The Compensation Committee will conduct an annual review of each executive officer for purposes of establishing a base salary, bonus or equity awards. The Compensation Committee does not intend to pay

 

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executive officers cash compensation unless and until the Company has sufficient cash resources to enable such payment and the business of the Company requires such payment.

Executive Compensation Tables

As of the date of this Registration Statement, no executive or director compensation has been paid by the Company since its inception. Upon the Distribution, the Company plans to issue the following equity awards to its officers:

 

Name

   

Grant Type

    Expected
Shares Granted		     

Expected Grant Date

Kenneth R. Peak

    Restricted Stock      22,500       November 30, 2010

Sergio Castro

    Restricted Stock      11,250       November 30, 2010

Yaroslava Makalskaya

    Restricted Stock      11,250       November 30, 2010

 

Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The following is a description of transactions that the Company intends to enter into, and in which any director, executive officer or holder of more than 5% of the Company’s capital stock will have a direct or indirect material interest. All of the transactions disclosed below will be duly authorized by the then-serving Board of Directors.

Immediately before the Distribution, Contango Mining expects to distribute the Properties to Contango, and Contango expects to contribute the Properties and $3.5 million in cash to the Company in exchange for shares of common stock of the Company in an amount equal to one share of common stock for each ten (10) shares of Contango’s common stock outstanding as of October 15, 2010 pursuant to a Contribution Agreement.

The Company has instituted policies and procedures for the review, approval and ratification of “related person” transactions as defined under SEC rules and regulations. Our Audit Committee Charter requires management to inform the Audit Committee of all related person transactions. In order to identify any such transactions, among other measures, the Company requires its directors and officers to complete questionnaires identifying transactions with any company in which the officer or director or their family members may have an interest. In addition, our Code of Ethics requires that the Audit Committee review and approve any related person transaction before it is consummated.

Each Board member other than Mr. Peak is an independent director as defined in Section 5605 of the Nasdaq listing standards.

 

Item 8. LEGAL PROCEEDINGS.

As of the date of this Form 10, we are not a party to any legal proceedings and we are not aware of any proceeding contemplated against us.

 

Item 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

There is no current market for the common stock of the Company.

Holders

As of October 15, 2010, there were 100 shares of our common stock outstanding held solely by Contango.

 

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Dividends

The Company does not intend to declare or pay any dividends and currently intends to retain any available earnings generated by its operations for the development and growth of its business. It does not currently anticipate paying any cash dividends on its outstanding shares of common stock in the foreseeable future. Any future decision to pay dividends on its common stock will be at the discretion of its Board and will depend on its financial condition, results of operations, capital requirements, and other factors the Board may deem relevant.

 

Item 10. RECENT SALES OF UNREGISTERED SECURITIES.

On September 1, 2010, the Company was formed as a Delaware corporation and issued 100 shares of its common stock to Contango. We will rely on the provisions of Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), in claiming exemption for the offering, sale and delivery of such securities from registration under the Securities Act. We anticipate issuing restricted shares of our common stock to directors and officers immediately prior to the Distribution equal to 4.5% of the aggregate shares of common stock being distributed to the stockholders of Contango. In connection with the Distribution, the Company anticipates that it will issue approximately 1.5 million shares of its common stock to Contango for distribution to Contango’s shareholders of record on October 15, 2010 and an additional approximately 67,500 shares to the Company’s officers and directors in the form of restricted stock.

 

Item 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.

Authorized and outstanding capital stock

The Company’s authorized capital stock consists of 30,000,000 shares of common stock and 15,000,000 shares of preferred stock. As of October 15, 2010, 100 shares of common stock were outstanding.

Common Stock

Our certificate of incorporation authorizes us to issue 30,000,000 shares of common stock. As of October 15, 2010, 100 shares of common stock were issued and outstanding, all of which are fully paid and non-assessable.

Holders of common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders and are not entitled to cumulative voting for the election of directors. Upon the liquidation, dissolution or winding up of our business, after payment of all liabilities and payment of preferential amounts to the holders of preferred stock, if any, the shares of common stock are entitled to share equally in our remaining assets. Pursuant to our certificate of incorporation, no stockholder has any preemptive rights to subscribe for our securities. The common stock is not subject to redemption.

We do not intend to declare or pay any cash dividends on our common stock. We currently intend to retain future earnings in excess of preferred stock dividends, if any, for operations and to develop and expand our business. We do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination with respect to the payment of dividends on the common stock will be at the discretion of the Board and will depend on, among other things, operating results, financial condition and capital requirements, the terms of then-existing indebtedness, general business conditions and other factors the Board deems relevant.

Preferred Stock

Our certificate of incorporation authorizes us to issue 15,000,000 shares of preferred stock, par value $0.01 per share, in one or more series with such voting powers, full or limited, or no voting powers and such designations, preferences and relative participation, optional or other special rights, and the qualifications,

 

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limitations or restrictions thereof as shall be stated in the resolutions of the Board providing for their issuance. As of October 15, 2010, there were no shares of preferred stock issued and outstanding.

Stock Options and Warrants

As of October 15, 2010, we had not granted any stock options or warrants to purchase shares of common stock. The Company anticipates issuing restricted shares of common stock to certain officers and directors and to Avalon immediately before the Distribution. See Item 4 – “Security Ownership of Certain Beneficial Owners and Management.”

 

Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (DGCL) permits the Board of Directors of the Company to indemnify any person against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his or her being or having been a director, officer, employee or agent of the Company, as the case may be, in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the Securities Act). The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.

The Company’s certificate of incorporation and bylaws provide for indemnification of its directors and officers to the fullest extent permitted by law. Article VI of the Company’s bylaws and Article XIII of the Company’s certificate of incorporation provide that the Company shall indemnify directors and officers under certain circumstances for liabilities and expenses incurred by reason of their activities in such capacities. In addition, the Company has insurance policies that provide liability coverage to directors and officers while acting in such capacities and they are also covered by insurance policies indemnifying against certain liabilities, including certain liabilities arising under the Securities Act, which might be incurred by them in such capacities.

 

Item 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required to be included in this Registration Statement appear at the end of this Registration Statement beginning on page F-1.

 

Item 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

 

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Item 15. FINANCIAL STATEMENTS AND EXHIBITS.

Index to Financial Statements

See the Index to the Company’s financial statements on page F-1 of this Registration Statement.

Exhibits

 

Exhibit
Number

   

Description

  3.1    Certificate of Incorporation of Contango ORE, Inc.
  3.2    Bylaws of Contango ORE, Inc.
  4.1    Form of Certificate of Contango ORE, Inc. Common Stock
10.1    Mineral Lease, effective as of July 15, 2008, between the Native Village of Tetlin and Juneau Exploration Company, d/b/a Juneau Mining Company, as amended by Amendment No. 1 to Mineral Lease, effective as of October 1, 2009.
10.2    Chairman Agreement dated as of November 1, 2010, between Contango ORE, Inc. and Kenneth R. Peak
10.3    Form of 2010 Equity Compensation Plan
10.4    Contribution Agreement, dated as of November 1, 2010, between Contango Oil & Gas Company and Contango ORE, Inc.
  
10.5    Amended and Restated Professional Services Agreement, dated as of November 1, 2010, between Avalon Development Corporation and Contango ORE, Inc.

 

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 26, 2010     CONTANGO ORE, INC.
    By:   /s/    KENNETH R. PEAK        
    Name:   Kenneth R. Peak
    Title:   Chief Executive Officer

 

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CONTANGO ORE, INC.

INDEX TO FINANCIAL STATEMENTS

 

     Page  

Contango ORE, Inc.

   

Report of Independent Registered Public Accounting Firm

      F-2   

Balance Sheet, September 24, 2010

      F-3   

Notes to Balance Sheet

      F-4   

Contango Mining Company

   

Financial Statements for the Period from Inception (October 15, 2009) to June 30, 2010:

   

Report of Independent Registered Public Accounting Firm

      F-5   

Balance Sheet

      F-6   

Statement of Operations

      F-7   

Statement of Cash Flows

     F-8   

Statement of Shareholder’s Equity

      F-9   

Notes to Financial Statements

      F-10   

Financial Statements for the quarter ended September 30, 2010 and for the period from Inception (October 15, 2009) to September 30, 2010 (Unaudited):

   

Balance Sheets (Unaudited)

      F-12   

Statements of Operations (Unaudited)

      F-13   

Statements of Cash Flows (Unaudited)

      F-14   

Statement of Shareholder’s Equity (Unaudited)

      F-15   

Notes to Financial Statements (Unaudited)

      F-16   

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholder of Contango ORE, Inc.:

We have audited the accompanying balance sheet of Contango ORE, Inc. (an exploration stage company) (the “Company”) as of September 24, 2010. This balance sheet is the responsibility of the Company’s management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Contango ORE, Inc. as of September 24, 2010, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ UHY LLP
Houston, Texas
September 24, 2010

 

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CONTANGO ORE, INC.

(An Exploration Stage Company)

BALANCE SHEET

SEPTEMBER 24, 2010

 

     September 24, 2010  
ASSETS   

CURRENT ASSETS:

   

Cash and cash equivalents

    $ 100   

Total current assets

      100   
        

TOTAL ASSETS

    $ 100   
        
LIABILITIES AND SHAREHOLDER’S EQUITY   

SHAREHOLDER’S EQUITY:

   

Common stock, $0.01 par value, 30,000,000 shares authorized, 100 shares issued and 100 shares outstanding at September 24, 2010

    $ 1   

Additional paid-in capital

      99   

Deficit accumulated during exploration stage

      —     

Total shareholder’s equity

      100   
        

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY

    $ 100   
        

 

 

The accompanying notes are an integral part of this financial statement.

 

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CONTANGO ORE, INC.

(An Exploration Stage Company)

NOTES TO BALANCE SHEET

As of September 24, 2010

1. Organization and Business

The Company is a Houston-based, independent company. The Company was formed on September 1, 2010 as a Delaware corporation for the purpose of engaging in the exploration and prospecting of gold and associated minerals and rare earth elements in the State of Alaska. The Company has no operating history since inception. The Company is a wholly-owned subsidiary of Contango Oil & Gas Company, a Delaware corporation (“Contango”) and is an exploration stage company as defined by Accounting Standards Codification (“ASC”) 915, “Development Stage Entities.” The Company expects to enter into a series of transactions (the “Distribution”) whereby the Company will acquire from Contango certain leasehold interests and mining claims for the conduct of exploration and development of mineral properties in the State of Alaska plus $3.5 million of cash and Contango will distribute the Company’s common stock to Contango’s stockholders. The Company expects the Distribution to be completed by the end of 2010.

The Company’s fiscal year end is June 30.

2. Cash Equivalents.

Cash equivalents are considered to be highly liquid investment grade debt investments having an original maturity of 90 days or less. As of September 24, 2010, the Company had $100 in cash and cash equivalents.

3. Common Stock

The Company’s certificate of incorporation authorizes us to issue 30,000,000 shares of common stock, $0.01, par value. As of September 24, 2010, 100 shares of common stock were issued and outstanding, all of which are fully paid and non-assessable.

Holders of common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders and are not entitled to cumulative voting for the election of directors. Upon the liquidation, dissolution or winding up of our business, after payment of all liabilities and payment o preferential amounts to the holders of preferred stock, if any, the shares of common stock are entitled to share equally in our remaining assets. Pursuant to our certificate of incorporation, no stockholder has any preemptive rights to subscribe for our securities. The common stock is not subject to redemption.

We do not intend to declare or pay any cash dividends on our common stock. We currently intend to retain future earnings in excess of preferred stock dividends, if any, for operations and to develop and expand our business. We do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination with respect to the payment of dividends on the common stock will be at the discretion of the Board and will depend on, among other things, operating results, financial condition and capital requirements, the terms of then-existing indebtedness, general business conditions and other factors the Board deems relevant.

4. Commitments and Contingencies

Pursuant to the terms of the Distribution, the Company will assume any claims, litigation or disputes pending as of the effective date on any matters arising in connection with ownership of the properties prior to the effective date. The Company is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the balance sheet.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholder of Contango Mining Company:

We have audited the accompanying balance sheet of Contango Mining Company (an exploration stage company) (the “Company”) as of June 30, 2010 and the related statements of operations and cash flows for the period from October 15, 2009 (date of inception) through June 30, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Contango Mining Company as of June 30, 2010 and the results of its operations and its cash flows for the period from October 15, 2009 (date of inception) to June 30, 2010, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ UHY LLP
Houston, Texas
September 24, 2010

 

F-5

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Balance Sheet

June 30, 2010

 

     June 30, 2010  

ASSETS

   

CURRENT ASSETS:

   

Prepaid expenses

    $ 233,268   
        

Total current assets

      233,268   
        

PROPERTY AND EQUIPMENT:

   

Mineral properties

      1,008,886   

Accumulated depreciation, depletion and amortization

      —     
        

Total property and equipment, net

      1,008,886   
        

TOTAL ASSETS

    $ 1,242,154   
        

LIABILITIES AND SHAREHOLDER’S EQUITY

   

CURRENT LIABILITIES:

   

Accrued liabilities

    $ 511,156   
        

Total current liabilities

      511,156   
        

COMMITMENTS AND CONTINGENCIES (NOTE 4)

   

SHAREHOLDER’S EQUITY

   

Capital Stock, 3,000 no-par common shares are authorized, 100 shares issued and outstanding at June 30, 2010

      1,833,634   

Deficit accumulated during exploration stage

      (1,102,636 ) 
        

SHAREHOLDER’S EQUITY

      730,998   
        

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY

    $ 1,242,154   
        

 

The accompanying notes are an integral part of these financial statements

 

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CONTANGO MINING COMPANY

(An Exploration Stage Company)

Statement of Operations

Inception (October 15, 2009) to June 30, 2010

 

     Period from
Inception
(October 15, 2009) to
June 30, 2010		  

EXPENSES:

   

Delay Rentals

    $ 192,712   

Exploration expenses

      877,762   

Other operating expenses

      30,485   

General and administrative expense

      1,677   
        

Total expenses

      1,102,636   
        

NET LOSS

    $ 1,102,636   
        

EARNINGS (LOSS) PER SHARE

   

Basic and diluted

    $ (11,026 ) 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

   

Basic and diluted

      100   

 

 

The accompanying notes are an integral part of these financial statements

 

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Statement of Cash Flows

Inception (October 15, 2009) to June 30, 2010

 

     Period from
Inception
(October 15, 2009) to
June 30, 2010		  

CASH FLOWS FROM OPERATING ACTIVITIES:

   

Net loss

    $ (1,102,636 ) 

Adjustments to reconcile net loss to net cash used in operating activities:

   

Changes in operating assets and liabilities:

   

Increase in prepaid expenses

      (233,268 ) 

Increase in accrued liabilities

      511,156   
        

Net cash used in operating activities

      (824,748 ) 
        

CASH FLOWS FROM INVESTING ACTIVITIES:

   

Acquisition of mineral properties

      (1,008,886 ) 
        

Net cash used in investing activities

      (1,008,886 ) 
        

CASH FLOWS FROM FINANCING ACTIVITIES:

   

Shareholder’s contributions

      1,833,634   
        

Net cash provided by financing activities

      1,833,634   
        

NET CHANGE IN CASH AND CASH EQUIVALENTS

      —     

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

      —     
        

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $ —     
        

 

The accompanying notes are an integral part of these financial statements

 

F-8

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Statement of Shareholder’s Equity

 

     Capital Stock      Deficit
Accumulated
During Exploration		     Total
Shareholder’s		  
     Shares      Amount      Stage     Equity  

Balance at Inception (October 15, 2009)

      —         $ —         $ —        $ —     

Shareholder’s contribution

      100         1,833,634         —          1,833,634   

Net loss for the period

      —           —           (1,102,636 )      (1,102,636 ) 
                                  

Balance at June 30, 2010

      100       $ 1,833,634       $ (1,102,636 )    $ 730,998   
                                  

 

 

 

The accompanying notes are an integral part of these financial statements

 

F-9

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

1. Organization and Business

Contango Mining Company (“Contango Mining”) was formed on October 15, 2009 for the purpose of engaging in exploration in the State of Alaska for (i) gold and associated minerals and (ii) rare earth elements. Contango Mining is a wholly-owned subsidiary of Contango Oil & Gas Company, a Delaware corporation (“Contango”) and is an exploration stage company as defined by Accounting Standards Codification (“ASC”) 915, “Development Stage Entities.” Contango Mining expects to enter into a series of transactions (the “Contribution”) whereby the assets and liabilities of Contango Mining will be contributed to Contango ORE, Inc. The Contribution is expected to be completed by the end of 2010.

Contango Mining has a 50% ownership interest in 647,000 acres acquired from the Tetlin Village Council (the “Tetlin Properties”), the council formed by the governing body for the Native Village of Tetlin, an Alaskan Native Tribe. Contango Mining also holds 109,280 acres in unpatented mining claims from the State of Alaska and 3,520 acres in unpatented Federal mining claims, for the exploration of gold deposits and rare earth elements.

Contango Mining purchased its 50% interest in the Tetlin Properties pursuant to a Joint Exploration Agreement dated as of September 29, 2009 for $1 million plus an overriding royalty granted to JEX of 1%. If the Tetlin Properties are placed into commercial production, Contango Mining shall pay a production royalty which varies from 1.5% to 2.5%.

2. Basis for Presentation

The accompanying financial statements for the period ended June 30, 2010 provide the activity of Contango Mining since its inception and have been prepared in conformity with accounting principles generally accepted in the United States of America. They include all the information required and in the opinion of management, include all adjustments considered necessary for a fair presentation. All such adjustments are of a normal recurring nature.

3. Summary of Significant Accounting Policies

Management Estimates

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

Cash and Cash Equivalents

We consider all highly liquid financial instruments having maturities of three months or less at the date of purchase to be cash equivalents.

Revenue Recognition

Contango Mining has yet to realize any revenues. Expenses are presented on the accrual basis of accounting.

Property and Equipment

Mineral property interests include interests in the exploration stage mineral properties acquired. The amount capitalized includes costs paid to acquire mineral property interest as well as the costs paid to the State of Alaska

 

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS—(Continued)

 

to obtain the lease rights. Exploration costs are expensed as incurred. Development costs are expensed as incurred until the Company obtains proven and probable reserves within its commercially minable properties. Costs of abandoned projects are charged to earnings upon abandonment. Properties determined to be impaired are written-down to the estimated fair value. The Company periodically evaluates whether events or changes in circumstances indicate that the carrying value of mineral property interests and related property, plant and equipment may not be recoverable.

The amounts shown as costs incurred include 100% of the costs pertaining to the properties, notwithstanding Contango Mining’s 50% interest in the properties prior to September 15, 2010. In accordance with the Joint Exploration Agreement, Contango Mining was responsible for 100% of expenditures related to these mineral properties. During the period ending June 30, 2010, Contango Mining incurred approximately $2.1 million in costs to acquire and explore mineral properties as follows:

 

     Period Ended June 30,
2010		  

Acquisition of Mineral Properties

    $ 1,008,886   

Exploration costs

      1,070,474   
        

Total costs incurred

    $ 2,079,360   
        

4. Commitments and Contingencies

Pursuant to the terms of the Distribution, Contango ORE, Inc. will assume any claims, litigation or disputes pending as of the effective date on any matters arising in connection with ownership of the Properties prior to the effective date. Contango Mining is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Statement of Operations.

5. Subsequent Events

As of September 15, 2010, Contango Mining acquired the remaining 50% of the Tetlin Properties and the State of Alaska and Federal unpatented mining claims, in exchange for a 2% overriding royalty interest (“ORRI”). Contango Mining was previously committed to a 1% ORRI to this third-party. When combined with the production royalty payable on the Tetlin Properties, Contango Mining is now committed to a 3% ORRI to the third party and a 3% to 5% ORRI to the Tetlin Village Council.

 

F-11

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Balance Sheets

(Unaudited)

 

     September 30,
2010		     June 30,
2010		  

ASSETS

     

CURRENT ASSETS:

     

Prepaid expenses

    $ 70,178      $ 233,268   
                

Total current assets

      70,178        233,268   
                

PROPERTY, PLANT AND EQUIPMENT:

     

Mineral properties

      1,008,886        1,008,886   

Accumulated depreciation, depletion and amortization

      —          —     
                

Total property, plant and equipment, net

      1,008,886        1,008,886   
                

TOTAL ASSETS

    $ 1,079,064      $ 1,242,154   
                

LIABILITIES AND SHAREHOLDER’S EQUITY

     

CURRENT LIABILITIES:

     

Accrued liabilities

    $ 62,811      $ 511,156   
                

Total current liabilities

      62,811        511,156   
                

COMMITMENTS AND CONTINGENCIES (NOTE 4)

     

SHAREHOLDER’S EQUITY:

     

Capital Stock, 3,000 no-par common shares are authorised, 100 shares issued and outstanding at September 30, 2010 and June 30, 2010

      2,981,017        1,833,634   

Deficit accumulated during exploration stage

      (1,964,764 )      (1,102,636 ) 
                

SHAREHOLDER’S EQUITY

      1,016,253        730,998   
                

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY

    $ 1,079,064      $ 1,242,154   
                

 

The accompanying notes are an integral part of these financial statements

 

F-12

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Statements of Operations

(Unaudited)

 

     Quarter ended
September 30, 2010		     Period from
Inception
(October 15, 2009) to
September 30, 2010		  

EXPENSES:

     

Delay Rentals

    $ 38,524      $ 216,391   

Exploration expenses

      729,904        1,607,666   

Other operating expenses

      53,450        98,780   

General and administrative expense

      40,250        41,927   
                

Total expenses

      862,128        1,964,764   
                

NET LOSS

    $ 862,128      $ 1,964,764   
                

EARNINGS (LOSS) PER SHARE

     

Basic and diluted

    $ (8,621 )    $ (19,648 ) 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

     

Basic and diluted

      100        100   

 

 

The accompanying notes are an integral part of these financial statements

 

F-13

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Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Statements of Cash Flows

(Unaudited)

 

     Quarter ended
September 30, 2010		     Period from
Inception
(October 15, 2009) to
September 30, 2010		  

CASH FLOWS FROM OPERATING ACTIVITIES:

     

Net loss

    $ (862,128 )    $ (1,964,764 ) 

Adjustments to reconcile net loss to net cash provided by operating activities:

     

Changes in operating assets and liabilities:

     

Decrease (increase) in prepaid expenses

      163,090        (70,178 ) 

Increase (decrease) in other accrued liabilities

      (448,345 )      62,811   
                

Net cash used in operating activities

      (1,147,383 )      (1,972,131 ) 
                

CASH FLOWS FROM INVESTING ACTIVITIES:

     

Acquisition of natural gas and oil producing properties

      —          (1,008,886 ) 
                

Net cash used in investing activities

      —          (1,008,886 ) 
                

CASH FLOWS FROM FINANCING ACTIVITIES:

     

Shareholder’s contributions

      1,147,383        2,981,017   
                

Net cash provided by financing activities

      1,147,383        2,981,017   
                

NET CHANGE IN CASH AND CASH EQUIVALENTS

      —          —     

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

      —          —     
                

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $ —        $ —     
                

 

The accompanying notes are an integral part of these financial statements

 

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Table of Contents
Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

Statement of Shareholder’s Equity

(Unaudited)

 

     Capital Stock      Deficit
Accumulated
During
Exploration
Stage		     Total
Shareholder’s
Equity		  
     Shares      Amount       

Balance at Inception (October 15, 2009)

      —         $ —         $ —        $ —     

Shareholder’s contribution

      100         1,833,634           1,833,634   

Net loss for the period

            (1,102,636 )      (1,102,636 ) 
                                  

Balance at June 30, 2010

      100       $ 1,833,634       $ (1,102,636 )    $ 730,998   
                                  

Shareholder’s contribution

      —           1,147,383           1,147,383   

Net loss for the period

            (862,128 )      (862,128 ) 
                                  

Balance at September 30, 2010

      100       $ 2,981,017       $ (1,964,764 )    $ 1,016,253   
                                  

 

 

The accompanying notes are an integral part of these financial statements

 

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Table of Contents
Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Business

Contango Mining Company (“Contango Mining”) was formed on October 15, 2009 for the purpose of engaging in exploration in the State of Alaska for (i) gold and associated minerals and (ii) rare earth elements. Contango Mining is a wholly-owned subsidiary of Contango Oil & Gas Company, a Delaware corporation (“Contango”) and is an exploration stage company as defined by Accounting Standards Codification (“ASC”) 915, “Development Stage Entities.” Contango Mining expects to enter into a series of transactions (the “Contribution”) whereby the assets and liabilities of Contango Mining will be contributed to Contango ORE, Inc. The Contribution is expected to be completed by the end of 2010.

Contango Mining has a 100% ownership interest in 647,000 acres acquired from the Tetlin Village Council (the “Tetlin Properties”), the council formed by the governing body for the Native Village of Tetlin, an Alaskan Native Tribe. Contango Mining also holds 109,280 acres in unpatented mining claims from the State of Alaska and 3,520 acres in unpatented Federal mining claims, for the exploration of gold deposits and rare earth elements.

Contango Mining purchased a 50% interest in the Tetlin Properties pursuant to a Joint Exploration Agreement dated as of September 29, 2009 for $1 million plus an overriding royalty granted to JEX of 1%. If the Tetlin Properties are placed into commercial production, Contango Mining shall pay a production royalty which varies from 1.5% to 2.5%. On September 15, 2010, Contango Mining acquired the remaining 50% of the Tetlin Properties and the State of Alaska and Federal unpatented mining claims from JEX, in exchange for increasing JEX’s overriding royalty interest (“ORRI”) on the Tetlin Properties and mining properties to 3%.

2. Basis for Presentation

The accompanying unaudited financial statements for the quarter ended September 30, 2010 and for the period from Inception (October 15, 2009) to September 30, 2010 were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, in the opinion of management, include all adjustments required for a fair statement of such financial statements in accordance with accounting principles generally accepted in the United States of America. All such adjustments are of a normal recurring nature. Such unaudited financial statements should be read in conjunction with the audited financial statements and notes to the financial statements. The results of operations for the three months ended September 30, 2010 are not necessarily indicative of the results which may be expected for the fiscal year ending June 30, 2011.

3. Summary of Significant Accounting Policies

Management Estimates

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

Cash and Cash Equivalents

We consider all highly liquid financial instruments having maturities of three months or less at the date of purchase to be cash equivalents.

 

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Table of Contents
Index to Financial Statements

CONTANGO MINING COMPANY

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

Revenue Recognition

Contango Mining has yet to realize any revenues. Expenses are presented on the accrual basis of accounting.

Property and Equipment

The amount capitalized includes costs paid to acquire mineral property interest as well as the costs paid to the State of Alaska to obtain the lease rights. Exploration costs are expensed as incurred. Development costs are expensed as incurred until the Company obtains proven and probable reserves within its commercially minable properties. Costs of abandoned projects are charged to earnings upon abandonment. Properties determined to be impaired are written-down to the estimated fair value. The Company periodically evaluates whether events or changes in circumstances indicate that the carrying value of mineral property interests and related property, plant and equipment may not be recoverable.

The amounts shown as costs incurred include 100% of the costs pertaining to the properties, notwithstanding Contango Mining’s 50% interest in the properties prior to September 15, 2010. In accordance with the Joint Exploration Agreement Contango was responsible for 100 % of expenditures related to these mineral properties. During the quarter ended September 30, 2010 we incurred approximately $0.8 million to explore mineral properties. During the period from Inception to September 30, 2010, we incurred approximately $1.0 million to acquire and approximately $1.8 million in costs to explore mineral properties as follows:

 

     Quarter ended
September 30, 2010		      Period from
Inception
(October 15, 2009) to
September 30, 2010		  
     (Unaudited)      (Unaudited)  

Acquisition of Mineral Interests

    $ —         $ 1,008,886   

Exploration costs and delay rentals

      768,428         1,824,057   
                 

Total costs incurred

    $ 768,428       $ 2,832,943   
                 

On September 15, 2010, Contango Mining acquired the remaining 50% of the Tetlin Properties and the State of Alaska and Federal unpatented mining claims from JEX, in exchange for increasing the ORRI in the Tetlin Properties and mining claims to 3%. Contango Mining was previously committed to a 1% ORRI on the Tetlin Properties. When combined with the production royalty payable on the Tetlin Properties, Contango Mining is now committed to a 3% ORRI to the third party and a 3% to 5% ORRI to the Tetlin Village Council.

Reclassifications

Certain reclassifications have been made to the expenses included in the Statement of Operations for the period from Inception (October 15, 2009) to June 30, 2010 in order to conform with the quarter ended September 30, 2010 presentation. These reclassifications were not material.

4. Commitments and Contingencies

Pursuant to the terms of the Distribution, Contango ORE, Inc. will assume any claims, litigation or disputes pending as of the effective date on any matters arising in connection with ownership of the Properties prior to the effective date. Contango Mining is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Company’s financial position or results of operations.

 

F-17