dazetrader
11年前
LIBERTY SILVER CORP Files SEC form 10-Q (Thu, Feb 13)
LIBERTY SILVER CORP Files SEC form 10-Q (Thu, Feb 13)
Form 10-Q for LIBERTY SILVER CORP
13-Feb-2014
Quarterly Report
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.
DESCRIPTION OF BUSINESS
The Corporation
Liberty Silver Corp. was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp. Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp. The Company's registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J 2T3, and our telephone number is 888-749-4916.
Current Operations
Overview
We were incorporated for the purpose of engaging in mineral exploration activities, and on May 24, 2007, purchased the Zone Lode mining claim located in Elko County, Nevada, for a purchase price of $10,000. Our objective was to conduct mineral exploration activities on the Zone Lode claim to assess whether it contained economic reserves of copper, gold, silver, molybdenum or zinc. We were not able to determine whether this property contained reserves that were economically recoverable and as a result, ceased to explore this property. The Company's current business operations are focused on exploring and developing the Trinity Silver property located in Pershing County, Nevada (the "Trinity Project").
The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement (the "Earn-In Agreement"), discussed below in Item 2 - Properties. On March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company providing the Company with a right to
earn a 70% undivided interest in rights of AuEx, Inc. in the Trinity Project (the "70% Interest"); as discussed below, the 70% Interest is subject to the rights and obligations of AuEx, Inc. and its successors and assigns under a Minerals Lease and Sublease between AuEx, Inc. and Newmont Mining USA Limited.
AuEx, Inc. is beneficially owned by another Nevada company AuEx Ventures, Inc. AuEx, Inc. held an exclusive interest in the Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project; the Minerals Lease and Sublease is discussed below. As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada company Renaissance Gold Inc. ("Renaissance") was spun out, and on July 1, 2010 AuEx, Inc. assigned all of its interest in the Trinity Project and the Earn-In Agreement to Renaissance, who currently holds a 100% leasehold interest in the Trinity Project pursuant to the Minerals Lease and Sublease. The Company's rights in the Trinity Project are derived from and based upon the rights of Renaissance through the Minerals Lease and Sublease.
The Minerals Lease and Sublease grants to Newmont, a right of first offer on any transfer of AuEx, Inc.'s interests in the Trinity Project to any non-affiliate of AuEx, Inc., and also gives Newmont a right to either enter into a joint venture agreement covering the Trinity Project and any other real property interests that AuEx, Inc. holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such properties. Currently the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from AuEx, Inc. The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided interest in rights of Renaissance in the Trinity Project.
The Trinity Project consists of a total of approximately 10,020 acres, including 5,676 acres of fee land and 253 unpatented mining claims. Under the Earn-In Agreement, the Company may earn-in the 70% Interest in the Trinity Project during a 6-year period in consideration of (1) a signing payment of $25,000, which has been made, (2) an expenditure of a cumulative total of $5,000,000 in exploration and development expenses on the Trinity Project by March 29, 2016, including a minimum of $500,000 which must be expended within one year from the effective date of the Agreement, and (3) completion of a bankable feasibility study on the Trinity Project on or before the 7th anniversary date of the Agreement. Item (1) has been completed by the Company, and the Company has satisfied item (2), and will report its compliance as of March 29, 2013, which is the end of the third year from the inception of the Earn-in Agreement.
Our business operations are currently focused on efforts to explore the Trinity Project. The Company has not yet commenced development stage activities, however, subject to the availability of adequate funding, the Company intends to engage in efforts to develop the Trinity Project in the future. The Company foresees future operations at the Trinity Project consisting of (i) an effort to expand the known mineralized material through drilling, (ii) permitting for operation, if deemed economically viable, (iii) metallurgical studies aimed at enhancing the recovery of the silver and by-product lead and zinc, and (iv) engineering design related to potential construction of a new mine. Exploration of the property will be conducted simultaneously with the mine development in order to locate additional mineralized materials.
Products
The Company's anticipated product will be precious and base metal-bearing concentrates and/or precious metal bullion produced from ores from mineral deposits which it hopes to discover and exploit through exploration and acquisition. The Company anticipates such products will be silver, lead and zinc.
Trinity Project Location
The Trinity Project is located along the west flank of the Trinity Range in Pershing County, Nevada, about 25 miles by road northwest of Lovelock, NV, the county seat. The Trinity Project consists of approximately 10,020 acres, which includes 253 unpatented lode mining claims and portions of nine sections of private land. The specific location of the Trinity Project is discussed in more detail the section entitled "Properties" herein.
Infrastructure
The Trinity Project is situated in western Nevada, a locale which is host to many metal mines, mining equipment companies, drilling companies, mining and metallurgical consulting expertise, and experienced mining personnel. Its location is accessible by all-weather road through an area of very sparse population. There is no infrastructure on
the property. All buildings have been removed, all wells have been properly abandoned, and there is no equipment on site. The mine site has been totally reclaimed to the satisfaction of the State of Nevada. The need for power and water would be defined by a feasibility study and mine plan both of which are premature at this point in time.
Government Regulation and Approval The following permits will be necessary to put the Trinity Project into production. Permit/notification Agency - Mine registry Nevada Division of Minerals - Mine Opening notification State Inspector of Mines - Solid Waste Landfill Nevada Bureau of Waste Management - Hazardous Waste Management Permit Nevada Bureau of Waste Management - General Storm Water Permit Nevada Bureau of Pollution Control - Hazardous material Permit State Fire Marshal - Fire and Life Safety State Fire Marshal - Explosives Permit Bureau of Alcohol, Tobacco, Firearms - Notification of Commencement of Operations Mine Safety and Health Administration - Radio License Federal Communications Commission
All of the Company's drilling operations to date have been on private land and, as a result, have not been subject to U.S. Bureau of Land Management jurisdiction. On private land in Nevada, the Company's activities are regulated by The Nevada Division of Environmental Protection and the Nevada Bureau of Mining Regulation and Reclamation ("NBMRR") and no permit is needed as long as the disturbance created is less than five acres. Our total disturbance to date has been less than four acres, much of which has already been reclaimed, and as a result, we have not yet applied for a NBMRR permit. However, as a matter of courtesy, we have provided written correspondence to NBMRR to advise them of our activities.
Environmental Regulations
Our current exploration activities and any future mining operations (of which we currently have none planned), are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species. We have made, and expect to make in the future, significant expenditures to comply with such laws and regulations. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on our financial condition or results of operations. In the event that we make a mineral discovery and decide to proceed to production, the costs and delays associated with compliance with these laws and regulations could stop us from proceeding with a project or the operation or further improvement of a mine or increase the costs of improvement or production.
We anticipate that the following environmental permits will be necessary for our anticipated operations:
?Permit for Reclamation
?Water Pollution Control Permit
?Air Quality Operating Permit
?Industrial Artificial Pond Permit
?Water Rights
The Company anticipates that, subject to the availability of funds or financing, it will begin soliciting bids for the programs necessary to obtain these permits during the fiscal year ending June 30, 2014. The cost, timing, and work schedules are not yet available.
Competition
We compete with other mining and exploration companies in connection with the acquisition of mining claims and leases on silver and other precious metals prospects and in connection with the recruitment and retention of qualified employees. Many of these companies are much larger than we are, have greater financial resources and have been in the mining business much longer than we have. As such, these competitors may be in a better position through size, finances and experience to acquire suitable exploration properties. We may not be able to compete against these companies in acquiring new properties and/or qualified people to work on our current Trinity Project, or any other properties we may acquire in the future.
Given the size of the world market for precious metals such as silver and gold relative to the number of individual producers and consumers, we believe that no single company has sufficient market influence to significantly affect the price or supply of precious metals such as silver and gold in the world market.
Employees
The Company currently has six full-time employees, R. Geoffrey Browne, the President and Chief Executive Officer and Director on the Board of Directors, Manish Z. Kshatriya, the Chief Financial Officer and Executive Vice President, William Tafuri, the Project Manager for the Trinity Project, H. Richard Klatt, the Vice President of Exploration, and two additional employees.
PROPERTIES
Office Space
The Company has a lease agreement for office space at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J 2T3. The telephone number is: 647-749-4916. The monthly base rent is CDN $4,007 (approximately US $4,000). The term of the lease is for fifty-four months and terminates on April 28, 2016.
The Company has a lease agreement for a field office at 808 Packer Way, Sparks, NV 89431. The phone number there is: 775-352-9375. The monthly base rent is USD $2,477.25 plus Common Area Reimbursement of USD $370 and Property Tax of USD $250. The term of the lease is for twenty-four months and terminates on January 31, 2015.
Trinity Project
Trinity Project Location
The Trinity Project is situated approximately 25 road miles north-northwest of Lovelock, Nevada, in Pershing County, Nevada, on the northwest flank of the Trinity Range, in the Trinity mining district. The latitude-longitude coordinates of the mine site are 40o 23' 47" N, 118o 36' 38" W. The JV area is situated in sections 2, 3, 4, 5, 8, 9, 10, 11, 15, 16, and 17, Township 29 North, Range 30 East, MDB&M and sections 26-28, 33, 34, and 35, Township 30 North, Range 30 East, MDB&M.
The Trinity Project includes located public and leased/subleased fee land consisting of the following 253 unpatented mining claims and tracts of fee land:
(1)
248 unpatented lode mining claims consisting of: The Seka 1-6, 8-16, 61-64, 73-76, 95-112 claims, the TS 1-18 claims, and the XXX claims located in secs. 4, 10, 16 and 21 in T29N, R30E. The Elm 1-183 in secs. 2, 4, 10, 16 T29N, R30E and secs. 26 28, 34, and 35 in T30N, R30E. The claims are located on public land open to mineral entry, currently valid, and subject to Bureau of land management regulations. The total area covered is approximately 5,120 acres.
(2)
Hi Ho Silver 3, 5, 9, 10, and 11 unpatented lode mining claims located in sec. 10, T29N, R30E MDB&M covering approx. 100 acres.
(3)
Approximately 4,480 acres of fee land leased by Newmont Mining Corp. from Southern Pacific Land Co., and its successors, and from Santa Fe Pacific Minerals Corporation, and its successors located in sections 3,
5, 11, and 17, Township 29 North, Range 30 East, and sections 27, 33, and 35, Township 30 North, Range 30 East MDB&M.
(4)
Approximately 1,280 acres of fee land owned by Newmont Mining Corp. located in sections 9 and 15, Township 29 North, Range 30 East, MDB&M.
The Company's joint venture area of interest is currently sections 2-5, 8-11, 15-17, and 21 Township 29 North, Range 30 East, MDB&M, and sections, 26-28, 33-35, Township 30 North, Range 30 East, MDB&M. The Company's rights, which apply to all of the above properties include exploration, development, and production of valuable minerals except geothermal, hydrocarbons, and sand/gravel, and also include the authority to apply for all necessary permits, licenses and other approvals from the United States of America, the State of Nevada or any other governmental or other entity having regulatory authority over any part of the Trinity Project.
Each claim filed with the BLM has an associated maintenance fee of $140 per year for each assessment year (which runs from September 1 through August 31). This fee must be paid by midnight on August 31 of each year to maintain the claim's validity for the succeeding assessment year. The fees for the claims comprising the Trinity Project are paid by Renaissance in accordance with the Lease they hold with Newmont. The Company reimburses Renaissance for this expenditure. All of the fees have been paid to the BLM for the 2012-2013 assessment year and all filings are current. We have 253 claims which, based upon current maintenance fees, costs $35,420 per assessment year to maintain.
To protect and verify our claims and interests in the Trinity Project, we have completed examinations of legal title to the property making up the Trinity Project, which we have deemed to be satisfactory. In addition, a Memorandum of Exploration Earn-In Agreement, effective March 29, 2010, has been recorded in the Office of the Recorder of Pershing County, Nevada.
Location and Access
The following maps identify the location and access of the Trinity Project located in Pershing County Nevada:
[[Image Removed: [libertysilverform10qdecem002.gif]]]
[[Image Removed: [libertysilverform10qdecem003.jpg]]]
Trinity Project Agreements
The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement, discussed below. On March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company beneficially owned by another Nevada company AuEx Ventures, Inc. AuEx, Inc. held an exclusive interest in the Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project; the Minerals Lease and Sublease is discussed below. As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada company Renaissance Exploration Inc. ("Renaissance") was spun out, and on July 1, 2010, pursuant to a letter agreement by and between AuEx, Inc., Renaissance Exploration, Inc., and Liberty Silver Corp., AuEx, Inc. assigned all of its rights in the Exploration Earn-In Agreement to Renaissance, which currently holds a 100% leasehold interest in the Trinity Project pursuant to the Minerals Lease and Sublease. Pursuant to the letter agreement, all parties consented to the assignment, and as a result, the Company's rights in the Trinity Project under the Earn-In Agreement are enforceable against Renaissance Exploration, Inc., and are derived from and based upon the rights of Renaissance under the Minerals Lease and Sublease; a copy of the Letter Agreement effective July 1, 2010 was filed as Exhibit 10.18 to the Company's S-1 filed on January 24, 2013. Additionally, a Memorandum of Exploration Earn-In effective March 29, 2010, has been recorded in the Office of the Recorder of Pershing County, Nevada.
Lease and Sublease Agreement
Renaissance's rights in the Trinity Project are derived through a Minerals Lease and Sublease dated July 29, 2005 (the "Lease") by and between Newmont Mining USA Limited, a Delaware corporation ("Newmont") and AuEx, Inc., a Nevada corporation.
Consideration
The Lease was granted to Renaissance for the following consideration:
a)
Renaissance agreed to pay Newmont a claim fee reimbursement of $10,955 concurrently with the execution of the Lease (this amount was paid);
b)
Renaissance is required to expend a total of $2,000,000 in ascertaining the existence, location, quantity, quality or commercial value of a deposit of minerals within the Trinity Project on or before the seventh anniversary of the Lease;
c)
Prior to the commencement of any commercial production, Renaissance shall supply Newmont with a feasibility study with respect to the Trinity Project.
In the event the Company does not meet its minimum expenditure obligation in any year, it is obligated under the terms of the Earn-In Agreement to pay the amount of any deficiency to Renaissance Exploration, Inc. During each of the first three years, the Company has exceeded its minimum expenditure obligation and has not been obligated to pay any amounts to Renaissance. The Company had an excess of approximately $133,000 in expenditures over the minimum requirement in the first year, an excess of approximately $162,000 in expenditures over the minimum requirement in the second year, and an excess of approximately $2,856,430 in the third year. The Company has satisfied its entire $5,000,000 expenditure commitment by the end of the third year, when it had incurred a total of approximately $5,652,397. As a result, the Company will not be obligated to pay any deficiency amounts to Renaissance for any future years.
Joint Venture / Royalty
The Lease gives Newmont a right to either enter into a joint venture with Renaissance covering the Trinity Project and any other real property interests that Renaissance holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such properties.
Joint Venture: The Lease contemplates the following schedule with respect to Newmont's rights to enter into a joint venture with Renaissance:
a)
Before Renaissance spends $5 million and provides a feasibility study, Newmont can elect at any time to enter into a joint venture in which event Newmont would be required to pay all future joint venture expenses up to 250% of the expenditures made by Renaissance as of the date of Newmont's election to enter into the joint venture.
b)
Upon Renaissance spending $5 million, but before the feasibility study, Renaissance shall deliver written notice to Newmont containing a summary of the expenditures made by Renaissance on the Trinity Project. Newmont may thereafter elect to enter into a joint venture by notifying Renaissance in writing of such election within 60 days of Newmont's receipt of Renaissance's initial notice. Under the joint venture, Newmont would be required to pay all future joint venture expenses up to 250% of the expenditures made by Renaissance as of the date of Newmont's election to enter into the joint venture.
c)
After Renaissance spending $5 million, but before the feasibility study, at any time after the expiration of the 60 day period identified in section b above, Newmont can elect to enter into a joint venture in which event Newmont would be required to pay Renaissance 50% of the expenditures made in the Trinity Project up to the date of Newmont's election to participate in a joint venture, and all future joint venture expenses up to 200% of such expenditures.
d)
At any time within 60 days after Renaissance's delivery of feasibility study, Newmont can elect to enter into a joint venture at which time Newmont would be required to pay Renaissance 200% of expenditures made by Renaissance as of the date of Newmont's election to enter into the joint venture. Additionally, Renaissance can elect to have Newmont finance Renaissance's share of the joint venture expenses until the Trinity Project is put into commercial production. Following the commencement of commercial production, Newmont shall be entitled to recover such paid expenses with interest at the London Interbank Offering Rate. If Newmont fails to elect to participate in the Joint Venture within 60 days following the delivery of the feasibility study, Newmont's right to participate in a joint venture shall terminate.
Should Newmont elect to participate in a joint venture with Renaissance, pursuant to the Lease, and its payment terms, Newmont will serve as the manager of the joint venture and own 51% of the joint venture with an option to acquire an additional 14% for additional payments to Renaissance (for a total participating interest of 65%). Pursuant to the Earn-In Agreement, we are entitled to 70% interest in the Trinity Project, subject only to the Newmont interest. Accordingly, if Newmont exercised all of its joint venture options under the Lease, we would own a 35% interest in the Trinity Project.
Royalty: In the event Newmont does not elect to participate in a joint venture, then Newmont shall have the right to receive a royalty on all mineral production from the Trinity Project. Pursuant to the Lease, if Newmont elects to not participate in the joint venture, then Renaissance shall pay to Newmont $1 million and the Lease shall terminate and Newmont shall transfer title to all property comprising the Trinity Project to Renaissance, and thereafter receive a royalty payment of up to 5% of the net smelter returns generated from the properties comprising the Trinity Project.
Buyout Option
The Lease provides Renaissance with a buyout option pursuant to which Renaissance holds the right to purchase Newmont's rights in the Trinity Project through the payment of $1 million to Newmont. In the event Renaissance elects the buyout option, Newmont would transfer title to the Trinity Project to Renaissance through quit claim deed while retaining certain rights in the Trinity Project; such rights may include some form of joint venture or a royalty interest.
Ownership Interest - Earn-In Agreement
As noted above, the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from AuEx, Inc. The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided interest in rights of Renaissance in the Trinity Project (the "70% Interest"), as set out below. The following is intended to be a summary of the material terms of the Earn-In Agreement, and is subject to, and qualified in its entirety, by the full text of the Earn-In Agreement.
Consideration
The exclusive right to acquire the 70% Interest in the Trinity Project was granted to the Company for the following consideration:
a)
The Company agreed to pay $25,000 upon execution of the Earn-In Agreement (this amount was paid);
b)
In order to obtain the 70% Interest in the Trinity Project, the Company is required to (i) produce a bankable feasibility study by March 29, 2017 and (ii) to expend a minimum of $5,000,000 in exploration on the Trinity Project as follows: $500,000 in the first year; $1,000,000 in the second year; $1,000,000 in the third year; $1,000,000 in the fourth year; $1,000,000 in the fifth year; and $500,000 in the sixth year.
Any excess expenditure in any year shall be carried forward and applied to the subsequent year's expenditure requirement, and the Company may accelerate the expenditures at its discretion. If the Company elects not to meet the minimum expenditure obligation during any year but wishes to maintain the Earn-In Agreement in full force and effect, or if it is subsequently determined that the minimum amount was not expended in any given year, the Company shall pay the amount of any deficiency to Renaissance.
In the event the Company does not meet its minimum expenditure obligation in any year, it is obligated under the terms of the Earn-In Agreement to pay the amount of any deficiency to Renaissance Exploration, Inc. During each of the first two years, the Company has exceeded its minimum expenditure obligation and not been obligated to pay any amounts to Renaissance. The Company had an excess of approximately $133,000 in expenditures over the minimum requirement in the first year, and an excess of approximately $162,000 in expenditures over the minimum requirement in the second year and an excess of approximately $2,856,430 in the . . .
http://biz.yahoo.com/e/140213/lbsv10-q.html
See the full repot on sedar.com
Read more at http://www.stockhouse.com/companies/bullboard/lbsv/liberty-silver-corp#tOcfPhcM5kjSqAzh.99