[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[X]
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended January 31, 2012 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________________ to ___________________ |
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
or
[ ]
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report______________ |
455organization)
Contact Person)
Not Applicable | Not Applicable | |
Title of Each Class | Name of Each Exchange on Which Registered |
The
2012.
Large Accelerated File | o | Accelerated Filer | o | Non-Accelerated Filer | x |
US GAAP [ ]
International Financial Reporting Standards as issued by the International Accounting Standards Board [ ]
Other [X]
U.S. GAAP | o | International Financial Reporting Standards as issued by the International Accounting Standards Board | x | Other | o |
o
x
YEARS)
NOT APPLICABLE
Coral Gold Resources Ltd.,
In this annual report on Form 20-F, which we refer to as the “Annual Report”, except as otherwise indicated or as the context otherwise requires, the “Company”, “we” or “us” refers to Coral Gold Resources Ltd.
The following discussion contains
forward-looking statements.
We advise
resources may not form the basis of feasibility or pre-feasibility studies, or economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.
| ||
assay | ||
An analysis to determine the presence, absence or quantity of one or more | ||
au | ||
The elemental symbol for gold. | ||
carlin type | Carlin–type gold deposits are sediment-hosted disseminated gold deposits. These deposits are characterized by invisible (typically microscopic and/or dissolved) gold in pyrite and arsenopyrite. The deposit is named after the Carlin mine, the first large deposit of this type discovered in the Carlin Trend, Nevada. | |
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A rock resembling flint and consisting essentially of crypto-crystalline quartz or fibrous chalcedony. | ||
CIM Standards | Canadian Institute of Mining | |
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crystalline | consisting of or containing crystals. | |
devonian | is a geologic period | |
diamond drill | ||
A rotary type of rock drill that | ||
eocene | is the second of five era’s in the Tertiary Period and lasted from about 55.8 to 33.9 million years ago. | |
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A fracture in a rock where there has been displacement of the two sides. | ||
grade | ||
The concentration of each ore metal in a rock sample, usually given as weight percent. Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t or gpt) or ounces per ton (oz/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit. | ||
GSR | ||
Payment of a percentage of gross mining profits commonly known as gross smelter return royalty. | ||
heap leaching | A process whereby valuable metals, usually gold and silver, are leached from a heap, or pad, of crushed ore by leaching solutions percolating down through the heap and collected from a sloping, impermeable liner below the pad. | |
HQ diameter | is a diamond drill bit size with an outside diameter of 88.9 mm and an internal diameter of 77.8 mm. | |
hydrothermal | Hot fluids, usually mainly water, in the earth’s crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration. | |
intrusive | ||
A rock mass formed below the earth’s surface from magma which has intruded into a | ||
IRR | Internal Rate of Return | |
lode claim | A mining claim on an area containing a known vein or lode. | |
microcrystalline | material is a crystallized substance or rock that contains small crystals visible only through microscopic examination. | |
mineral reserve | The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of the reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral resources are sub-divided in order of increasing confidence into “probable” and “proven” mineral reserves. A probable mineral reserve has a lower level of confidence than a proven mineral reserve. The term “mineral reserve” does not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals. | |
mineral resource | The estimated quantity and grade of mineralization that is of potential economic merit. A resource estimate does not require specific mining, metallurgical, environmental, price and cost data, but the nature and continuity or mineralization must be understood. |
3
Mineral resources are sub-divided in order of increasing geological confidence into “inferred”, “indicated”, and “measured” categories. An inferred mineral resource has a lower level of confidence than that applied to an indicated mineral resource. An indicated mineral resource has a higher level of confidence than an inferred mineral resource, but has a lower level of confidence than a measured mineral resource. A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such grade or quality that it has reasonable prospects for economic extraction. | |
mineralization | |
Usually implies minerals of value occurring in rocks. | |
net smelter or NSRRoyalty | Payment of a percentage of net mining profits after deducting applicable smelter charges. |
NPV | Net Present Value |
| |
ore | |
A natural aggregate of one or more minerals which may be mined and sold at a profit, or from which some part may be profitably separated. | |
oxide | A compound of oxygen and some other element. |
paleozoic | is the earliest of three geologic eras of the Phanerozoic Eon, spanning from roughly 542 to 251 million years ago. |
phanerozoic eon | is the current geologic eon in the geologic timescale. It covers roughly 542 million years. |
placer claim | A mining claim located upon gravel or ground whose mineral contents are extracted by the use of water, by sluicing, hydraulicking, etc. |
porphyry | |
Rock type with mixed crystal sizes, i.e. containing larger crystals of one or more minerals. | |
quartz | |
| |
| |
Silica or SiO2, a common constituent of veins, especially those containing gold and silver mineralization. | |
RQD | Rock Quality Designation - a technique that is used in geotechnical engineering principles in which that determines the quality of rock that was recovered when taking a core sample. It means rock quality designation and representative cross sections of the core sample must reach, or exceed 90- 100 mm in length for it to be considered excellent in quality. |
| |
silurian | is a geologic period and system that extends from the end of the Ordovician Period, about 443.7 ± 1.5 million years ago (mya), to the beginning of the Devonian Period, about 416.0 ± 2.8 million years ago. |
| |
tertiary | a widely used term for the geologic period from 65 million to 2.6 million years ago. |
ton | Imperial measurement of weight equivalent to 2,000 pounds. |
tonne | |
Metric measurement of weight equivalent to 1,000 kilograms (or 2,204.6 pounds). | |
trench | |
A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure. | |
veins | |
The mineral deposits that are found filling openings in rocks created by faults or replacing rocks on either side of faults. | |
wenban limestone | Devonian limestones best exposed on the western flank of Wenban Peak south of the town of Cortez, Nevada. |
4
Advisers
‘‘Item 17 — Financial Statements.’’
Year Ended January 31, | ||||||||
2012 | 2011 | |||||||
Operations | ||||||||
Revenue | $ | - | $ | - | ||||
Expense | ||||||||
General and Administrative | 772,587 | 1,276,817 | ||||||
Net Income (loss) | (773,813 | ) | (1,559,781 | ) | ||||
Net Earnings (loss) Per Share | (0.02 | ) | (0.05 | ) | ||||
Weighted Average Number of Shares Outstanding | 33,483,650 | 31,294,001 |
As at January 31, | ||||||||||||
Balance Sheet | 2012 | 2011 | 2010 | |||||||||
Working Capital | $ | 1,166,663 | $ | 2,577,722 | $ | 630,567 | ||||||
Total Assets | 20,756,599 | 21,380,222 | 17,360,378 | |||||||||
Liabilities | 2,719,920 | 2,740,928 | 2,241,200 | |||||||||
Shareholders’ Equity | 18,036,679 | 18,639,294 | 15,119,178 |
Canadian GAAP | Year ended January 31, | ||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||
Operations | |||||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | |||||
Expense | |||||||||||||||
General and Administrative | 2,516,862 | 1,359,172 | 1,983,965 | 2,301,983 | 866,085 | ||||||||||
Net Loss | (3,746,165 | ) | (1,319,185 | ) | (2,528,614 | ) | (2,263,288 | ) | (983,665 | ) | |||||
Net Loss Per Share | (0.15 | ) | (0.06 | ) | (0.13 | ) | (0.16 | ) | (0.07 | ) | |||||
Weighted Average Number of | |||||||||||||||
Shares Issued | 24,979,312 | 23,570,728 | 19,857,210 | 14,369,643 | 13,889,676 |
As at January 31, | |||||||||||||||
Balance Sheet | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||
Working Capital | 959,419 | 3,322,447 | 2,196,772 | 36,519 | 1,400,605 | ||||||||||
Total Assets | 17,633,626 | 18,185,688 | 14,892,422 | 11,385,912 | 10,737,683 | ||||||||||
Liabilities | 5,378,755 | 3,925,356 | 3,991,576 | 3,711,170 | 2,761,897 | ||||||||||
Shareholders’ Equity | 12,254,871 | 14,260,332 | 10,900,846 | 7,674,742 | 7,975,786 |
5
Canadian | Year Ended January 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
Operations | ||||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Expense | ||||||||||||
General and Administrative | 1,613,713 | 2,516,862 | 1,359,172 | |||||||||
Net Income (loss) | 1,711,611 | (3,746,165 | ) | (1,319,185 | ) | |||||||
Net Earnings (loss) Per Share | 0.07 | (0.15 | ) | (0.06 | ) | |||||||
Weighted Average Number of Shares Outstanding | 25,093,778 | 24,979,312 | 23,570,728 |
As at January 31, | ||||||||||||
Balance Sheet | 2010 | 2009 | 2008 | |||||||||
Working Capital | $ | 648,921 | $ | 959,419 | $ | 3,322,447 | ||||||
Total Assets | 17,791,566 | 17,633,626 | 18,185,688 | |||||||||
Liabilities | 2,022,447 | 5,378,755 | 3,925,356 | |||||||||
Shareholders’ Equity | 15,769,119 | 12,254,871 | 14,260,332 | |||||||||
US GAAP | Year Ended January 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
Operations | ||||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Income (loss) for year under Canadian GAAP | 1,711,611 | (3,746,165 | ) | (1,319,185 | ) | |||||||
Adjustments: | ||||||||||||
Deferred exploration expenditures | (324,301 | ) | (1,683,613 | ) | (2,006,961 | ) | ||||||
Future income taxes | (2,774,334 | ) | 533,297 | 620,710 | ||||||||
Foreign exchange gain (loss) | (465,402 | ) | 866,933 | (553,133 | ) | |||||||
Net loss for the year under US GAAP | (1,852,426 | ) | (4,029,548 | ) | (3,258,569 | ) | ||||||
Unrealized gain (loss) on investment securities | 465,643 | (88,479 | ) | (19,352 | ) | |||||||
Comprehensive loss for the year per US GAAP | (1,386,783 | ) | (4,118,027 | ) | (3,277,921 | ) | ||||||
Loss per share under US GAAP | (0.06 | ) | (0.16 | ) | (0.14 | ) |
US GAAP | Year Ended January 31, | ||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||
Operations | |||||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | |||||
Loss for year under Canadian GAAP | (3,746,165 | ) | (1,319,185 | ) | (2,528,614 | ) | (2,263,288 | ) | (983,665 | ) | |||||
Adjustments: | |||||||||||||||
Deferred exploration expenditures | (1,683,613 | ) | (2,006,961 | ) | (1,646,060 | ) | (584,880 | ) | (897,908 | ) | |||||
Future income taxes | 533,297 | 620,710 | 479,270 | 187,865 | 262,275 | ||||||||||
Foreign exchange gain | 866,933 | (553,133 | ) | 89,877 | (214,051 | ) | (157,429 | ) | |||||||
Writedown of deferred exploration | |||||||||||||||
expenditures | - | - | - | - | - | ||||||||||
Net loss for the year under US GAAP | (4,029,548 | ) | (3,258,569 | ) | (3,605,527 | ) | (2,874,354 | ) | (1,776,727 | ) | |||||
Unrealized gain (loss) on investment | |||||||||||||||
securities | (88,479 | ) | (19,352 | ) | 76,693 | (14,581 | ) | 5,771 | |||||||
Comprehensive loss for the year per US | |||||||||||||||
GAAP | (4,118,027 | ) | (3,277,921 | ) | (3,528,834 | ) | (2,888,935 | ) | (1,770,956 | ) | |||||
Loss per share under US GAAP | (0.16 | ) | (0.14 | ) | (0.18 | ) | (0.20 | ) | (0.13 | ) | |||||
As at January 31, | |||||||||||||||
Balance Sheet | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||
Total assets under Canadian GAAP | 17,633,626 | 18,185,688 | 14,892,442 | 11,385,912 | 10,737,683 | ||||||||||
Adjustments | (14,393,768 | ) | (12,710,156 | ) | (10,635,312 | ) | (9,065,945 | ) | (8,466,484 | ) | |||||
Total assets under US GAAP | 3,239,858 | 5,475,532 | 4,257,110 | 2,319,967 | 2,271,199 | ||||||||||
Total equity under Canadian GAAP | 12,254,871 | 14,260,332 | 10,900,846 | 7,674,742 | 7,975,786 | ||||||||||
Adjustments | (9,783,392 | ) | (9,500,010 | ) | (7,492,743 | ) | (6,492,523 | ) | (5,866,876 | ) | |||||
Total equity under US GAAP | 2,471,479 | 4,760,322 | 3,408,103 | 1,182,219 | 2,108,910 |
As at January 31, | ||||||||||||
Balance Sheet | 2010 | 2009 | 2008 | |||||||||
Total assets under Canadian GAAP | $ | 17,791,566 | $ | 17,633,626 | $ | 18,185,688 | ||||||
Adjustments | (14,718,069 | ) | (14,393,768 | ) | (12,710,156 | ) | ||||||
Total assets under US GAAP | 3,073,497 | 3,239,858 | 5,475,532 | |||||||||
Total shareholders’ equity under Canadian GAAP | 15,769,119 | 12,254,871 | 14,260,332 | |||||||||
Adjustments | (13,337,109 | ) | (9,773,072 | ) | (9,489,690 | ) | ||||||
Total shareholders’ equity under US GAAP | 2,432,010 | 2,481,799 | 4,770,642 |
Year Ended | ||||
January 31, | Average | Period End | High | Low |
2005 | 1.2960 | 1.2380 | 1.3968 | 1.1774 |
2006 | 1.2060 | 1.1439 | 1.2704 | 1.1439 |
2007 | 1.1358 | 1.1792 | 1.1824 | 1.0990 |
2008 | 1.0603 | 1.0022 | 1.1853 | 0.9170 |
2009 | 1.0849 | 1.2364 | 1.2969 | 0.9719 |
Year Ended January 31, | Average | Period End | High | Low | ||||||||||||
2008 | 1.0603 | 1.0022 | 1.1853 | 0.9170 | ||||||||||||
2009 | 1.0849 | 1.2364 | 1.2969 | 0.9719 | ||||||||||||
2010 | 1.1272 | 1.0650 | 1.3000 | 1.0251 | ||||||||||||
2011 | 1.0260 | 1.0022 | 1.0778 | 0.9862 | ||||||||||||
2012 | 0.9970 | 1.0052 | 1.0604 | 0.9449 |
Month | High | Low |
February 2009 | 1.2890 | 1.2192 |
March 2009 | 1.3000 | 1.2245 |
April 2009 | 1.2643 | 1.1940 |
May 2009 | 1.1872 | 1.0872 |
June 2009 | 1.1625 | 1.0827 |
July 2009 | 1.1655 | 1.0790 |
6
B. Capitalization and Indebtedness
Month | High | Low | ||||||
January 2012 | 0.9986 | 1.0272 | ||||||
February 2012 | 1.0016 | 0.9986 | ||||||
March 2012 | 1.0015 | 0.9849 | ||||||
April 2012 | 1.0039 | 0.9807 | ||||||
May 2012 | 1.0349 | 0.9839 | ||||||
June 2012 | 1.0443 | 1.0210 |
B. | Capitalization and Indebtedness |
If the Company is unable to raise additional funds, it may not be able to develop its properties or any of its business plans as described in this Annual Report.
7
8
9
The economic feasibility of a project depends on numerous factors, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined using a given facility, the proximity of the mineral deposits to a user of the minerals, and the market price of the minerals at the time of sale. There is no assurance that existing or future exploration programs or acquisitions will result in the identification of deposits that can be mined profitably.
The Company is subject
Cautionary Note to United States Investors
The Company describes its properties utilizing mining terminology such as “measured resources” and “indicated resources” that are required by Canadian regulations but are not recognized by the SEC.United States investors are cautioned not to assume that any part of the mineral deposits in these categories will ever be converted into reserves.
10
In consideration of the acquisition, the Company issued one common share of the Company for every four common shares of Marcus, for a total of 347,964 common shares of the Company. In addition, each tendering Marcus shareholder received a non-transferable share purchase warrant, permitting such shareholders to purchase one additional common share of the Company at an exercise price of $2.00 per share for a period of up to two years from the closing date of the acquisition, for every two shares of the Company received on the share exchange.
At the Annual General Meeting of the Company on July 17, 2007, the shareholders of the Company passed an ordinary resolution amending the Company’s share structure by subdividing the Company’s issued share capital of 8,267,360 common shares without par value into 24,802,080 common shares without par value, every one common share being subdivided into three common shares, referred to as the “Subdivision”.
11
January 18, 2012. The first two technical reports were prepared by Robert McCusker, P.Geol. in accordance with NI 43-101 (“McCusker Reports”). The third and fourth reports were prepared by Beacon Hill Consultants (1988) Ltd. (“Beacon Hill”) of Vancouver, British Columbia (the “Beacon Hill Report”). The first Beacon Hill report was a NI 43-101 resource estimate that included the zones located within the Robertson’s Core claims only. The Company’s other claim blocks, including Norma Sass, Lander Ranch, Ruf, Blue Nugget and the Carve Out (Excluded) claims (joint ventured with Cortez Gold Mines (“Cortez”), a joint venture owned by Barrick Gold Corporation), were not part of the estimate. The 2012 report was an NI 43-101 compliant preliminary economic assessment of the advanced stage Altenburg Hill, Porphyry and Gold Pan zones analyzing a combination of open pit mining methods and cyanide heap leach.
Company/Date | Number of Claims | Option Payment | Production Royalty | Advance Royalty Payment | ||||||
Core: Tenabo Gold Mining Co. Nov. 30, 1975 | 13 | $ | 2M | 8% NSR | $12,000/yr | |||||
Northern Nevada Au, Inc. Sept. 30, 1986 | 12 | $ | - | 4% GSR | $9,600/yr | |||||
Albany Gold Corp. (Geomex) | All | $ | 1.25M | 3% NSR | Nil | |||||
Other Areas: Mauzy, et al Apr. 21, 1989 | 36 | $ | 1.5M | 2% NSR | $18,000/yr | |||||
Jay and Grace Wintle | 9 | $ | - | 5% GSR | $21,600/yr | |||||
Filippini/Breckon (June Claims) | 6 | $ | 1M | 3% NSR | $25,000/yr |
offset and/or follow up existing drill intersections and surface gold anomalies.
389,387. In fiscal 2012 the Company increased the reclamation bonds by US$34,600. As at January 31, 2012, the total reclamation deposits were $417,393 (US$416,228).
NI 43-101.
McCusker.
In the fiscal year ending January 31, 2008, the Company purchased 100% interest in the 72 claims comprising the Fanny Komp/Elwood Wright lease which forms part of the core area of the Robertson Property for US$250,000.
12
In February 2008, the Company received the final NI 43-101 compliantMineral Resource Estimate for the Robertson Property, Lander County, Nevadareport dated January 27, 2008, prepared by Beacon Hill Consultants Ltd. (“Beacon Hill”) of Vancouver, British Columbia. The new estimate, based on a gold price of US$600 per ounce, raises the Robertson Property inferred resource to over 2.3 million ounces of gold—an increase of 110% over the previous NI 43-101 estimate from April 2006. A portion of the oxide resources are locally exposed at the surface and are potentially in an open pit mining configuration. Some of the new resources remain open to expansion on strike and at depth.
The zones included in the Beacon Hill estimate are located within the Robertson’s Core Claims only. Beacon Hill reported the following updated resource estimate:
Zone (Core Claims) | Qty | Grade | Qty | Grade | Contained | ||||||||||
(Tons) | oz Au/ton | (Tonnes) | g Au/tonne | oz Au | |||||||||||
Distal | 10,355,041 | 0.0335 | 9,376,398 | 1.148 | 346,893 | ||||||||||
39A | 25,010,247 | 0.0287 | 22,690,382 | 0.984 | 717,794 | ||||||||||
Triplet Gulch | 5,904,713 | 0.0269 | 5,357,012 | 0.922 | 158,837 | ||||||||||
Outside | 2,187,500 | 0.0208 | 1,984,595 | 0.713 | 45,500 | ||||||||||
Gold Pan Oxide | 7,049,181 | 0.0262 | 6,395,323 | 0.898 | 184,689 | ||||||||||
Altenburg Hill Oxide | 4,558,402 | 0.0208 | 4,135,580 | 0.713 | 94,815 | ||||||||||
Porphyry Oxide | 19,121,927 | 0.0213 | 17,348,243 | 0.730 | 407,297 | ||||||||||
Gold Pan Sulphide | 12,053,279 | 0.0208 | 10,935,258 | 0.713 | 250,708 | ||||||||||
Altenburg Hill Sulphide | 584,016 | 0.0176 | 529,845 | 0.603 | 10,279 | ||||||||||
Porphyry Sulphide | 4,480,533 | 0.0223 | 4,064,934 | 0.765 | 99,916 | ||||||||||
TOTALS | 91,284.800 | 0.0250 | 82,817,600 | 0.870 | 2,316,728 |
For details on claim and gold zone locations, please see corresponding maps and diagrams at the Company’s website atwww.coralgold.com. The information contained in the Company’s website does not form part of this Annual Report.
Resource estimate parameters:
The Company commissioned Beacon Hill to not only update the Robertson resource estimate but to also outline a program for continued development of the Core Claims in 2008 and beyond. Beacon Hill recommended a three-pronged development approach:
13
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Beacon Hill recommended the following drilling on the Core Claims:
Phase I:52 RC holes ranging in depth from 500 ft to 1,200 ft and totaling 37,600 ft, to focus on:
Phase II:should consist of 21 diamond core holes (HQ diameter) ranging from 300-ft to 1,000-ft-deep and totaling 11,900 ft. The purpose of core drilling is to provide geological data on the controls of mineralization, acquire geotechnical data (RQD and specific gravity), confirm grade and continuity and provide material for metallurgical testing. Drilling has been recommended as follows:
Mr. Garth D. Kirkham, P.Geo., and Mr. Peter Stokes, P.Eng., of Beacon Hill and Mr. Robert McCusker, Consultant Geologist and Project Manager, are responsible for preparing the report and are “qualified persons” in accordance with NI 43-101. Messrs Kirkham, Stokes and McCusker are independent of the Company as defined by NI 43-101.
Deep drilling in 2007 encountered Carlin-type geochemistry including gold in the important lower plate host rocks for Carlin-type structure beneath the Roberts Mountains thrust fault. The gold intercepts indicate a Carlin type system in Lower Plate rocks on a western part of the property.
14
Property increased to 178.9 million tons at a grade of 0.0189 oz Au/ton and containing 3.4 million ounces, which is a 47% increase over the figure reported in the 2008 report.
1) | Additional exploratory and definition drilling to increase the resource base and the level of confidence in the resource to the indicated and/or measured categories. |
2) | Complete a metallurgical program to enhance the metallurgical data. |
3) | Commence a preliminary assessment study on the mineralized zones within the Robertson Property to determine which of the zones have the greater potential for viability. |
· | 39A Zone: Ten holes totaling 8,400 feet drilled along the southeast and northeast margins of the zone to test for additional high-grade mineralization. |
· | Distal Zone: Ten holes totaling 12,000 feet drilled in the Distal Zone, which remains open for discovery of high-grade mineralization in all directions. |
· | Altenburg Hill/South Porphyry Area: Twenty holes totaling 10,000 feet as infill and offset drilling on the northeast flank of Altenburg Hill and in the gravel- covered area south of the Porphyry Zone. |
· | Triplet Gulch: Twelve wide-spaced RC holes totaling 7,200 feet to test potential continuity and grade of inferred mineralization. |
· | 39A Zone: Six “twin” core holes totaling 5,000 feet focused in areas of higher grade mineralization. |
· | Distal Zone: Four pre-collared “twin” core holes totaling 2,400 feet drilled to confirm grade and geological controls. |
· | Altenburg Hill/South Porphyry Area: Six (or more) “twin” core holes totaling 3,000 feet to provide ore-grade oxide mineralization for metallurgical studies and confirm the grade and continuity of mineralization. |
· | Gold Pan Zone: Five shallow “twin” core holes totaling 1,500 feet drilled mainly to provide ore-grade oxide mineralization for metallurgical studies and to confirm grade, continuity and geological controls for mineralization. |
RobertReport, the Company has not received acceptance of the report.
Zone | Tons | Ounces per Ton | Ounces of Au |
Distal | 13,310,451 | 0.0287 | 382,010 |
39A | 38,945,698 | 0.0228 | 887,962 |
South Zone | 9,993,853 | 0.0209 | 208,872 |
Outside | 5,422,131 | 0.0156 | 84,585 |
Gold Pan Oxide | 12,566,599 | 0.02 | 251,332 |
Altenburg Hill Oxide | 12,873,976 | 0.0152 | 195,684 |
Porphyry Oxide | 39,049,182 | 0.0167 | 652,121 |
Gold Pan Sulphide | 32,524,592 | 0.0154 | 500,879 |
Altenburg Hill Sulphide | 1,701,844 | 0.014 | 23,826 |
Porphyry Sulphide | 12,535,861 | 0.0158 | 198,067 |
TOTAL | 178,924,188 | 0.0189 | 3,381,667 |
· | Cut-off grade was calculated on the basis of US$850/oz Au and 70% Au recovery. |
· | The 0.0106 ozAu/ton cut-off grade utilized to report the resource was derived from a mining cost of US$1.02/ton, process cost of US$5.00/ton and waste cost of US$1.14/ton. |
· | The mineral resources in the table above were estimated using the CIM Standards on Mineral Resources and Reserves. |
· | The database comprised a total of 1,160 drill holes, 533,453 feet (162,638 metres) of drilling and 101,757 gold assays. |
· | The inferred resource covers 6 distinct and separate areas; Distal, 39A, Gold Pan, Porphyry, Altenburg Hill, Southern Area and then all remaining blocks outside these areas that warrant inclusion as an inferred resource. In addition, Gold Pan, Porphyry and Altenburg Hill were separated into oxide and sulphide zones for analysis and modeling. |
· | An interpreted mineralized envelope was modeled into a solid in MineSight 3D™, with six area mineralized zones and then separated into oxide and sulphide zones. |
· | Block dimensions of 25 feet (7.6 m) North, 25 feet (7.6 m) east and 20 feet (6 m) vertically. |
· | Grade interpolation of 20 foot (6 m) composites. |
· | Composites greater than 0.75 ozAu/ton limited in influence to 100 feet (30.5 m). |
· | Tonnage estimates are based on 200 bulk historic density measurements carried out by previous operators. These were assigned to each block by zone. The resources are categorized as inferred since the amount and distribution of bulk tonnage factor data is sparse. |
All Zones | Au Cut-off | Au Price | Tons | Ounces Per Ton | Ounces of Au |
0.009 | 1000 | 259,786,897 | 0.016 | 4,156,590 | |
0.0095 | 950 | 215,146,526 | 0.0174 | 3,743,550 | |
0.0106 | 850 | 178,924,188 | 0.0189 | 3,381,667 | |
0.012 | 750 | 149,133,203 | 0.0205 | 3,057,231 | |
0.0129 | 700 | 125,174,186 | 0.0221 | 2,766,350 | |
0.015 | 600 | 91,284,840 | 0.0253 | 2,309,506 |
· | Storage of the mineralized zone code and percentage of mineralization. |
· | Application of density based on limited SG measurements. |
· | Estimation of the grades for Au using ordinary kriging. |
· | Ellipsoid orientation was orthogonal and ranges were set to 300 feet in the northing and easting whilst 200 feet in elevation. |
· | Est. inferred resources at a cut-off of 0.005 ozAu/t | 78.2 million tons grading 0.0138 ozAu/t. |
· | In situ gold | 1,080,900 ozs |
· | Development period to construction decision | 5 years |
· | Mine life | 10.5 years |
· | Average production rate | 21,300 tpd |
· | Ore to waste Strip Ratio | 0.6:1 |
· | Leach recovery HG cut off 0.0147 ozAu/t | 67% |
· | Leach recovery LG cut off 0.005 to 0.0147 ozAu/t | 45% |
· | Saleable gold | 608,000 ozs |
Note: | Due to the uncertainty that may be attached to an inferred mineral resource, it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured resource as a result of continued exploration. |
Description | Owner Operated | Contractor Operated |
US$ millions | US$ millions | |
Development Cost | 16.5 | 16.5 |
Initial Capital Cost | 122.1 | 97.0 |
Ongoing Capital Cost | 54.2 | 26.1 |
Average Operating Cost US$/ton mined | 5.28 | 6.45 |
Gold Price US$/oz | IRR % | NPV undiscounted US$ million | NPV discounted 5% US$ million | Payback Period Years |
1350 | 15.44 | 180.6 | 96.2 | 5.91 |
1500 | 20.13 | 247.2 | 147.1 | 4.72 |
1750 | 27.40 | 358.3 | 230.7 | 3.91 |
Gold Price US$/oz | IRR % | NPV undiscounted US$ million | NPV discounted 5% US$ million | Payback Period Years |
1350 | 15.43 | 159.4 | 85.4 | 5.94 |
1500 | 20.96 | 226.4 | 135.9 | 4.86 |
1750 | 29.18 | 337.8 | 219.7 | 3.82 |
Note: | It should be noted that the economic analysis of this deposit is based upon the expenditures from the time a construction decision is taken and that all development costs to that point have been considered as sunk costs whether they have been expended or not at this time. |
Description | Estimated Cost $ |
Royalty and Regulatory Fees | 351,680 |
Exploratory and definition drilling | 2,817,000 |
Metallurgical test work program | 900,000 |
Environmental program | 1,826,138 |
Preliminary Feasibility Study | 1,495,000 |
Contingency | 510,182 |
Total | 7,900,000 |
1. | Porphyry Zone: “Twinning” 10 percent (20 holes) of the historic drill holes by diamond core drilling to determine if “historic” Amax drilling data can be used with confidence to upgrade the level of confidence in the resources. In addition, a further 17 RC holes, totaling about 7,600 ft, to be drilled along the west and south boundaries of the Porphyry Zone to test for possible extensions to mineralization. |
2. | Altenburg Hill/South Porphyry Area: Twenty-five RC holes totaling 12,400 ft. |
3. | Gold Pan Zone: Twenty wide-spaced diamond core holes totaling 10,000 ft to verify continuity and grade retuned in historic drilling. |
4. | Altenburg Hill/South Porphyry: Based on results on the Phase I RC drilling follow up diamond core drilling (20 holes) is to be conducted in this area. |
· | prepare composite material representing larger zones of each deposit to define the crush size and other process conditions; |
· | crushing work index and abrasion testing; |
· | mineralogical evaluation of column feed and products; |
· | extensive column work to determine optimum crush size and other process conditions; |
· | similar testing as was performed on oxide materials to be done on sulfide and transition zone materials; |
· | additional processing parameters to be investigated including reagent use and concentrations; |
· | leach evaluation on material that is below the cut-off grades of the various deposits which was classified as waste based on dump leaching of run of mine, low grade materials; and |
· | laboratory test work on up to 10 tonnes of 100% minus 300 mm (~12”) feed. |
· | Nevada State Highway 305, a paved all weather road which is the main access to Barrick’s Cortez Operations (adjoins the Robertson Property to the south) crosses the south east corner of the property; |
· | A network of gravel roads give easy access to the gold resources at the Robertson Property; |
· | The gold resources are on the south east edge of the Shoshone Range. The leach pads can be built on the basinal flat land, only a short haul from the planned pits; |
· | The electric power transmission line which supplies Cortez, parallels State Highway 306 and crosses the Robertson Property. The proposed gold recovery plant would be built adjoining the power transmission line. (ie. internal power lines will be very short); |
mineral resources and no further work on the Carve-Out Claims is proposed at this time.
Nevada, U.S.A
On December 4, 2002, the Company granted an option to acquire 33.3% of the Company’s interest in the Norma Sass and Ruf Claims to Goldfranchise Corporation, referred to as “Goldfranchise”. In order to earn the interest, Goldfranchise was required to: (a) pay the Company US$38,391.50, which has been received by the Company; (b) incur a minimum of US$300,000 in exploration work on the Norma Sass and Ruf Claims, of which US$100,000 had to be incurred on or before December 4, 2003, and the balance of US$200,000 incurred on or before December 4, 2004; and (c) pay the Company 33.3% of all annual land fees, taxes, advance royalties required to keep the claims in good standing, until Goldfranchise has exercised the option. Goldfranchise failed to incur the exploration work required or to pay the Company 33.3% of all annual land fees, taxes and advance royalties under the option, and the option has since been terminated.
Barrick may earn a 60% interest by incurring total exploration expenditures of at least US$3 million in annual installments by December 31, 2014. Barrick may earn an additional 10% (for an aggregate interest of 70%) by incurring an additional US$1.5 million by December 31, 2015. Barrick may earn an additional 5% (for an aggregate interest of 75%) by carrying the Company and Levon through to commercial production.
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Alternatively, at the time of earning either its 60% or 70% interest, Barrick may be given the option to buy-out the Company’s and Levon’s joint interest by paying US$6 million and granting them a 2% net smelter returns royalty.
Nevada.
Norma Sass’ proximity to Pipeline, offershole. These formations are the deep discovery potential Barrick is pursuing. They have completely remapped and reinterpretedmajor host rocks for the gold deposits at the Pipeline, open pit geology since their acquisition of Placer Dome,Gold Acres and have a new stratigraphic model for the host rocks and structural setting of the gold deposit.
Cortez Hills mines.
June Claims
Norma Sass property. The Company continues to keep claims in good standing.
Reclamation Activities
The Company spent approximately $176,672 on reclamation and maintenance in fiscal 2009 on the Robertson Property. The Company is reclaiming past mining and exploration related disturbances to public lands as required by the Bureau of Land Management (“BLM”) and the Nevada Department of Environmental Protection (“NDEP”).
In August 2008, SRK Consulting prepared an “Aerial Survey Ground Truthing and Revised Cost Estimate” Report for the Company, which following amendments and revisions was submitted to the BLM and NDEP in October 2008.
The report outlined and updated results of reclamation done by the Company at the Robertson Property up to 2008.
The BLM and NDEP replied with required changes and updates in March/April 2009 and a revised “Aerial Survey Ground Truthing and Revised Cost Estimate” was prepared by SRK Consulting on June 10, 2009 and submitted to the BLM and NDEP. The Company is awaiting acceptance of the report.
In other reclamation activity, The Company resolved confusion concerning disturbance at Mill Gulch (in the Robertson Core area) and at the Company’s JDN claims in the Hilltop area. The BLM agreed in July 2008 that the Company is not responsible for the land disturbance at Mill Gulch. The disturbance was caused by placer gold mining activity before the Company’s involvement at Robertson.
In the Try/View area of the Robertson Property
In the core area of the Robertson Property, the Company also submitted a new “Storm Water Pollution Prevention Plan” and technical report which was approved by the BLM and NDEP in June 2009.
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In addition the Company has authorized SRK Consulting to prepare:
(a) Comprehensive Permit, List and Schedules (a diary of permitting requirements); and
(b) memo of existing reclamation status and planning for further reclamation.
During the year ended January 31, 2009, additional planned exploration activities were approved by the BLM. Accordingly, the BLM increased the amount of the required reclamation deposit to US$389,360.
Competition
The mining industry in which the Company is engaged is highly competitive. Competitors include well-capitalized mining companies, independent mining companies and other companies having financial and other resources far greater than those of the Company. The companies compete with other mining companies in connection with the acquisition of gold and other precious metal properties. In general, properties with a higher grade of recoverable mineral and/or which are more readily minable afford the owners a competitive advantage in that the cost of production of the final mineral product is lower. Thus, a degree of competition exists between those engaged in the mining industries to acquire the most valuable properties. As a result, the Company may eventually be unable to acquire attractive gold mining properties.
Dependence on Customers and Suppliers
The Company is not dependent upon a single or few customers or suppliers for revenues or its operations.
Government Regulation
We are subject to various federal and state laws and regulations including environmental laws and regulations. Environmental regulations impose, among other things, restrictions, liabilities and obligations in connection with the generation, handling, use, storage, transportation, treatment and disposal of hazardous substances and waste and in connection with spills, releases and emissions of various substances to the environment. Environmental regulation also requires that facility sites and other properties associated with our operations be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. In addition, certain types of operations, including exploration and development projects and changes to certain existing projects, may require the submission and approval of environmental impact assessments or permit applications. Compliance with environmental regulation can require significant expenditures, including expenditures for clean up costs and damages arising out of contaminated properties and failure to comply with environmental regulations may result in the imposition of fines and penalties. We believe that we are in substantial compliance with such laws and regulations. However, such laws and regulations may change in the future in a manner which will increase the burden and cost of compliance.
Certain laws and governmental regulations may impose liability on us for personal injuries, clean-up costs, environmental damages and property damages, as well as administrative, civil and criminal penalties. We maintain limited insurance coverage for sudden and accidental environmental damages, but do not maintain insurance coverage for the full potential liability that could be caused by sudden and accidental environmental damage. Accordingly, we may be subject to liability or may be required to cease production from properties in the event of such damages.
Environmental Regulations
The Company’s exploration programs in Nevada and California are subject to state and federal regulations regarding environmental considerations. All operations involving the exploration for the production of minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of streams and fresh water sources, odor, noise, dust and other environmental protection controls adopted by federal, state and local governmental authorities as well as the rights of adjoining property owners. The Company may be required to prepare and present to federal, state or local authorities data pertaining to the effect or impact that any proposed exploration for or production of minerals may have upon the environment.
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All requirements imposed by any such authorities may be costly, time consuming and may delay commencement or continuation of exploration or production operations. Future legislation may significantly emphasize the protection of the environment, and, as a consequence, the activities of the Company may be more closely regulated to further the cause of environmental protection. Such legislation, as well as further interpretation of existing laws in the United States, may require substantial increases in equipment and operating costs to the Company and delays, interruptions, or a termination of operations, the extent of which cannot be predicted. Environmental problems known to exist at this time in the United States may not be in compliance with regulations that may come into existence in the future. This may have a substantial impact upon the capital expenditures required of the Company in order to deal with such problem and could substantially reduce earnings. At the present time, the Company’s exploration activities in Nevada are in compliance with all known environmental requirements.
The regulatory bodies that directly regulate the Company’s activities are the Bureau of Land Management (Federal) and the Nevada Department of Environmental Protection (State).
C. Organizational Structure
The Company has two wholly-owned subsidiaries, Coral Energy Corporation of California, a California corporation which holds title to the Company’s California property, and Coral Resources, Inc., a Nevada corporation, which holds title to the Company’s mining claims located in Nevada. In the 2006 fiscal year, the Company completed the purchase of 1,391,860 shares, representing 98.49% of the issued shares, of Marcus, a Nevada Corporation that owns the Marcus mining claims, consisting of 39 unpatented lode claims and two placer claims, and which comprise a portion of the Company’s Robertson Property.
D. Property, Plant and Equipment
Presently, the Company is an “exploration stage company”, as all of the Company’s properties are currently in the exploratory stage of development. In order to determine if a commercially viable mineral deposit exists in any of the Company’s properties, further geological work will need to be done and a final evaluation based upon the results obtained to conclude economic and legal feasibility.
The Company’s primary focus has been on the Robertson Mining Claims, in Nevada, United States.
Robertson Mining Claims, Nevada, U.S.A.
The Robertson Mining Claims are located in Crescent Valley, Nevada on the western flanks of the Shoshone Range, 28 miles to the southeast of Battle Mountain, Nevada, which lies some 230 miles northeast of Reno, Nevada. The Robertson Mining Claims comprise approximately 11,000 acres in the Bullion Mining District, Lander County, Nevada, and currently include 724 unpatented and patented lode and placer mining claims. The Robertson Mining Claims comprise three separate claim groups known as: (i) the Core Claims; (ii) the Carve Out Claims, and (iii) the Norma Sass and Ruf Claims. as described more particularly below.
These mining claims have been acquired over a period of several years from different sources. The entire Robertson Mining Claims are subject to a 3% net smelter royalty to Geomex Development Eighth Partnership, referred to as “Geomex 8”, which royalty shall cease at such time as the sum of US$1,250,000 has been paid to Geomex 8, and various mining leases requiring minimum annual advanced royalties ranging from 2% to 8% of net smelter returns.
There is no underground or surface plant or equipment located on the Robertson Mining Claims.
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(i) Robertson Property
The Robertson Property is the subject of three technical reports dated January 15, 2004, April 25, 2006 and January 27, 2008. The first two technical reports were prepared by Robert McCusker, P.Geol. in accordance with NI 43-101, which we refer to as the “McCusker Reports”. The third and most recent report was prepared by Beacon Hill of Vancouver, British Columbia referred hereinto as the “Beacon Hill Report”. The zones included in the Beacon Hill estimate are located within the Robertson’s Core claims only. The Company’s other Claim blocks, including Norma Sass, Lander Ranch, Ruf, Blue Nugget and the Excluded claims (joint ventured with Cortez Gold Mines), were not part of the estimate.
Property Description and Location
The Robertson Property is an advanced-stage gold exploration project located in eastern Lander County, Nevada, 60 miles southwest of Elko. Coral Resources, Inc., a subsidiary of Coral Gold Resources Limited of Vancouver, B.C. acquired control of the Robertson Property in 1986. The core property consists of 556 unpatented federal lode claims, mill sites, placer claims and nine patented lode claims covering over 8,500 acres of public lands administered by the BLM. The Company is record owner of 495 claims and controls an additional 61 claims through a series of mineral leases and option agreements.
In 2001, a boundary agreement between the Company and Cortez resolved claim boundary overlaps and seniority issues along the east and south sides of the Robertson claim block. This agreement required both parties to amend and/or abandon certain claims in order to achieve the agreed upon boundary. This was completed during the 2002-2003 assessment year.
Approximately 61 of the 495 of the claims that comprise the Robertson Property are controlled by the Company through six mining leases and option agreements. The Core Claims held by the Company under lease or option agreements require minimum advance royalty payments and production royalties in the event of production. Total annual payments for the various leases and minimum advance royalties are US$36,000.
A summary compilation of the terms of these agreements are presented in the table below:
Mining Lease and Option Agreements
Annual federal rental fees of US$81,760, payable to the BLM, and Notice of Intent to Hold Mining Claims have been filed for the 2009-2010 assessment year.
Environmental Liabilities
In 1988-89, the Company operated a small open pit gold mining operation and heap leach facility on the Robertson Property. The resulting disturbances include three small open pit mines, waste dumps, haul roads, drill roads, open drill holes, and a 350,000 ton heap leach facility and related recovery plant. In 1994, a reclamation plan was prepared by Amax Gold Exploration Inc., referred to as “Amax”, and submitted to the Battle Mountain office of the BLM.
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The cost to perform the reclamation of the Robertson mine site was estimated at that time to be US$2,000,000. In 2001, the Company began reclamation activities which were accelerated in 2002, with the recontouring of waste dumps, reclamation of the leach pad, haul roads and the filling of all open drill holes. As a result of this activity, in June 2003, the BLM reduced the bonding requirements for the project to US$406,000.
In March 2003, on behalf of the Company, SRK Consulting submitted a final plan for permanent closure with the BLM and NDEP. The closure plan was approved by both agencies. As a result of this work, during 2004 the BLM lowered the bonding requirements to $226,205. The Company currently maintains a required performance bond with the Nevada State Office of the BLM in the amount of US$389,360. The Company is working with the BLM and the United States Department of Interior in efforts to further reduce the bond.
Permitting
In 2002, the Company submitted and was granted a five year renewal of Water Pollution Control Permit (NEV60035) by the NDEP for the Robertson Property. In addition, the Company continues to conduct reclamation and exploration activities under a Plan of Operation (NV067688) approved in 1989 by the BLM.
During 2000 through 2003, no exploration activity was conducted on the Robertson Property. However, during that period a significant amount of surface reclamation was completed on the property. As a result, new exploration activities in reclaimed areas will require submission and approval of an Amendment to the Plan of Operation. Additionally, theNational Historic Preservation Actrequires that all operators on public lands conduct an archeological survey of the proposed sites of new disturbance. Much of the Robertson Property has been previously cleared under various surveys conducted by Amax. Recent and planned future exploration activities by the Company have moved outside the area covered by previous archeological surveys. It is possible that future exploration will experience delays in receiving approval because additional surveys will be required by state and federal agencies.
During 2004 through 2006, the Company conducted exploratory drilling under a series of amendments to the Plan of Operation which were approved by the Battle Mountain office of the BLM and NDEP. The 2007 deep drilling was conducted under a Notice of Intent as the proposed drilling activities were outside the area covered by the Plan of Operation. In November 2007, the Company submitted a consolidated Plan of Operations which was approved by the BLM and NDEP in April 2008.
There are no known environmental or threatened and endangered species issues at the Robertson Property that would provide grounds for denial of approval of an Amended Plan of Operation.
History and Exploration
The Robertson Property is located in the Tenabo area, a sub-district of the Bullion mining district. Historic lode mining in this district dates from 1905 and placer gold was discovered in many of the dry washes in the Tenabo area in 1916. Between 1937 and 1939, a small dragline dredge and washing plant operated in the district, and a dredge was reported by Humphrey to be operating in lower Mill Gulch in 1945.
During 1966 through 1970, a number of companies explored the district in search of porphyry copper-style mineralization. In 1968, while drilling a series of shallow rotary holes near the Gold Pan mine, Superior Oil discovered a small, but relatively high-grade zone of gold at shallow depths in what is now known as the Gold Pan zone. However, with additional drilling, Superior Oil quickly lost interest in the district. They were soon followed by a number of mainly Vancouver-based junior mining companies, including Placer Development (1974-75), Teck Corporation (1977), Aaron Mining Ltd. (1975-86), and E & B Exploration Ltd. (1980-81), all of which sporadically explored the Tenabo area with limited success. A summary of the drilling completed by these companies prior to the Company’s involvement (1986) is presented in the table below:
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Summary of Pre-Coral Drilling Activities at Robertson Property
Date of | Number and Type of | Drill | ||
Company | Activity | Holes Drilled | Footage(ft) | Target |
Superior Oil | 1968-70 | 92 Conv. Rotary | c. 32,000 | Gold Pan |
Placer Development | 1973-74 | 23 Conv. Rotary | c. 3,500 | none |
Teck Corporation | 1977 | None | none | none |
Aaron Mining Ltd. | 1977 | 7 Conv. Rotary | c.300 | Gold Quartz |
E & B Exploration Ltd. | 1980-81 | 148 Rev. Circulation | 30,807 | Gold Pan |
Totals | 270 | 66,607 |
Modern open pit mining and heap leaching began as early as 1974, when Aaron Mining Ltd., referred to as “Aaron”, initiated a pilot leach operation on the Robertson Property. From 1978 through 1980, Aaron expanded its leaching operations and continued exploration and acquiring claims in the district.
In 1986, the Company acquired Aaron’s interest in the Robertson Property and immediately began a series of major drilling programs beginning in 1986 and continuing until 1989. Mining operations on the Robertson Property commenced in 1988, but were suspended less than one year later. During the operating life of the Robertson Property mine, approximately 350,000 tons of low-grade material was placed on leach pads from which about 6,200 ounces of gold were recovered.
During 1986 through 1989, the Company completed approximately 380 reverse circulation drill holes and seven diamond drill holes, totaling about 109,377 ft. Much of this drilling was focused in four resources areas including the Gold Pan, Gold Quartz, Gold Quartz extension (also called Gold Quartz West) and the Triplet Gulch areas. The purpose of this drilling was to determine the limits and continuity of mineralization within these zones. Nearly all of the reverse circulation holes were drilled vertically to an average depth of about 300 ft.
During the later stages of the exploration program, the Company completed two “deep” reverse circulation holes that reached depths of 1,400 ft and 1,810 ft, respectively. In addition to resource definition, the Company also embarked on a program of district-wide exploratory and follow-up drilling of numerous surface anomalies.
In 1990, the Company and Amax entered into an amended and restated option and earn-in agreement in which Amax could earn a 60% interest in the Robertson Property by producing a bankable feasibility study. From 1990, until Amex withdrew from the venture in 1996, Amax completed an exploration program that included drilling 338 reverse circulation holes and 62 diamond drill holes, totaling over 176,000 ft.
In 1998, Cortez, entered into an option and earn-in agreement with the Company in which Cortez could earn a 70% interest in the Robertson Property by producing a bankable feasibility study. The focus of Cortez’s exploration was to expand the 39A zone and test a number of outlying targets. During 1999, Cortez completed 46 reverse circulation drill holes and a single flood rotary hole, totaling 57,000 feet. Of the 13 holes directed at expanding the 39A zone, only two holes, 99401 and 99413, encountered significant mineralization. This drilling program did little to expand the resource. Of the remaining holes drilled by Cortez, only two holes (99406 and 99419) encountered significant mineralization. Both holes were designed to offset and/or follow up existing drill intersections and surface gold anomalies.
After completing this drilling program, Cortez declared its interest in renegotiating the terms of the Option Agreement with the Company. When the Company declined, Cortez subsequently terminated the Option Agreement on December 30, 1999, and did not earn an interest in the Robertson Property.
During 2004 and 2005, the Company conducted three drilling programs consisting of 32 reverse circulation holes totaling 24,020 ft on the Robertson Property. The focus of this exploration was to expand and further define the 39A Zone, test the “deep” Gold Pan Zone for extensions of the 39A Zone and offset previous ore-grade intersections in the “distal target area”.
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The Phase I and Phase II drilling programs in 2006 totaled 35,615 ft of reverse circulation drilling in 46 holes. Depths ranged from 450 ft to 1,500 ft. Due to the relatively flat-lying nature of mineralization at Robertson, all holes were drilled vertically.
The 2007 deep drilling program on the Robertson Property encountered Carlin-type mineralization, locally with strongly anomalous gold values, in the lower plate of the Robert Mountains thrust fault. The program consisted of two flooded reverse circulation drill holes totaling 6,450 ft.
In 2008, the Company entered into a contract for 37,600-feet of reverse circulation drilling on the Company’s 100% owned Robertson property at Crescent Valley, Nevada. The agreement, signed with Lang Exploratory Drilling of Salt Lake City, Utah, began in April following permit approval from the BLM.
In Phase I, the Company drilled 52 reverse circulation holes and Phase II included 11,000 ft of diamond drilling.
Both Phase I and Phase II were aimed at expanding and upgrading Robertson’s 2.3 million-ounce inferred resource. In February 2008, Beacon Hill reported the Robertson resource, to date situated in a small portion of the property, had increased by more than 110% from the previous calculation. The updated resource was calculated from work completed in 2006 and 2007. With the 2008 drilling, the Company hoped to upgrade a significant portion of the inferred resources into the measured and indicated categories.
The reverse circulation drilling of Phase I ranged in depth from 500 to 1,200 ft. The work was focused on key, shallow-lying zones locally exposed on surface and also potentially in an open pit mining configuration. Some of the new resources remained open to expansion on strike and at depth.
The planned 21 diamond drill holes of Phase II ranged from 300 to 1,000 ft in depth. Phase II drilling would:
1) provide geological data on the controls of mineralization; 2) provide geotechnical data for RQD (“Rock Quality Designation”) and specific gravity; 3) help confirm grade and continuity; and 4) provide material for metallurgical testing.
The Company continued to reevaluate all past Robertson exploration data and apply some new insights into gold controls in the Cortez Gold Trend, preparing for the 2008 resource expansion drilling.
To help derive exploration priorities to expand the current resource with the 2008 drilling campaign, a series of in-house, draft open pit shapes had been modeled around the 2008 NI 43-101 compliant inferred resource.
The inferred resource estimate of 2.3 million ounces of gold grading 0.0250 oz/ton (0.870 g/tonne was announced in February 2008 and a NI 43-101 compliant report is posted on the Company’s website for review athttp://www.coralgold.com/i/pdf/Robertson43-101Final.pdf. The information contained in the Company’s website does not form part of this Annual Report.
The loosely constrained open pit shapes were calculated at the posted resource cut off grades, for gold prices that range from $600 to $2000 per ounce gold. For simplicity, off site toll milling was considered and loosely estimated Nevada operating costs were used to produce non engineered, simple and idealized open pit shape alternatives. The point of the exercise is not to mimic or consider production alternatives, but provide semi quantitative exploration insight into where added resources might be most effective in any future open pit alternatives.
In February 2009, the Company completed its reverse circulation drilling program at the Robertson Property in Crescent Valley, Nevada, USA.
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The program totaled 22,835 ft of drilling in 33 vertical holes which ranged in depth from 500 to 1200 ft. The holes were located on the Altenburg Hill, South Porphyry, 39A and Distal zones in order to increase the gold resource in these zones. Hole locations can be viewed in maps on the Company’s website atwww.coralgold.com. The information contained in the Company’s website does not form part of this Annual Report.
Geological Setting
Geologically, the Robertson Property consists of a series of relatively flat-lying, vertically stacked thrust sheets that form part of the Roberts Mountain allochthon, which is composed of siliciclastic rocks of Ordovician through Devonian age. The district is dominated by a very thick sequence of middle to late Devonian Slaven Chert composed mainly of argillite, chert, lesser siltstone and shale, and minor intermediate volcanic rocks. Structurally overlying the Slaven Chert along the north and east sides of the district are a sequence of rusty brown weathering siltstone, sandstone and very minor limestone of the Silurian Elder Sandstone.
Intruding the thick Paleozoic sequence is an elliptical-shaped, composite granodiorite stock (or lacolith) of Eocene age. The orientation of the principal axis of the stock is approximately east-west. Associated with it are numerous dikes, sills and plugs that vary in composition from diorite, the earliest known intrusion, to rhyolite, the latest. Most of the identified gold resources, including the Porphyry, Gold Pan and 39A zones, lie along or near the northern contact of the composite stock. A series of narrow and laterally continuous (up to 1,600 ft) intrusive “pebble” dikes extend northward from the northern contact of the granodiorite stock. Near contacts with the Tertiary intrusions, many of the sedimentary and volcanic rocks, and early phases of the stock, have undergone significant thermal metamorphism, intense recrystallization, bleaching and pervasive metasomatism. Many of these rocks have been converted to layered sequences of biotite, “quartz” and calc-silicate hornfels, marble, exoskarn and endoskarn.
Mineralization at the Robertson Property is strongly controlled by a system of low and high-angle faults and related fracture zones. Less commonly, brecciation associated with axial plane shear zones developed in isoclinal folds are also important hosts for mineralization, locally. Although individual structures host ore-grade gold, higher grades commonly occur where one or more structures intersect.
Deposit Types and Mineralization
The Company has been focusing its exploration activities on four zones localized along the northern contact of the Tenabo stock forming the general east-west trend. These zones are the Porphyry, Gold Pan, Altenburg Hill and 39A zones. The Porphyry, Gold Pan and Altenburg Hill zones occur in highly fractured hornfels and skarn units at the contact of the granodiorite stock, whereas the 39A zone is localized at the intersection of two high-angle faults in retrograde-altered hornfels.
The following is a summary of the main minerals identified at the Robertson Property:
Mineral Resource Estimates
In late 2005, an independent third party was contracted by the Company to undertake a Preliminary Assessment of the currently defined mineral resources at the Robertson Property. The results of this study are reported in a NI 43-101 compliant technical report dated April 25, 2006 prepared by R. T. McCusker entitled “Update of the Geological Report on the Robertson Property”.
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The purpose for this study was to update the 2001 resource estimate, include results from the 2004-2005 drilling programs in the estimate and examine the effect of higher gold price on the economics of the existing resources. The mineral resource estimates of the Porphyry and combined 39A/Gold Pan Zones were conducted by an independent third party and a qualified person pursuant to NI 43-101. The Altenburg Hill and distal Target inferred mineral resources were estimated by R. T. McCusker, a qualified person pursuant to NI 43-101. A summary of the mineral resources estimated to be present on the Robertson Property are presented in the following table:
Measured mineral resources | Indicated mineral resources | Total measured and indicated | Inferred mineral resources | |||||||||
Short | Gold | Contained | Short | Gold | Contained | Short | Gold | Contained | Short | Gold | ||
tons | Grade | ozs | tons | Grade | ozs | tons | Grade | ozs | Tons | Grade | Contained | |
Zone | (000s) | (oz/ton) | (000s) | (000s) | (oz/ton) | (000s) | (000s) | (oz/ton) | (000s) | (000s) | (oz/ton) | ozs (000s) |
Porphyry(1) | 10,600 | 0.020 | 212 | 2,100 | 0.018 | 37 | 12,700 | 0.020 | 249 | |||
39A/Gold Pan(2) | 10,200 | 0.044 | 450 | 10,200 | 0.044 | 450 | 4,900 | 0.039 | 192 | |||
Altenburg Hill(1) | 3,500 | 0.018 | 63 | |||||||||
Distal Target(3) | 1,008 | 0.178 | 179 | |||||||||
Total | 10,600 | 0.020 | 212 | 12,300 | 0.040 | 487 | 22,900 | 0.031 | 699 | 9,408 | 0.046 | 434 |
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It should be noted that the resource classifications applied by an independent third party and R. T. McCusker conform to the Canadian Institute of Mining, Metallurgy and Petroleum definitions for measured, indicated and inferred mineral resources, respectively, pursuant to usage under NI 43-101. Further, it should also be noted that mineral resources that are not mineral reserves do not have demonstrated economic viability.
In 2007, Beacon Hill was commissioned by the Company to update the resource estimate on the Robertson Property. The purpose of the study was to incorporate additional drilling completed in 2006 in an updated resource estimate and to establish a program for continued development and provide a basis for a subsequent Technical Report. The final NI 43-101 compliantMineral Resource Estimate for the Robertson Property, Lander County, Nevadareport was received by the Company in February 2008. The new estimate, based on a gold price of US$600 per ounce, raised the Robertson Property inferred resource to over 2.3 million ounces of gold—an increase of 110% over the previous NI 43-101 estimate from April 2006. A portion of the oxide resources are locally exposed at the surface and are potentially in an open pit mining configuration. Some of the new resources remain open to expansion on strike and at depth.
The zones included in the Beacon Hill estimate are located within the Robertson’s Core claims only. The Company’s other claim blocks, including Norma Sass, Lander Ranch, Ruf, Blue Nugget and the Excluded claims (joint ventured with Cortez Gold Mines), were not part of the estimate.
Cautionary Note to U.S. Investors concerning Estimates of Measured, Indicated and Inferred Resources
This section uses the terms “measured resources” and “indicated resources.” The Company advises United States investors that while those terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. United States investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
This section uses therenewal term “inferred resources”. We advise United States investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. “Inferred resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases.United States investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally minable.
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Robertson Inferred Resources 2008 (by Beacon Hill)
Zone | Tons | Oz/tAu | Ounces |
Distal | 10,335,041 | 0.0335 | 346,224 |
39A | 25,010,247 | 0.0287 | 717,794 |
South Zone | 5,904,713 | 0.0269 | 158,837 |
Outside | 2,187,500 | 0.0208 | 45,500 |
Gold Pan Oxide | 7,049,181 | 0.0262 | 184,689 |
Altenburg Hill Oxide | 4,558,402 | 0.0208 | 94,815 |
Porphyry Oxide | 19,121,927 | 0.0213 | 407,297 |
Gold Pan Sulphide | 12,053,279 | 0.0208 | 250,708 |
Altenburg Hill Sulphide | 584,016 | 0.0176 | 10,279 |
Porphyry Sulphide | 4,480,533 | 0.0223 | 99,916 |
TOTAL | 91,284,840 | 0.0253 | 2,309,506 |
The mineral resources in the table above were estimated using the CIM Standards on Mineral Resources and Reserves.
This resource is compliant with NI 43-101.
Data Used for Estimate
A total of 1,204 drill holes were supplied for the Robertson Property in Lander County, Nevada which are the combined drill holes for the Gold Pan, 39A, Porphyry, Altenburg Hill and Lower Triplet Gulch zones in addition to areas that have drilling but lie outside the main areas of interest. The drill holes within the database included collars, downhole surveys, assays, and lithology.
Solids models of the main ore zones within the Robertson Deposit were created that encompass the Gold Pan, 39A, Porphyry, Altenburg Hill, Distal and Triplet Gulch deposit areas. The ore zones to be included within the solids model and then to be used for constraining the interpolation procedure are split into an Oxide Zone and a Sulphide Zone where sufficient data existed to do so which included the Gold Pan, 39A, Porphyry and Altenburg Hill areas. Due to its depth, the Distal zone is considered to be sulphide material.
Approximately 200 historic core samples were analyzed for dry bulk density using the volume displacement method. Densities for both ore and waste are primarily related to lithology, argillization, calc-silicate content and sulfide content. The average density for country rock was determined to be 12.2 cu ft/ton and 15.5 cu ft/ton for alluvium (2 determinations). These are historic determinations, which appear to be located for the most part, within the Porphyry Zone however, the exact locations are not known. The relative scarcity of specific gravity data is the primary reason for the resources being categorized as inferred and it is recommended that a comprehensive program to determine localized specific gravity be undertaken for future studies.
Estimate Method
The estimation plan includes the following items:
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The estimation strategy employed a minimum of four composites and a maximum of 15 with a maximum of two from any one drillhole.
Also, an octant search was used as it aids in declustering the estimate. This means that it helps(4) years beginning on March 22, 2012 to avoid over-influence of individual drill holes or sectors being overly informed, avoiding the use of samples that clustered together and thereby redundant.March 22, 2016. The maximum number of composites allowed in any one octant was two.
Conclusions
It can be concluded that the Robertson Property is one of merit and is worthy of additional development work to enhance the resource base and increase the level of confidence in the resource. It is also concluded that a Preliminary Assessment be completed to ascertain the potential viability of the mineralized zones contained within the Property.
Proposed Exploration
The Company believes that there is a potential for discovery of additional mineral resources on the Robertson Property. The Company plans to continue to explore the Robertson Property or seek third party partners for further exploration.
(ii) Carve-Out Claims, Nevada, U.S.A.
Under the terms of an Exploration and Mining Venture Agreement dated July 11, 1997, Barrick, formerly Placer, holds an undivided 61% interest and the Company has a 39% interest carried to production in the Carve-Out Claims.
Beginning in 1997 and continuing through 1998, Cortez conducted a series of exploratory drilling programs on the Carve-Out Claims with limited success. In 2002, the Company conducted a drilling program on the Carve-Out Claims with follow-up drilling in the immediate vicinity of existing drill holes with mixed results. To date, no significant mineral resources have been discovered on the Carve-Out Claims. However, the wide-space deep drilling has established the presence of scattered significant gold values, anomalous levels of Carlin-type trace elements, key structural components and the occurrence of a preferred host strata.
The Company plans to rely on Cortez to further explore the property for mineral resources.
There is no underground or surface plant or equipment located on the Carve-Out Claims, nor any known body of commercial ore.
No further work on the Carve-Out Claims is proposed at this time.
(iii) Norma Sass and Ruf Claims, Nevada, U.S.A
The Company currently owns a 66.6% interest in the Norma Sass and Ruf Claims, which originally were a part of the Carve-Out Claims, after an option agreement with Levon was amended on October 3, 2002 transferring to Levon a 33.3% interest in the Norma Sass and Ruf Claims. Levon is a British Columbia company also engaged in the exploration of precious minerals and has four directors in common to the Company.
In January 2005, we announced the formation of an exploration agreement with Agnico-Eagle. The agreement covers our the Norma Sass, Blue Nugget and Lander Ranch claims. The Norma Sass agreement also includes our partnership with Levon. Under the agreement, Agnico-Eagle can earn a 51% interest in the Norma Sass, Blue Nugget and Lander Ranch claims by completing at least 45,000 ft of exploration drilling and paying certain advance royalties. At its option, Agnico-Eagle may acquire the claim leases from the underlying owners for its benefit and Agnico-Eagle shall be deemed to have earned an additional 24% interest. Agnico-Eagle will then have the option of acquiring the remaining 25% interest by producing a positive feasibility study and making a positive production decision.
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At the fifth anniversary and every year thereafter until production occurs, the advance royalty payment will be US$150,000 per annum. All advance royalty payments will be credited towards Agnico-Eagle’s payment of a royalty of 2.5% net smelter returns from production to the Company and Levon. Agnico-Eagle has reserved the right to purchase 1% of this net smelter returns royalty (to reduce the royalty to the Company and Levon to 1.5%) for a cash payment of US$1.0 million. The Company and Levon have agreed to share in any benefits from the agreement with Agnico-Eagle in proportion to their current respective interests in the Norma Sass Property.
In February 2007, Agnico-Eagle Mines Ltd. notified the Company that it would not be continuing its option on Company’s Norma Sass, Lander Ranch and Blue Nugget properties because of other corporate priorities. The Company was pleased with the work done by Agnico-Eagle. They successfully showed depths to the lower plate sequence across the Norma Sass ground and extended the area of gold mineralization at Lander Ranch. The Company is reviewing results of Agnico-Eagle’s exploration programs in order to plan further work.
In September 2008 the Company entered into an exploration, development and mine operating agreement with Barrick, wherein Barrick is granted the option to acquire up to a 75% interest in the Company’s and Levon interests in the Norma Sass Property, Nevada, consisting of 36 unpatented mining claims.
Barrick may earn a 60% interest by incurring total exploration expenditures of at least US $3 million in annual installments by December 31, 2014. Barrick may earn an additional 10% (for an aggregate interest of 70%) by incurring an additional US $1.5 million by December 31, 2015. Barrick may earn an additional 5% (for an aggregate interest of 75%) by carrying the Company and Levon through to commercial production.
Alternatively, at the time of earning either its 60% or 70% interest, Barrick may be given the option to buy-out the Company’s and Levon’s joint interest by paying US $6 million and granting them a 2% net smelter returns royalty.
In May 2009, Barrick announced that plans are underway to do target delineation work in the second quarter followed by deep drilling in the third quarter on the Norma Sass property, Cortez Gold Trend, Nevada. Norma Sass is a 36-claim property immediately west of the Pipeline Mine open pit. Norma Sass was optioned to Barrick as mentioned in the above paragraph.
There is no underground or surface plant or equipment located on the Norma Sass and Ruf Claims, nor any known body of commercial ore.
(iv) June Claims
The Company announced the completion of a mineral lease with option to purchase agreement to explore, develop, and exploit six lode mining claims located in Lander County, State of Nevada (the “June Claims”). The June Claims are adjacent to the Company’s View Claims in the northwest section of its Robertson Property. The agreement is for an initial term of 4 years in consideration of the payment of an annual rent of US$25,000, renewable in successive four year terms, provided that the rentpayment under this agreement will increase by US$5,000 every four years. The property is subject to a royalty charge$5,000 for an aggregate annual rental payment of 3% of net smelter returns (“NSR”), subject to the Company’s exclusive right to purchase the NSR for US$1,000,000 per percentage point upon notice to the Lessors. The Company also has the exclusive right to purchase the property, subject to the NSR, for US $1,000,000 upon notice to the Lessors. $30,000.
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In 1987, geological mapping was conducted. In fiscal year 1994, the Company optioned a 50% interest in the JDN claims to Mill Bay Ventures Inc., formerly First International Metals Corp., referred to as “Mill Bay”, a company with two directors in common to the Company, for $10,000 and an initial installment of 50,000 common shares of Mill Bay. On February 5, 1997, Mill Bay exercised the option by issuing to the Company an additional 50,000 common shares and completion of specified exploration work.
In 1987, the Company acquired a 100% interest in the C-Eagle Claims.
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Thethereto included in this annual report on Form 20-F. Such discussion and analysis is based upon our annual audited consolidated financial statements are prepared in accordance with Canadian GAAP which has several notable differences from US GAAP. Canadian GAAP permits the deferral of acquisitionInternational Financial Reporting Standards (‘‘IFRS’’).
Overall Performance
The following is a summary of significant events and transactions duringincluding the year ended January 31, 2009:
Robertson Property, Nevada
Core Area
2011, we prepared our consolidated financial statements in accordance with Canadian generally accepted accounting principles (‘‘Canadian GAAP’’). The Company doubled the inferred gold resource to over 2.3 million ounces in late 2007. This new calculation was based on 91,284,800 tons grading 0.025 oz Au/ton using a gold price of US$600/oz and a cutoff grade of 0.015 oz Au/ton. (Details are available in our February 11, 2008 news release). Later in 2008, the Company also completed 22,385 feet of reverse circulation drilling in 33 vertical holes, partially extending the areas of mineralization in several zones. Highlights of the drill program included Hole #CR08-13, which intersected 100 feet grading 0.075 oz Au/ton and included 25 feet grading 0.17 oz Au/ton. Complete drill results and program details are available in the Company’s news release issued February 4, 2009. The 2008 drilling program has not as yet been incorporated in the Company’s current resource figures.
Deep drilling in 2007 encountered Carlin-type geochemistry including gold in the important lower plate host rocks for Carlin-type structure beneath the Roberts Mountains thrust fault. The gold intercepts indicate a Carlin type system in Lower Plate rocks on a western part of the property. Follow up mapping, rock sampling and infill gravity surveys in 2008 lead to the Company’s identification of a new lower plate target zone that extends from the coral deep hole, 2 km to the south. The West Deep Carlin-type target adds significant discovery potential to the Robertson Property for a world-class gold deposit. The target zone lies north of the Pipeline Mine open pit along a projected mineralized fault and fracture system that controls gold within that deposit. Considerably more drilling on the Robertson West Deep target is warranted. While the Company would prefer to continue drilling and expanding these targets in 2009, the Company must wait and see what unfolds in the equity markets and regarding its ability to raise additional exploration capital.
A. Results of Operations
Twelve months ended January 31, 2009 compared with the twelve months ended January 31, 2008
General and administrative expenses
General and administrative expenses totaled $2,516,862annual audited consolidated financial statements for the year ended January 31, 2009 compared2012 are our first annual consolidated financial statements that have been prepared in accordance with $1,359,172IFRS as issued by the International Accounting Standards Board (‘‘IASB’’) and IFRS 1, First Time Adoption of International Financial Reporting Standards.
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The increase in consulting fees during fiscal 2009 was attributable to the addition of a consultant. The increased expense in investor relations and travel come from a contract with an investor relation firm engaged earlier in the fiscal year. The significant higher legal and accounting fees in the prior year were resulting from the title search of the Robertson Property during the year. As discussed above, the increase in stock-based compensation was due the extension of expiry dates of warrants. Listing and filing fees decreased during the yearOperations
Loss for the year
The loss for the year ended January 31, 2009 was $3,746,165 compared with a loss of $1,319,185 for the year ended January 31, 2008, an increase of $2,426,980. In addition to the increase in general and administrative expenses, there was a future income tax expense of $533,297 and a foreign exchange loss of $765,770, which primarily related to the future income tax calculation. Interest income also decreased by $95,240 due to a lower cash balance. During the year ended January 31, 2008, there was also a write-down of $24,029 in advances receivable whereas this did not occur in the year ended January 31, 2009.
Twelve months ended January 31, 2008 compared with the twelve months ended January 31, 2007.
General and administrative expenses
General and administrative expenses totaled $1,359,172 for the year ended January 31, 2008 compared with $1,983,965 for the year ended January 31, 2007, a decrease of $624,793. The year ended January 31, 2008 had decreases of $98,995 in consulting fees, $50,000 in directors fees, $43,640 in legal and accounting, $38,368 in office and miscellaneous, $438,163 in stock-based compensation and $14,378 in travel. Cost items that increased were investor relations and shareholder information by $8,988, listing and filing fees by $30,346, management fees by $2,275 and salaries and benefits by $17,287.
Legal and accounting fees, consulting fees, office and miscellaneous and directors fees were all higher in the year ended January 31, 2007as a result of the due diligence in connection with a buyout offer and a mineral property review and title search of the Robertson Property. In addition to requiring U.S. based legal services for these activities, there were such items as special committee fees for the directors, liability insurance and financial advisory services whereas these costs were much less or were not incurred in the year ended January 31, 2008.
Listing and filing fees were higher in the year ended January 31, 2008 because of the fee associated with performing the 3-for-1 common share split. Salaries and benefits were higher due to an increase in personnel to handle marketing, accounting, and administrative demands.
Loss for the year
Loss for the year ended January 31, 2008 was $1,319,185 compared with a loss of $2,528,614 for the year ended January 31, 2007, a decrease of $1,209,429. The primary reasons for the decrease in the loss for the year ended January 31, 2008 were the decreased administrative expenses of approximately $624,793 and a foreign exchange gain of $519,722. Interest revenue also increased from $144,422 in the year ended January 31, 2007 to $165,004 for the year ended January 31, 2008, a difference of $20,582. In addition, write-down of advances receivable decreased by $42,091 for the year ended January 31, 20082012 compared with the year ended January 31, 2007.2011.
carrying values of assets and liabilities and their tax values and the Company’s ability to utilize any of its deferred income tax assets to offset the deferred income liability.
During year ended January 31, 2009, the Company incurred expenditures that increased the mineral property carrying value on the Robertson Property by $1,683,612. At this time,
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Historically, the Company has funded its operations through equity financings and the exercise of options and warrants.
The Company has sufficient cash on hand at this time to finance limited exploration work on its mineral properties and maintain administrative operations. The Company is in the exploration stage. The investmentsinvestment in and expenditures on the mineral propertiesproperty comprise substantially all of the Company’s assets. The recoverability of amounts shown for its mineral property interestsinterest and related deferred costs are dependent upon the continued support of its directors, the discovery of economically recoverable reserves and the ability of the Company to obtain the financing necessary to complete development and achieve profitable operations in the future. The outcome of these matters cannot be predicted at this time and the Company may never achieve profitable operations.
time.
As the
policies.
appeal of investments in exploration companies. The appeal of exploration companies as investment alternatives could effect the liquidity of the Company and thus future exploration, development and financial conditions of the Company. Other factors such as retaining qualified mining personnel and contractor availability and costs could also impact the Company’s operations.
Payment due by period | ||||||||||||||||||||
Total | <1 year | 1-3 Years | 3-5 Years | More than 5 years | ||||||||||||||||
- | ||||||||||||||||||||
Total | $ | - | $ | - | $ | - | $ | - | - |
a cost-sharing agreement to reimburse Oniva (a related Company) for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on the total overhead and corporate expenses. The agreement may be terminated with one-month’s notice by either party.
Certain statements in this Annual Report, including those appearing under this Item 5, constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the terminology used such as “plans”, “expects”, “estimates”, “budgets”, “intends”, “anticipates”, “believes”, “projects”, “indicates”, “targets”, “objective”, “could”, “may”, or other similar words.
The forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for metals; the results of exploration and development drilling and related activities; economic conditions in the countries and provinces in which we carry on business, especially economic slowdown; actions by governmental authorities including increases in taxes, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflict; the negotiation and closing of material contracts; and the other factors discussed in Item 3 Key Information – “Risk Factors”, and in other documents that we file with the SEC. The impact of any one factor on a
33
particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors; our course of action would depend upon our assessment of the future considering all information then available. In that regard, any statements as to future production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding of our capital program; drilling; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves; dates by which transactions are expected to close; cash flows; uses of cash flows; collectability of receivables; availability of trade credit; expected operating costs; expenditures and allowances relating to environmental matters; debt levels; and changes in any of the foregoing are forward-looking statements, and there can be no assurances that the expectations conveyed by such forward-looking statements will, in fact, be realized.
Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.
Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning the Company, including factors that could materially affect its financial results, may emerge from time to time. The Company does not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
Name | |||||||
Position Held | |||||||
Principal Occupation | |||||||
Director/Officer | |||||||
Since | |||||||
Chairman and Director | Mining Executive; Director of | July 1990 | |||||
Ronald Andrews | Director | Director of Berkley Resources Inc. and | January 2010 | ||||
Chris Sampson | Vice President Exploration and Director | Director and Vice President | |||||
Exploration of the Company; | |||||||
Professional Engineer, | |||||||
Director of Sego Resources | |||||||
Ltd. | January 1996 | ||||||
David Wolfin(1) | Director, President & Chief Executive Officer | Director, President and | September 1997 | ||||
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Gary Robertson | Director | Certified Financial Planner, Director of the Company and Director of Avino Silver & Gold Mines Ltd., Bralorne Gold Mines Ltd., Levon Resources Ltd., Mill Bay Ventures Inc. and Sage Gold Inc. | July 2003 | |||
Dorothy Chin | Corporate Secretary | Corporate Secretary of the Company and of Avino Silver & Gold Mines Ltd., Bralorne Gold Mines Ltd., Gray Rock Resources Ltd., Levon Resources Ltd. and formerly Corporate Secretary of Mill Bay Ventures Inc. and Dentonia Resources Ltd. | September 2008 | |||
Chief Financial Officer | Chief Financial Officer of | |||||
and Gray Rock Resources Ltd. | ||||||
January 2012 |
For purposes of this Item 6(B), “named executive officer” of the Company means an individual who, at any time during the year, was:
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|
35
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each a “Named Executive Officer” (“NEO”).
Based on the foregoing definition, during
1) Compensation Discussion and Analysis
Lisa Sharp.
1) | Compensation Discussion and Analysis |
Compensation Element | Description | Compensation Objectives |
Annual Base Salary | Salary is market-competitive, fixed level of compensation | Retain qualified leaders, motivate strong business performance. |
Incentive Bonuses | ||
Incentive Stock Option | Equity grants are made in the form of stock options. The amount of grant will be dependent on individual and corporate performance. |
2) Summary Compensation Table
2) | Summary Compensation Table |
36
Name and principal position | Year | Salary ($) | Share- based awards ($) | Option- based awards ($) | Non-equity incentive plan compensation ($) | Pension value ($) | All other compensation ($) | Total compensation ($) | |
Annual incentive plans | Long- term incentive plans | ||||||||
Louis Wolfin(1) CEO and Director | 2008 | $75,000 | NIL | NIL | NIL | NIL | NIL | NIL | $75,000 |
Lisa Sharp(2) CFO | 2008 | $12,756 | NIL | NIL | NIL | NIL | NIL | NIL | $12,756 |
Kevin Bales Former CFO | 2008 | $5,227 | NIL | NIL | NIL | NIL | NIL | NIL | $5,227 |
Name and principal position | Year | Salary ($) | Share-based awards ($)1 | Option-based awards ($)2 | Non-equity incentive plan compensation ($)3 | Pension value ($)3 | All other compensation ($) | Total compensation ($) |
David Wolfin(4) President, CEO & Director | 2012 | $30,000 | NIL | NIL | NIL | NIL | NIL | $30,000 |
malcolm davidson(5) CFO | 2012 | $800 | NIL | NIL | NIL | NIL | NIL | $800 |
Lisa Sharp(5) Former CFO | 2012 | $27,231 | NIL | NIL | NIL | NIL | NIL | $27,231 |
| |
|
Long Term
Compensation
plan.
In the June 26, 2009 Shareholders’ Meeting, the “disinterested” shareholders approved the implementation ofPlan (the “Plan”), under which stock options have been granted and may be granted to purchase a new stock option plan to supersede and replace the existing 2008 Stock Option Plan. The new stock option plan (the "2009 Stock Option Plan") for insiders, employees and other service providers to the Company, will reserve upnumber equal to 10% of the Company’s issued sharescapital from time to time, as a “rolling stock option plan”. Currently, there are 24,989,771 shares issued, so the 2009 Stock Option Plan will currently permit up to 2,498,977 shares for incentive stock option grants under the plan to qualifying persons, less the currently issued and outstanding stock options. New stock options may be granted under the 2009 Stock Option Plan for up to a maximum of ten (10) years.
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In addition, the 2009 Stock Option Plan will limit the number of stock options, which may be granted to any one individual to not more than 5% of the total issued shares of the Company in any 12 month period, and not more than 10% of the total issued shares to all insiders at any time or granted over any 12 month period (in the absence of disinterested shareholder approval). The number of options granted to any one consultant, or a person employed to provide investor relations activities, in any 12 month period must not exceed 2% of the total issued shares of the Company. Any stock options granted under the 2009 Stock Option Plan will not be subject to any vesting schedule, unless otherwise determined by the Board of Directors
time. For details of the option plan please refer to “Particulars of Matters to be Act Upon” in the Information Circular filed with the SEC ondated June 8, 2009.
11, 2012.
Board of Directors.
3) Incentive Plan Awards
3) | Incentive Plan Awards |
Option-based Awards | Share-based Awards | |||||
Name | Number of securities underlying unexercised options (#) | Option exercise price ($) | Option expiration date | Value of unexercised in-the-money options ($)(1) | Number of shares or units of shares that have not vested (#) | Market or payout value of share-based awards that have not vested ($)(1) |
David Wolfin President, CEO and Director | 100,000 90,000 105,000 55,000 300,000 | $ 1.00 $ 0.76 $ $0.80 $0.40 | Sept 26, 2012 Jan 13, 2015 Sep 17, 2015 Jan 21, 2016 Feb 22, 2017 | Nil Nil Nil Nil Nil | Nil Nil Nil Nil Nil | Nil Nil Nil Nil Nil |
Malcolm Davidson* CFO | 20,000 75,000 | $0.80 $0.40 | Jan 21, 2016 Feb 22, 2017 | Nil Nil | Nil Nil | Nil Nil |
Lisa Sharp* Former CFO | 50,000 50,000 35,000 | $ 0.76 $ $0.80 | Jan. 13, 2015 Sep 17, 2015 Jan 21, 2016 | Nil Nil Nil | Nil Nil Nil | Nil Nil Nil |
2012 and the exercise price of the option. The closing market price of the Company’s common shares as at January 31, 2012 was $0.40 per common share.
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Name | Option-based awards – Value vested during the year ($)(1) | Share-based awards – Value vested during the year ($) | Non-equity incentive plan compensation – Value earned during the year ($) |
David Wolfin President, CEO and Director | Nil | Nil | Nil |
Malcolm Davidson* CFO | Nil | Nil | Nil |
Lisa Sharp* Former CFO |
4) Pension Plan Benefits
18, 2012 Ms. Lisa Sharp resigned as CFO, and Mr. Malcolm Davidson was appointed CFO.
4) | Pension Plan Benefits |
5) Termination and Change of Control Benefits
5) | Termination and Change of Control Benefits |
6) Director Compensation
6) | Director Compensation |
Name | Fees earned ($) | Share- based awards ($) | Option- based awards ($)(1) | Non-equity incentive plan compensation ($) | Pension value ($) | All other compensation ($) | Total ($) |
Lloyd Andrews | $12,000 | NIL | NIL | NIL | NIL | NIL | $12,000 |
Gary Robertson | NIL | NIL | NIL | NIL | NIL | NIL | NIL |
Chris Sampson | NIL | NIL | NIL | NIL | NIL | NIL | NIL |
David Wolfin | NIL | NIL | NIL | NIL | NIL | NIL | NIL |
Victor Chevillon(2) | NIL | NIL | NIL | NIL | NIL | NIL | NIL |
* Independent and Non-Employee Directors. (1) The methodology used to calculate the grant date fair value (2) CEO’s, see Summary Compensation Table. No director of the Company who is not a named executive officer has received, during the most recently completed financial year, compensation pursuant to:
The Company may grant incentive stock options to directors of the Company from time to time pursuant to the stock option plan of the Company and in accordance with the policies of the TSX Venture Exchange (the "TSX-V") Outstanding share-based awards and option-based awards The following table sets forth the options granted to the directors to purchase or acquire securities of the Company outstanding at the end of the most recently completed financial year ended January 31, 2012:
44 Incentive plan awards – value vested or earned during the year An “incentive plan” is any plan providing compensation that depends on achieving certain performance goals or similar conditions within a specific period. An “incentive plan award” means compensation awarded, earned, paid or payable under an incentive plan. The following table sets forth the value vested or earned during the year of option-based awards, share-based awards and non-equity incentive plan compensation paid to directors during the most recently completed financial year ended January 31, 2012:
Termination of Employment, Changes in Responsibilities and Employment Contracts The Company does not have an employment contract with the C. Board Practices
The Board is currently comprised of five directors. The size and experience of the Board is important for providing the Company with effective governance in the mining industry. The Board’s mandate and responsibilities can be effectively and efficiently administered at its current size. The The Board has considered the relationship of each director to the Company and considers two of the five directors to be
the Company, other than interests and relationships arising solely from shareholdings. Two of the directors (Messrs. David Wolfin and Louis Wolfin) who are considered related are related by family. Chris Sampson is also the Vice-President of Exploration of the Company and is not independent. The Board has addressed the related directorship issues and intends, given a transitional period, to eventually be comprised of a majority of unrelated directors. Procedures are in place to allow the Board to function independently. At the present time, the Board has experienced directors that have made a significant contribution to the Company’s success, and are satisfied that it is not constrained in its access to information, in its deliberations or in its ability to satisfy the mandate established by law to supervise the business and affairs of the Company. The Company’s chairman and independent directors meet in the absence of managing directors. Committees meet independent of management and other directors. Committees appoint a chairman from their number who presides over the committee meetings. 45 Mandate of the Board of Directors, its Committees and Management The role of the Board is to oversee the conduct of the Company’s business, including the supervision of management, and determining the Company’s strategy. Management is responsible for the Company’s day to day operations, including proposing its strategic direction and presenting budgets and business plans to the Board for consideration and approval. The strategic plan takes into account, among other things, the opportunities and risks of the Company’s business. Management provides the Board with periodic assessments as to those risks and the implementation of the Company’s systems to manage those risks. The Board reviews the personnel needs of the Company from time to time, having particular regard to succession issues relating to senior management. Management is responsible for the training and development of personnel. The Board assesses how effectively the Company communicates with shareholders, but has not adopted a formal communications policy. Through the audit committee, and in conjunction with its auditors, the Board assesses the adequacy of the Company’s internal control and management information systems. The Board looks to management to keep it informed of all significant developments relating to or effecting the Company’s operations. Major financings, acquisitions, dispositions and investments are subject to Board approval. A formal mandate for the Board and the Chief Executive Officer has not been considered necessary since the relative allocation of responsibility is well understood by both management and the Board. The Board and
Committees Corporate Governance Committee The Corporate Governance Committee assists the Board in establishing the Company’s corporate governance policies and practices generally identifying individuals qualified to become members of the Board, reviewing the composition and functioning of the Board and its committees and making recommendations to the Board as appropriate. When considering nominees to the Board the Corporate Governance Committee’s mandate requires that it consider the current composition of the Board and give consideration to candidates having experience in the industry, life experience and background. The Corporate Governance Committee is also responsible for the Company’s corporate governance guidelines. The Corporate Governance Committee may retain legal or other advisors. The Corporate Governance Committee currently consists of three directors (Messrs. Audit Committee The Audit Committee assists the Board in its oversight of the Company’s financial statements and other related public disclosures, the Company’s compliance with legal and regulatory requirements relating to financial reporting, the external auditors, qualifications and independence and the performance of the internal audit function and the external auditors. The Audit Committee has direct communications channels with the Company’s auditors. The Audit Committee reviews the Company’s financial statements and related management’s discussion and analysis of financial and operating results. The Audit Committee can retain legal, accounting or other advisors. The Audit Committee consists of Gary Robertson, It is intended that this Audit Committee eventually will be comprised solely of unrelated directors. 46 The Board has adopted a charter for the Audit Committee which is reviewed annually and sets out the role and oversight responsibilities of the Audit Committee with respect to:
Compensation Committee The Compensation Committee recommends to the Board the compensation of the Company’s directors and the Chief Executive Officer which the Compensation Committee feels is suitable. Its recommendations are reached primarily by comparison of the remuneration paid by the Company with publicly available information on remuneration paid by other reporting issuers that the Compensation Committee feels are similarly placed within the same business of the Company.
The Compensation Committee consists of two unrelated directors (Messrs. Robertson and Andrews) and one related director (Mr. David Wolfin). It is intended that the Compensation Committee will eventually be comprised solely of unrelated directors. D. Employees As at January 31, The Company’s senior management as well as administrative and corporate services are located in Canada; however, these people are not considered employees of the Company in a legal sense. Senior management and administrative staff are contracted by the Company through their companies or through the Company’s cost sharing agreement for overhead and corporate services with Oniva International Services Corp (“Oniva”). E. Share Ownership The following table sets out the share ownership of the
*Less than one percent 47 Outstanding Options The following information, as of
* On June 28, 2010, Mr. Louis Wolfin resigned as CEO and Mr. David Wolfin was appointed CEO. ** On January 18, 2012 Ms. Lisa Sharp resigned as CFO, and Mr. Malcolm Davidson was appointed CFO. Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders To the knowledge of the Company, it is not directly or indirectly owned or controlled by any other corporation or by the Canadian Government, or any foreign government or by any other natural or legal person(s) severally or jointly. As of
B. Related Party Transactions Related party transactions are measured at the estimated fair values of the services provided or goods received. Related party transactions not disclosed elsewhere in these consolidated financial statements are as follows: a) Management transactions Key management personnel include the members of the Board of Directors and officers of the Company, who have the authority and responsibility for planning, directing and controlling the
49 d) Other related party transactions The Company has a cost-sharing agreement to reimburse Oniva International Services Corp. (“Oniva”), as described in Note 12. The transactions with Oniva during the
are summarized below:
The Company has entered into a cost-sharing agreement Advances receivable from a related Advances payable to related parties as at January 31, 2012 include Amounts due are without stated terms of interest or repayment. C. Interests of Experts and Counsel Item 8. Financial Information A. Consolidated Statements and Other Financial Information The following financial statements of the Company are included under Item 17 to this Annual Report and include the following:
Legal Proceedings The Company is not involved in any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and be contemplated. 50 Dividend Policy The Company has never paid any dividends and does not intend to in the near future. B. Significant Changes
Except as otherwise disclosed in this annual report, there have been no material changes in our financial position, operations or cash flows since January 31, 2012. Item 9. The Offering and Listing A. Offer and Listing Details
The following table sets forth the high and low prices expressed in Canadian dollars on the TSX-V
Company’s common shares for the past five years, for each quarter for the last two fiscal years, and for the last four months.
B. Plan of Distribution Not Applicable. C. Markets The common stock of the Company is listed on the TSX-V under the symbol “CLH”, in the United States on the OTCBB under the symbol “CLHRF” and on the FSE under the symbol “GV8”. 51 D. Selling Shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the Issue Not applicable. Item 10. Additional Information A. Share Capital Not applicable .B. Memorandum and Articles of Association
Coral Energy Corporation was incorporated on January 22, 1981 under the Company Act of the Province of British Columbia, which changed its name to Coral Energy Corporation on March 3, 1981. On September 9, 1987, Coral Energy Corporation changed its name to the Coral Gold Corp. On September 13, 2004, the Company changed its name to Coral Gold Resources Ltd. in conjunction with a 10:1 share consolidation.
Common Shares All issued and outstanding common shares are fully paid and non-assessable. Each holder of record of common shares is entitled to one vote for each common share so held on all matters requiring a vote of shareholders, including the election of directors. The holders of common shares will be entitled to dividends on a pro-rata basis, if and when as declared by the board of directors. There are no preferences, conversion rights, preemptive rights, subscription rights, or restrictions or transfers attached to the common shares. In the event of liquidation, dissolution, or winding up of the Company, the holders of common shares are entitled to participate in the assets of the Company available for distribution after satisfaction of the claims of creditors. Powers and Duties of Directors The directors shall manage or supervise the management of the affairs and business of the Company and shall have authority to exercise all such powers of the Company as are not, by the British ColumbiaBusiness Corporations Actor by the Memorandum or Articles, required to be exercised by the Company in a general meeting. Directors will serve as such until the next annual meeting. In general, a director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Company whereby a duty or interest might be created to conflict with his duty or interest as a director, that director shall declare the nature and extent of his interest in such contract or transaction or the conflict or potential conflict with his duty and interest as a director. Such director shall not vote in respect of any such contract or transaction with the Company in which he is interested and if he shall do so, his vote shall not be counted, but he shall be counted in the quorum present at the meeting at which such vote is taken. However, notwithstanding the foregoing, directors shall have the right to vote on determining the remuneration of the directors. 52 The directors may from time to time on behalf of the Company: (a) borrow money in such manner and amount from such sources and upon such terms and conditions as they think fit; (b) issue bonds, debentures and other debt obligations; and/or (c) mortgage, charge or give other security on the whole or any part of the property and assets of the Company. The majority of the directors of the Company must be persons ordinarily resident in Canada and one director of the Company must be ordinarily resident in British Columbia and be of the full age of 18 years. There is no minimum share ownership to be a director. No person shall be a director of the Company who is not capable of managing their own Shareholders An annual general meeting shall be held once in every calendar year at such time and place as may be determined by the directors. A quorum at an annual general meeting and special meeting shall be two shareholders or one or more proxy holder representing two shareholders, or one shareholder and a proxy holder representing another shareholder. There is no limitation imposed by the laws of Canada or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote the common shares, other than as provided in theInvestment Canada Act, (the “Investment Act”) discussed below under “Item 10. Additional Information, D. Exchange Controls.” In accordance with British Columbia law, directors shall be elected by an “ordinary resolution” which means: (a) a resolution passed by the shareholders of the Company at a general meeting by a simple majority of the votes cast in person or by proxy: or (b) a resolution that has been submitted to the shareholders of the Company who would have been entitled to vote on it in person or by proxy at a general meeting of the Company and that has been consented to in writing by such shareholders of the Company holding shares carrying not less than the requisite majority of the votes entitled to be cast on it.
Under British Columbia law certain items such as an amendment to the Company’s C. Material Contracts The Company entered into a cost sharing agreement dated October 1, 1997, and amended November 1, 2003 to reimburse Oniva International for a variable percentage of Oniva’s overhead expenses, to reimburse 100% of Oniva’s out-of-pocket expenses incurred on behalf of the company, and to pay to Oniva a percentage fee based on the total overhead and corporate expenses. The agreement may be terminated with one month notice by either party. D. Exchange Controls Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Issuer’s securities, except as discussed below under “Item 10. Additional Information, E. Taxation.” 53 There are no limitations under the laws of Canada or in the organizing documents of the Company on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of “control” of the Company by a “non-Canadian”. The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. “Non-Canadian” generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians. E. Taxation
The following summarizes the principal Canadian federal income tax consequences applicable to the holding and disposition of common shares in the capital of the Company by a United States resident, and who holds common shares solely as capital property, referred to as a “U.S. Holder”. This summary is based on the current provisions of theIncome Tax Act(Canada) (the “Tax Act”), the regulations thereunder, all amendments thereto publicly proposed by the government of Canada, the published administrative practices of Revenue Canada, Customs, Excise and Taxation, and on the current provisions of theCanada-United States Income Tax Convention, 1980, as amended, referred to as the “Treaty”. Except as otherwise expressly provided, this summary does not take into account any provincial, territorial or foreign (including without limitation, any U.S.) tax law or treaty. It has been assumed that all currently proposed amendments will be enacted substantially as proposed and that there is no other relevant change in any governing law or practice, although no assurance can be given in these respects. Each U.S. Holder is advised to obtain tax and legal advice applicable to such U.S. Holder’s particular circumstances. Every U.S. Holder is liable to pay a Canadian withholding tax on every dividend that is or is deemed to be paid or credited to the U.S. Holder on the U.S. Holder’s common shares. The statutory rate of withholding tax is 25% of the gross amount of the dividend paid. The Treaty reduces the statutory rate with respect to dividends paid to a U.S. Holder for the purposes of the Treaty. Where applicable, the general rate of withholding tax under the Treaty is 15% of the gross amount of the dividend, but if the U.S. Holder is a company that owns at least 10% of the voting stock of the Company and beneficially owns the dividend, the rate of withholding tax is 5% for dividends paid or credited after 1996 to such corporate U.S. Holder. The Company is required to withhold the applicable tax from the dividend payable to the U.S. Holder, and to remit the tax to the Receiver General of Canada for the account of the U.S. Holder.
Pursuant to the Tax Act, a U.S. Holder will not be subject to Canadian capital gains tax on any capital gain realized on an actual or deemed disposition of a common share, including a deemed disposition on death, provided that the U.S. Holder did not hold the common share as capital property used in carrying on a business in Canada, and that neither the U. S. Holder nor persons with whom the U.S. Holder did not deal at arm’s length (alone or together) owned or had the right or an option to acquire 25% or more of the issued shares of any class of the Company at any time in the five years immediately preceding the disposition. United States Federal Income Tax Consequences Passive Foreign Investment Company. The Company believes that it is a passive foreign investment company 54 Because the Company believes it qualifies as a PFIC, unless a United States Investor who owns shares in the Company (i) elects (a section 1295 election) to have the Company treated as a “qualified electing fund”, referred to as a “QEF” (described below), or (ii) marks the stock to market (described below), the following rules apply:
A shareholder that makes a section 1295 election will be currently taxable on his or her pro rata share of the Company’s ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year of the Company, regardless of whether or not distributions were received. The shareholder’s basis in his or her shares will be increased to reflect taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of basis in the shares and will not be taxed again as a distribution to the shareholder.
A shareholder may make a section 1295 election with respect to a PFIC for any taxable year of the shareholder (a “shareholder’s election year”). A section 1295 election is effective for the shareholder’s election year and all subsequent taxable years of the shareholder. Procedures exist for both retroactive elections and filing of protective statements. Once a section 1295 election is made it remains in effect, although not applicable, during those years that the Company is not a PFIC. Therefore, if the Company re-qualifies as a PFIC, the section 1295 election previously made is still valid and the shareholder is required to satisfy the requirements of that election. Once a shareholder makes a section 1295 election, the shareholder may revoke the election only with the consent of the Commissioner. If the shareholder makes the section 1295 election for the first tax year of the Company as a PFIC that is included in the shareholder’s holding period, the PFIC qualifies as a pedigreed QEF with respect to the shareholder. If a QEF is an unpedigreed QEF with respect to the shareholder, the shareholder is subject to both the non-QEF and QEF regimes. Certain elections are available which enable shareholders to convert an unpedigreed QEF into a pedigreed QEF thereby avoiding such dual application. 55 A shareholder making the section 1295 election must make the election on or before the due date, as extended, for filing the shareholder’s income tax return for the first taxable year to which the election will apply. A shareholder must make a section 1295 election by completing Form Because the Company’s stock is “marketable” under section 1296(e), a U.S. Investor may elect to mark the stock to market each year. In general, a PFIC shareholder who elects under section 1296 to mark the marketable stock of a PFIC includes in income each year an amount equal to the excess, if any, of the fair market value of the PFIC stock as of the close of the taxable year over the shareholder’s adjusted basis in such stock. A shareholder is also generally allowed a deduction for the excess, if any, of the adjusted basis of the PFIC stock over the fair market value as of the close of the taxable year. Deductions under this rule, however, are allowable only to the extent of any net mark to market gains with respect to the stock included by the shareholder for prior taxable years. While the interest charge regime under the PFIC rules generally does not apply to distributions from and dispositions of stock of a PFIC where the U.S. Investor has marked to market, coordination rules for limited application will apply in the case of a U.S. Investor that marks to market PFIC stock later than the beginning of the shareholder’s holding period for the PFIC stock. Special rules apply with respect to the calculation of the amount of the foreign tax credit with respect to excess distributions by a PFIC or inclusions under a QEF.
Controlled Foreign Corporations. Sections 951 through 964 and Section 1248 of the Internal Revenue Code (the “Code”) relate to controlled foreign corporations, referred to as “CFCs”. A foreign corporation that qualifies as a CFC will not be treated as a PFIC with respect to a shareholder during the portion of the shareholder’s holding period after December 31, 1997, during which the shareholder is a 10% United States shareholder and the corporation is a CFC. The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to shareholders that are less than 10% United States shareholders. The 10% United States shareholders of a CFC are subject to current United States tax on their pro rata shares of certain income of the CFC and their pro rata shares of the CFC’s earnings invested in certain United States property. The effect is that the CFC provisions may impute some portion of such a corporation’s undistributed income to certain shareholders on a current basis and convert into dividend income some portion of gains on dispositions of stock, which would otherwise qualify for capital gains treatment. The Company does not believe that it is not and will not be a CFC. It is possible that the Company could become a CFC in the future. Even if the Company were classified as a CFC in a future year, however, the CFC rules referred to above would apply only with respect to 10% shareholders. 56 Personal Holding Company/Foreign Personal Holding Company/Foreign Investment Company A corporation will be classified as a personal holding company A corporation will be classified as a foreign personal holding company A corporation will be classified as a foreign investment company The Company believes that it is not and will not be a PHC, FPHC or FIC. However, no assurance can be given as to the Company’s future status.
U.S. Information Reporting and Backup Withholding. Dividends are generally subject to the information reporting requirements of the Code. Dividends may be subject to backup withholding at the rate of 31% unless the holder provides a taxpayer identification number on a properly completed Form W-9 or otherwise establishes an exemption. The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the United States Investor’s federal income tax liability. Filing of Information Returns. Under a number of circumstances, a United States Investor acquiring shares of the Company may be required to file an information return. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply and United States Investors should consult their own tax advisors concerning these requirements. 57 F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. H. Documents on Display The Company is required to file financial statements and other information with the Securities Commission in the Provinces of British Columbia, Ontario and Alberta, electronically through the Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) which can be viewed at www.sedar.com. The Company files annual reports and furnishes other information with the SEC. You may read and copy any document that we file at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or by accessing the Commission’s website (http://www.sec.gov). Copies of the Company’s material contracts are kept in the Company’s administrative headquarters. I. Subsidiary Information Not applicable. Item 11. Quantitative and Qualitative Disclosures About Market Risk Not applicable Item 12. Description of Securities Other than Equity Securities Not applicable.
PART II Item 13. Defaults, Dividend Arrearages and Delinquencies
Not Applicable. Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not Applicable. Item Disclosure Controls and Procedures As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, the Company’s principal executive officer and principal financial officer evaluated the Company’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report. Based on the evaluation, these officers concluded that as of the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the SEC. These disclosure controls and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. The Company intends to remediate the material weaknesses as set out below. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected. Management’s Report on Internal Control Over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for the Company. The Company’s internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management, including the Company’s principal executive officer and principal financial officer, along with an independent consultant, conducted an evaluation of the design and operation of the Company’s internal control over financial reporting as of January 31, The Company has taken steps to enhance and improve the design of the Company’s internal controls over financial reporting, however these steps were not complete as of January 31, The Company’s internal control over financial reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Changes in Internal Control over Financial Reporting There were no changes in internal control over financial reporting in the year ended January 31, Item 16. [Reserved] Item 16A. Audit Committee Financial Expert The Board determined that Mr. Gary Robertson is an “audit committee financial expert” as defined in Item 16A of Form 20-F under the Exchange Act, and that Mr. Robertson is independent as defined in the NASDAQ listing rules. Item 16B. Code of Ethics The Company has not currently adopted a code of ethics but is evaluating its internal procedures to determine the necessity of same. In the event that it is determined that a code of ethics is necessary, an appropriate code will be implemented. Item 16C. Principal Accountant Fees and Services The independent auditor for the 60 Audit Fees The aggregate fees billed by Smythe Ratcliffe LLP for the audit of the Company’s annual financial statements for the fiscal year ended January 31,
$38,000 (2011 - $38,500; 2010 - $38,500). Audit-Related Fees The Tax Fees The tax fees billed by Smythe Ratcliffe LLP for the All Other Fees The aggregate fees billed for all other professional services rendered by the Company’s independent registered public accounting firm were nil for the fiscal years ended January 31, 2010. The Audit Committee approved 100% of the fees paid to the principal accountant for audit-related, tax and other fees in the fiscal year 61 Item 16D. Exemptions from the Listing Standards for Audit Committees Not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 16F. Changes in Registrants Certifying Accountant None. Item 16G. Corporate Governance Not applicable. Item 16H. Mine Safety Disclosure Under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and under the SEC's recently adopted Item 104 of Regulation S-K, each operator of a coal or other mine is required to include disclosures regarding certain mine safety results in its periodic reports filed with the SEC. The operation of the our quarries is subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977. We do not own any operating mines in the United States and as a result, this information is not required. 62 PART III Item 17. Financial Statements The following Financial Statements pertaining to the Company are filed as part of this annual report: Item 18. Financial Statements Item 19. Exhibits
__________________________ *
CORAL GOLD RESOURCES LTD. (an Exploration Stage Company) Audited Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian Dollars) 64 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING The consolidated financial statements of Coral Gold Resources Ltd. (the “Company”) are the responsibility of the Company’s management. The consolidated financial statements are prepared in accordance with Management has developed and is maintaining a system of internal controls to ensure that the Company’s assets are safeguarded, transactions are authorized and properly recorded and financial information is reliable. The Board of Directors is responsible for ensuring management fulfills its responsibilities. The Audit Committee reviews the results of the audit and the annual consolidated financial statements prior to their submission to the Board of Directors for approval. The Company’s consolidated financial
INDEPENDENT AUDITORS’ REPORT TO THE (an exploration stage company) We have audited the accompanying consolidated Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our An audit
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a Opinion In our opinion, Emphasis of Matter Without qualifying our opinion, we draw attention to note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss of $733,813 for the Chartered Accountants Vancouver, Canada June 14, 2012 66 CORAL GOLD RESOURCES LTD. Consolidated Statements of Financial Position (Expressed in Canadian
Approved by the Board of Directors:
The accompanying notes are an integral part of the consolidated financial statements 67 CORAL GOLD RESOURCES LTD. Consolidated Statements of Operations and Comprehensive Loss For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars)
The accompanying notes are an integral part of the consolidated financial statements 68 CORAL GOLD RESOURCES LTD. Consolidated Statements of Changes in Equity (Expressed in Canadian dollars)
The accompanying notes are an integral part of the consolidated financial statements 69 CORAL GOLD RESOURCES LTD Consolidated Statements of Cash Flows For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars)
The accompanying notes are an integral part of the consolidated financial statements 70 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 1. NATURE AND CONTINUANCE OF OPERATIONS Coral Gold Resources Ltd. (the “Company”) was incorporated in 1988 under the Company Act of British Columbia and is primarily involved in the exploration and development of its mineral properties. The Company’s head office and principal place of business is Suite 900, 570 Granville Street, Vancouver, BC, Canada. These consolidated financial statements are prepared on a going concern basis, which contemplates that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. Accordingly, these consolidated financial statements do not give effect to any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The recoverability of the carrying value of exploration and evaluation assets and the Company's ability to continue as a going concern is dependent upon the preservation of its interest in the underlying properties, the discovery of economically recoverable reserves, the achievement of profitable operations, or the ability of the Company to raise alternative financing. At January 31, 2012, the Company had working capital of $1,166,633 (January 31, 2011 - $2,577,722; February 1, 2010 - $630,567) and an accumulated deficit of $29,041,040 (January 31, 2011 - $29,072,412; February 1, 2010 - $31,036,565). Management believes the Company has sufficient funds to meet its liabilities for the ensuing year as they fall due, and to fund payments for administration, ongoing commitments and current planned exploration programs. 2. BASIS OF PRESENTATION Statement of compliance and conversion to International Financial Reporting Standards These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). These are the Company’s first IFRS annual consolidated financial statements to be presented in accordance with IFRS and IFRS 1 First-time Adoption of IFRS has been applied. Previously the Company prepared its annual and interim consolidated financial statements in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). Note 18 contains reconciliations and descriptions of the effect of the transition from Canadian GAAP to IFRS on equity, operations and comprehensive loss along with reconciliations of the statements of financial position as at February 1, 2010 and January 31, 2011 and the statements of operations and comprehensive loss and cash flows for the year ended January 31, 2011. Basis of presentation These consolidated financial statements are expressed in Canadian dollars, the Company’s functional currency and have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting. The accounting policies set out in Note 3 have been applied consistently to all years presented in these consolidated financial statements as if the policies have always been in effect, subject to certain IFRS transition elections described in Note 18. 71 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 2. BASIS OF PRESENTATION (continued) Approval of the consolidated financial statements These consolidated financial statements were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on May 25, 2012. Foreign Currency Translation The functional and reporting currency of the Company and its subsidiaries is the Canadian dollar. Transactions in currencies other than the Company’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency translation differences are recognized in net loss for the year. Significant Accounting Judgements and Estimates The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and may affect both the period of revision and future periods. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
72 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 3. SIGNIFICANT ACCOUNTING POLICIES Basis of Consolidation The consolidated financial statements include the accounts of the Company and its US subsidiaries.
Intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions are eliminated in preparing the consolidated financial statements. Financial Instruments All financial assets are initially recorded at fair value and classified into one of four categories: held to maturity, available for sale, loans and receivable or fair value through profit or loss (“FVTPL”). All financial liabilities are initially recorded at fair value and classified as either FVTPL or other financial liabilities. Financial instruments comprise cash and cash equivalents, marketable securities, amounts due from related party, accounts payable and amounts due to related parties. At initial recognition management has classified financial assets and liabilities as follows: The Company has classified its cash and cash equivalents as FVTPL. Marketable securities are classified as available for sale and amounts due from related parties are classified as loans and receivables. Accounts payable and amounts due to related parties are classified as other liabilities. Fair value hierarchy Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs in making the measurements. The levels of the fair value hierarchy are defined as follows: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Inputs for the asset or liability that are not based on observable market data. Cash and cash equivalents Cash and cash equivalents in the statements of financial position comprise cash at banks and on hand, and short term deposits with an original maturity of three months or less, which are cashable readily convertible into a known amounts of cash. 73 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Exploration and evaluation assets The Company is in the exploration stage with respect to its mineral properties and capitalizes all costs relating to the acquisition, exploration and evaluation of mineral claims and recognizes any proceeds received as a reduction of the cost of the related claims. At such time as commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable reserves. The aggregate costs related to abandoned mineral claims are charged to operations at the time of any abandonment. All capitalized exploration and evaluation expenditures are monitored for indications of impairment. Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that exploration expenditure is not expected to be recovered, it is charged to the results of operations. An impairment charge relating to a mineral property is subsequently reversed when new exploration results or actual or potential proceeds on sale or farm out of the property result in a revised estimate of the recoverable amount, but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized. The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition. Incidental revenues and operating costs are included in exploration and evaluation assets prior to commercial production. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine development properties, and subsequently amortized over the life of the resources associated with the area of interest once mining operations have commenced. Property and equipment Property and equipment are recorded at historical cost less accumulated depreciation. Historical costs include expenditures that are directly attributable to bringing the asset to a location and condition necessary to operate in a manner intended by management. Such costs are accumulated as construction in progress until the asset is available for use, at which point the asset is classified as plant and equipment. Once commercial production has commenced, mine, mill, machinery, plant facilities, and certain equipment are depreciated using the units of production method, if sufficient reserve information is available or the straight-line method over their estimated useful lives, not to exceed the life of the mine to which the assets related. Property and equipment are depreciated annually at the following rates:
An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the consolidated statements of comprehensive income or loss. Where an item of property and equipment comprises major components with different useful lives, the components are accounted for as separate items of property and equipment. Expenditures incurred to replace a component of an item of plant and equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized. 74
(Expressed in Canadian dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment At each financial reporting date, the carrying amounts of the Company’s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate cash flows that are independent from other assets, the Company An asset’s recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Accounting for equity units Proceeds received on the issuance of units, comprised of common shares and warrants are allocated based on their relative fair values, calculated using the Black-Scholes option pricing model for warrants and the market price of common shares. Share-based payment transactions The share option plan allows Company employees, directors and consultants to acquire shares of the Company. All options granted are measured at fair value and are recognized in expenses as
The fair value of employee options is measured at grant date, and each tranche is recognized using the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. For non-employees, share-based payments are measured at the fair value goods and services received or the fair value or the fair value of the equity instruments issued, if it is determined the fair value cannot be reliably measured, and are recorded at the date the goods or services are received. The fair value of the options is accrued and charged either to operations or exploration and evaluation assets, with the offset credit to equity reserves. This includes a forfeiture estimate, which is revised for actual forfeitures in subsequent periods. Upon the expiration or cancellation of unexercised stock options, the Company will transfer the value attributed to those stock options from equity reserves to deficit. Provisions Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as accretion expense. 75 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, (Expressed in Canadian dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Reclamation provision The Company records the present value of estimated costs of legal and constructive obligations required to restore mineral properties in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and restoration, reclamation and re-vegetation of affected areas. The fair value of the liability for a rehabilitation provision is recorded when it is incurred. When the liability is initially recognized, the present value of the estimated cost is capitalized by increasing the carrying amount of the related mineral property. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability, which is accreted over time through periodic charges to income or loss. Additional disturbances or changes in rehabilitation costs will be recognized as additions or charges to the corresponding assets and rehabilitation liability when they occur. Loss per share The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company
Income taxes Income tax on the profit or loss for the years presented comprises current and deferred tax. Income tax is recognized in profit or loss, except to the extent that it relates to items recognized directly in equity, in which case it is recognized as equity. Deferred tax is provided using the statement of financial position asset and liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. New accounting standards and interpretations not yet adopted Certain new standards, interpretations and amendments to existing standards have been issued by the IASB or the International Financial Reporting Interpretations Committee (“ The Company has not early-adopted these standards, amendments and New accounting standards effective February 1, 2012 Amendments to IFRS 7 Financial Instruments: Disclosures - In October 2010, the IASB issued amendments to IFRS 7 that improve the disclosure requirements in relation to transferred financial assets. The amendments are effective for annual periods beginning on or after July 1, 2011, with early adoption permitted. The Company does not anticipate this amendment to have a significant impact on its consolidated financial statements. 76 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) New accounting standards and interpretations not yet adopted (continued) New accounting standards effective February 1, 2012 (continued) IAS 12 Income Taxes - In December 2010, the IASB issued an amendment to International Accounting Standard (”IAS”) 12 that provides a practical solution to determining the recovery of investment properties as it relates to the accounting for deferred income taxes. This amendment is effective for annual periods beginning on or after July 1, 2011, with early adoption permitted. The Company does not anticipate this amendment to have New accounting standards effective January 1, 2013 IFRS 10 Consolidated Financial Statements - IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the
IFRS 11 Joint Arrangements - IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-monetary Contributions by Venturers. IFRS 12 Disclosure of Interests in Other Entities - IFRS 12 establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in other entities. IFRS 13 Fair Value Measurement - IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and in many cases does not reflect a clear measurement basis or consistent disclosures. Amendments to IAS 1 Presentation of Financial Statements - The IASB has amended IAS 1 to require entities to separate items presented in other comprehensive income (“OCI”) into two groups, based on whether or not items may be reclassified into profit or loss in the future. Entities that choose to present OCI items before tax will be required to show the amount of tax related to the two groups separately. CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) New accounting standards and interpretations not yet adopted (continued) New accounting standards effective January 1, 2013 (continued) IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine - IFRIC 20 addresses the accounting for overburden waste removal (stripping) costs in the production phase of a surface mine. Stripping activity may result in two types of benefits: (i) inventory produced and (ii) improved access to ore that will be mined in the future. Stripping costs associated with inventory production should be accounted for as a current production cost in accordance with IAS 2 Inventories, and those associated with improved access to ore should be accounted for as an addition to, or enhancement of, an existing asset. Amendments to other standards - In addition, there have been other amendments to existing standards, including IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures. IAS 27 addresses accounting for subsidiaries, jointly controlled entities and associates in non-consolidated financial statements. IAS 28 has been amended to include joint ventures in its scope and to address the changes in IFRS 10 to IFRS 13. Each of the new standards, IFRS 10 to 13, IFRIC 20 and the amendments to other standards, is effective for the Company beginning on January 1, 2013 with early adoption permitted. The Company has not yet begun the process of assessing the impact that the new standards will have on its consolidated financial statements or whether to early-adopt any of the new requirements. IFRS 9 Financial Instruments - IFRS 9 was issued in November 2009 and contained requirements for financial assets. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 Financial Instruments – Recognition and Measurement for debt instruments with a new mixed measurement model having only two categories: amortized cost and FVTPL. IFRS 9 also replaces the models for measuring equity instruments and such instruments are either recognized at FVTPL or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in profit or loss to the extent not clearly representing a return of investment; however, others gains and losses (including impairments) associated with such instruments remain in accumulated OCI indefinitely. Requirements for financial liabilities were added in October 2010 and they largely carried forward existing requirements in IAS 39, except that fair value changes due to credit risk for liabilities designated at FVTPL would generally be recorded in other comprehensive income. IFRS 9 is effective for annual periods beginning on or after January 2015 with early adoption permitted. The Company has not yet begun the process of assessing the impact that the new and amended standards will have on its consolidated financial statements or whether to early-adopt any of the new requirements. 78 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) The Company has accumulated the following acquisition and exploration expenditures:
The Company has certain interests in
The Company holds an undivided interest in 561 patented and unpatented lode mining claims. The Company owns outright 485 of these claims of which 39 unpatented lode claims and two placer claims are owned by the Company’s 98.49% owned subsidiary, Marcus. 79 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 4. EXPLORATION AND EVALUATION ASSETS (continued)
The remaining 76 claims are leased by the Company as follows:
The Company entered a mineral lease and option-to-purchase agreement granting it the exclusive rights to explore, develop and exploit six lode mining claims, which form part of the core area of the Robertson Property. The agreement is for an initial term of four years expiring March 22, 2012 in consideration of the payment of an annual rent of US$25,000, renewable in successive four-year terms, provided that the rent will increase by US$5,000 every four years. The agreement was renewed in March 2012. The property is subject to a 3% NSR royalty, subject to the Company’s exclusive right to purchase the NSR for US$1,000,000 per percentage point. The Company also has the exclusive right to purchase the property, subject to the NSR, for US$1,000,000.
The Company assumed a mineral lease agreement dated March 1, 1992 relating to nine mineral claims, which form part of the core area of the Robertson Property. The original lease agreement bears an initial term of 20 years with the possibility to extend the term if the Company is actively exploring, developing or mining the property. These claims are subject to a 5% NSR. In order to maintain the lease the Company must pay minimum advanced royalty payments of US$1,800 per month during the term of the lease.
The Company assumed an option-to-purchase agreement dated November 30, 1975 related to 13 mineral claims, which form part of the core area of the Robertson Property. The total purchase price of the claims is US$2,000,000, which is payable in installments of US$1,000 per month until paid in full. The property is subject to an 8% NSR. Any NSR royalty payments paid to the lessors are credited against the minimum monthly payments for a period equal to the value of the royalties paid at a rate of US$1,000 per month.
The Company entered a mineral lease and option-to-purchase agreement with respect to nine Blue Nugget claims, 27 Lander Ranch claims, 24 Norma claims and 11 Sass claims of which the Blue Nugget and Lander Ranch claims form part of the core area of the Robertson Property and the Norma and Sass claims form part of the Norma Sass Property (Notes 4(a)(iii) and 4(b)). Pursuant to the fifth amending agreement, the term of the lease was extended to April 21, 2013. The total purchase price of the claims is US$1,500,000, which is payable in annual installments of $500 per claim until paid in full. 80 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 4. EXPLORATION AND EVALUATION ASSETS (continued)
The Company entered a mineral lease with respect to 12 claims, which form part of the core area of the Robertson Property with an indefinite term. The claims are subject to a 4% NSR for which the Company is required to make minimum annual advanced royalty payments in the amount of $9,600 per year throughout the term of the lease.
By Agreement dated May 16, 1996, the Company granted Amax Gold Exploration Inc. (“Amax”) an option to purchase a 51% interest in 219 claims. Amax exercised the option by paying twice the amount the Company had incurred in exploration expenditures on the property. Under the terms of the Agreement, the Company has a 39% carried interest. The Amax 61% interest was subsequently acquired by Cortez GML and is currently owned by Barrick Gold Corporation (“Barrick”).
By an amended option agreement dated September 13, 1995, the Company granted Levon Resources Ltd (“Levon”), a company related by common directors, an option to purchase a 50% interest in 58 claims including 23 Ruf, 24 Norma and 11 Sass Claims (Notes 4(a)(i)(d) and 4(b)) of which the Ruf claims form a portion of the Robertson Property and the Norma Sass claims constitute the Norma Sass Property. On December 31, 2002, the Agreement was amended whereby Levon earned a 33.33% interest in these claims. Expenditures incurred on the Ruf claims have been classified to Ruf and Norma Sass claims in the exploration expenditure table. A third party holds a 3% NSR royalty from some of these mining claims, up to a limit of US$1,250,000.
The Company holds a 66.67% interest in the 35 Norma Sass mining claims located in the Bullion Mining District, Lander County, Nevada, pursuant to a mineral lease and option-to-purchase agreement (Note 4(a)(i)(d)). The remaining 33.33% interest is held by Levon (Note 4(a)(iii)). By way of an agreement dated September 25, 2008, the Company and Levon granted Barrick an option to acquire a 60% interest in these claims by incurring total exploration expenditures of at least US$3,000,000 in annual installments by December 31, 2014 as follows:
CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 4. EXPLORATION AND EVALUATION ASSETS (continued)
Realization of Exploration and The investment in and expenditures on exploration and evaluation assets comprise a significant portion of the Company’s assets. Realization of the Company’s investment in these assets is dependent upon the establishment of legal ownership, the attainment of successful production from the properties or from the proceeds of their disposal. Resource exploration and development is highly speculative and involves inherent risks. While the rewards if an ore body is discovered can be substantial, few properties that are explored are ultimately developed into producing mines. There can be no assurance that current exploration programs will result in the discovery of economically viable quantities of ore. The amounts shown for acquisition costs and deferred exploration expenditures represent costs incurred to date and do not necessarily reflect present or future values. Title to Exploration and Evaluation Assets Interests Although the Company has taken steps to verify the title to exploration and evaluation assets in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements or transfers and title may be affected by undetected defects. Environmental The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous material and other matters. The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its properties and properties in which it has previously had an interest. The Company conducts its mineral exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any existing environmental problems related to any of its current or former properties that may result in material liability to the Company other than as disclosed in these consolidated financial statements. Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation on the Company’s operations may cause additional expenses and restrictions. If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the property may be diminished or negated. 82 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 5. PROPERTY AND EQUIPMENT
83 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 6. INVESTMENT IN RELATED COMPANIES At January 31, 2012, the Company held shares as follows:
*Mill Bay Ventures Inc. had a 10:1 consolidation At January 31, 2011, the Company held shares as follows:
At February 1, 2010, the Company held shares as follows:
Certain directors of Levon and Mill Bay Ventures Inc. (“Mill Bay”) are also directors of the Company. During the year ended January 31, 2012, the Company recognized an unrealized loss of $330,342 (January 31, 2011 - $636,626 unrealized gain), which is included in OCI. 7. RECLAMATION BONDS Under the Bureau of Land Management of the United States (the “Bureau”), the Company is required to hold reclamation bonds that cover the estimated cost to reclaim the ground disturbed. As at January 31, 2012, the total reclamation deposits were $417,393 (US$416,228) (January 31, 2011 - $382,200 (US$381,628); January 31, 2010 - $408,075 (US$381,628)). The Company placed the funds in trust with a fully secured standby letter of credit lodged as collateral in support of the bond. Interest is accrued on the bond at a monthly weighted average rate of 0.07% (2011 - 0.10%). 84 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 8. SHARE CAPITAL
Unlimited common shares without par value. All shares outstanding are fully paid.
During the year ended January 31, 2012, 95,000 options were exercised for gross proceeds of $48,950. The Company reallocated the fair value of these options and warrants previously recorded in the amount of $37,875 from the equity settled employee benefit reserve. During year ended January 31, 2012, 519,258 warrants were exercised for total proceeds of $389,444. The Company reallocated the fair value of these warrants previously recorded in the amount of 88,727 from the reserve for warrants to share capital. On April 1, 2010, the Company closed the first tranche of a private placement of 5,245,120 units at a price of $0.55 per unit for gross proceeds of $2,884,816. Each unit consists of one common share and one non-transferable share purchase warrant. Each share purchase warrant is exercisable at a price of $0.75 expiring April 1, 2012. In March 2012, the Company extended the expiry date of these options to October 1, 2012. The Company paid to certain finders a cash commission equal to 6% or 10% of the applicable gross proceeds of the financing ($242,461) and issued compensation options equal to 6% or 10% of the units sold under the offering (415,427). Each compensation option was exercisable at a price of $0.75 and entitled the holder to one common share. The options expired on April 1, 2011. The fair value of the warrants and compensation options issued were estimated using the Black-Scholes options pricing model with the following assumptions, respectively: risk-free interest rates of 1.97%, dividend yield rates of $nil, volatility of 128.75% and 100.95%, and expected lives of 2 years and 1 year. The fair value of the common shares issued was calculated based on the market value of the Company’s shares on April 1, 2010. Of the $2,884,816 total aggregate proceeds raised, $1,050,467 was attributable to warrants and $1,834,349 was attributable to common shares. The compensation options were valued at $58,977. On April 23, 2010, the Company closed the final tranche of a private placement of 1,755,000 units at a price of $0.55 per unit for gross proceeds of $965,250. Each unit consists of one common share and one non-transferable share purchase warrant. Each share purchase warrant is exercisable at a price of $0.75 expiring April 23, 2012. In March 2012, the Company extended the expiry date of these options to October 23, 2012. The Company paid to certain finders a cash commission equal to 6% or 10% of the applicable gross proceeds of the financing ($28,945) and issued compensation options equal to 10% of certain units sold under the offering (19,000). Each compensation option was exercisable at a price of $0.75 and entitled the holder to one common share. The options expired April 23, 2011. The fair value of the warrants and compensation options issued have been estimated using the Black-Scholes options pricing model with the following assumptions, respectively: risk-free interest rates of 1.97, dividend yield rates of $nil, volatility of 127.70% and 100.78%, and expected lives of 2 years and 1 year. The fair value of the common shares issued was calculated based on the market value of the Company’s shares on April 23, 2010. Of the $965,250 total aggregate proceeds raised, $345,756 was attributable to warrants and $619,494 was attributable to common shares. The compensation options were valued at $2,281. 85 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 8. SHARE CAPITAL (continued)
During the year ended January 31, 2011, 436,000 stock
options were exercised for total proceeds of $327,000. The Company reallocated the fair value of these options previously recorded in the amount of $87,320 from reserve for equity settled employee benefits to share capital.
A summary of
Details of share purchase warrants outstanding as of January 31, 2012 and 2011 are:
* In March 2012, the expiry date of these options was extended to October 1, 2012. ** In March 2012, the expiry date of these options was extended to October 23, 2012. d) Stock options The Company’s stock option plan provides for the granting of options to directors, officers, employees and consultants. Under the terms of the option plan, options issued will not exceed 10% (2011 - 20%) of the issued and outstanding shares from time to time. The option price under each option is not less than the discounted market price on the grant date. The expiry date for each option is set by the Board of Directors at the time of issue and cannot be more than
CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 8. SHARE CAPITAL (continued) For the years ended January 31, 2012 and 2011, stock option activity is summarized as follows:
A summary of stock options outstanding and exercisable as at January 31, 2012 is as follows:
87 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 8. SHARE CAPITAL (continued)
A summary of stock options outstanding as at January 31, 2011 is as follows:
The number of options exercisable at January 31, 2011 is 3,026,750 with a weighted average exercise price of $0.86 9. SHARE-BASED PAYMENTS No stock options were granted during the year ended January 31, The Company recorded
88 CORAL GOLD RESOURCES LTD Notes to the For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 9. SHARE-BASED PAYMENTS (continued) Option pricing
The fair value of the options re-valued and granted to officers, directors, consultants and employees was calculated using the Black-Scholes model with following weighted average assumptions:
10. RELATED PARTY TRANSACTIONS AND BALANCES Related party transactions are measured at the estimated fair values of the services provided or goods received. Related party transactions not disclosed elsewhere in these financial consolidated statements are as follows:
Key management personnel include the members of the Board of Directors and officers of the Company, who have the authority and responsibility for planning, directing and controlling the activities of the Company. The remuneration of directors and officers was as follows:
CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 10. RELATED PARTY TRANSACTIONS AND BALANCES (continued) d) Other related party transactions
The Company has a cost-sharing agreement to reimburse Oniva International Services Corp. (“Oniva”), as described in Note 12. The transactions with Oniva during the year are summarized below:
11. RECLAMATON PROVISION The Company’s reclamation provision relates to the reclamation work required by the Bureau to be performed on the Robertson Property. Management estimates the total undiscounted inflation-adjusted amount of cash flows required to settle its reclamation provision to be approximately US$244,798 (2011 - US$249,596), which is expected to be incurred during 2017 and 2018. The risk-free rate of 6% was used to calculate the present value of the reclamation provision. A reconciliation of the reclamation provision is as follows:
12. COMMITMENTS The Company has a cost-sharing agreement to reimburse Oniva for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on the total overhead and corporate expenses. The agreement may be terminated with one-month’s notice by either party. Transactions and balances with Oniva are disclosed in Note 10. 90 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 13. FINANCIAL INSTRUMENTS The fair values of the Company’s cash and cash equivalents, advances receivable from a related party, other amounts receivable, accounts payable and advances payable to related parties approximate their carrying values due to the short-term nature of these instruments. Investment securities are accounted for at fair value based on quoted market prices. The carrying amount of reclamation deposits approximate their fair value as the stated rates approximate the market rate of interest. The Company’s financial instruments are exposed to certain financial risk, credit risk, liquidity risk and market risk.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s cash and cash equivalents is exposed to credit risk. The Company is not exposed to significant credit risk on amounts receivable (excluding HST). The Company manages credit risk, in respect of cash, by maintaining the majority of cash at high credit rated Canadian financial institutions. Concentration of credit risk exists with respect to the Company’s cash and cash equivalents and reclamation deposits as the majority of the amounts are held with a single Canadian and US financial institution. The Company’s concentration of credit risk, and maximum exposure thereto, is as follows:
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. The Company has cash and cash equivalents at January 31, 2012 in the amount of $1,314,494 (January 31, 2011 - $2,695,864; February 1, 2010 - $700,772) in order to meet short-term business requirements. At January 31, 2012, the Company had current liabilities of $183,426 (January 31, 2011 - $195,905; February 1, 2010 - $88,516). Accounts payable have contractual maturities of approximately 30 days and are subject to normal trade terms. Amounts due to related parties are without stated terms of interest or repayment. 91 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 13. FINANCIAL INSTRUMENTS (continued)
The Company will require significant cash funding to conduct its planned exploration programs, meet its administrative overhead costs and maintain its mineral properties in 2012. This will require the Company to continue to monitor its financing requirements
Market risk consists of interest rate risk, foreign currency risk and other price risk. These are discussed further below. Interest rate risk Interest rate risk consists of two components:
The Company is exposed to interest rate price risk with respect to reclamation deposits as they bear interest at market rates. However, given the stated rates of interest are fixed, the Company is not exposed to significant interest rate price risk as at January 31, 2012 and 2011. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in foreign currency. The Company is exposed to foreign currency risk with respect to cash, other amounts receivable, accounts payable and accrued liabilities, and amounts payable to related parties, as a portion of these amounts are denominated in US dollars as follows:
Based on the net Canadian dollar denominated asset and liability exposures as at January 31, 2012, a 6% (January 31, 2011 - 3%) fluctuation in the Canadian/US exchange rates will impact the Company’s earnings by approximately $29,000 (January 31, 2011 - $12,000). 92 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 13. FINANCIAL INSTRUMENTS (continued)
Foreign currency risk (continued) The Company manages foreign currency risk by minimizing the value of financial instruments denominated in foreign currency. The Company has not entered into any foreign currency contracts to mitigate this risk. Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is exposed to other price risk with respect to its investment securities, as they are carried at fair value based on quoted market prices. As at January 31, 2012, a 6.36% (January 31, 2011 - 73.38%) fluctuation in the fair value of investment securities based on the weighted average volatility of the underlying shares over the prior period would impact the Company’s OCI by $79,713 (January 31, 2011 - $356,325). The Company’s ability to raise capital to fund mineral resource exploration is subject to risks associated with fluctuations in mineral resource prices. Management closely monitors commodity prices, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company. 14. CAPITAL MANAGEMENT The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its properties and to maintain flexible capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company includes the components of shareholders’ equity. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or adjust the amount of cash and cash equivalents. Management reviews the capital structure on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements. There were no changes to the Company’s capital management during the year ended January 31, 2012. 15. NET CHANGES IN NON-CASH WORKING CAPITAL
93 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 16. INCOME TAXES A reconciliation of income tax computed at the Canadian statutory rate of 26.5% (2011 – 28.5%) to income tax recovery (expense)
The components of the future income tax assets (liabilities), after applying enacted Canadian rates of 25% (2011 - 25%) and enacted US rates of 35% (2011 - 35%), are as follows:
The 94 CORAL GOLD RESOURCES LTD Notes to the For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 16. INCOME TAXES (continued) At January 31,
At January 31,
17. SEGMENTED INFORMATION The Company The Company has non-current assets in the following geographic locations:
95 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS Transition to IFRS The Company has adopted IFRS effective February 1, 2011 with a transition date of February 1, 2010 (the “Transition Date”). Prior to the adoption of IFRS, the Company
The comparative information presented in these first annual consolidated financial statements for the
Initial elections upon adoption The guidance for
IFRS 1 also outlines specific guidelines that a first-time adopter must adhere to under certain circumstances. The Company has applied the following guidelines to its opening statement of financial position dated February 1, 2010: Estimates In accordance with IFRS 1, an entity’s estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under previous Canadian GAAP, unless there is objective evidence that those estimates were in error. The Company’s IFRS estimates as of February 1, 2010 are consistent with its Canadian GAAP estimates for the same date. IFRS employs a conceptual framework that is similar to Canadian GAAP. However, some differences exist in certain matters of recognition, measurement and disclosure. While adoption of IFRS has not changed the Company’s actual cash flows, it has resulted in changes to the Company’s reported consolidated financial position and consolidated financial performance. In order to allow the users of the consolidated financial
96 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) Notes on reconciliations between Canadian GAAP
Canadian GAAP calculates reclamation provision using current credit-adjusted, risk-free rates for upward adjustments, and the original credit adjusted, risk free rate for downward revisions. The original liability is not adjusted for changes in current discount rates. IFRS however, calculates reclamation provision using a current pre-tax discount rate, (which reflects current market assessment of the time value of money and the risk specific to liability) and is revised every reporting period to reflect changes in assumptions or discount rates. To calculate the reclamation provision and long-lived asset under IFRS, the Company has elected to apply the exemption available from full retrospective application as allowed under IFRS 1. As such, the Company has re-measured the rehabilitation liability as at February 1, 2010 and subsequent change in obligations under IAS 37 Provisions, contingent liabilities and contingent assets, estimating the amount to be included in the related asset by discounting the liability to the date of first disturbance in which the liability arose, using best estimates of the historical risk-free discount rates, and recalculating the accumulated depreciation and amortization under IFRS. The change in accounting policy related to the reclamation provision resulted in a decrease to exploration and evaluation assets of $78,526 with a related decrease in reclamation provision at the transition date. During the year ended January 31, 2011, a further adjustment was required, which resulted in an increase of $9,505 to exploration and evaluation assets with a related increase to the provision for reclamation. There were also costs of $11,228 and $4,683 charged to income for finance costs and foreign exchange gain, respectively. In addition, under Canadian GAAP, the unwinding of the discount was included with depreciation and amortization expense, and will now be reclassified to finance costs as required under IFRS.
IFRS requires an entity to present, for each component of equity, a reconciliation between the carrying amount at the beginning and end of the period, separately disclosing each change. The Company examined its “contributed surplus” account and concluded that as at the February 1, 2010 transition date and the comparative January 31, 2011, part of the contributed surplus relates to “Equity settled employee benefit reserve” and part to “Reserves for warrants”. IFRS also permits a transfer of reserves arising from share-based transactions, within equity. At February 1, 2010, $879,817 of total reserves related to options and warrants no longer outstanding was therefore transferred to Deficit, in order that the balance of equity reserve reflect only the fair value of options and warrants on that date. During the year ended January 31, 2011, additional options and warrants expired and therefore a further transfer of $3,523,935, representing the fair value attributed to these cancelled instruments, was made from their respective reserve accounts to deficit.
At the transition date, the Company elected to change its accounting policy for equity units. In the past, the proceeds received on the issuance of units, consisting of common shares and warrants, were allocated first to warrants based on their fair value determined using the Black-Scholes option pricing model, and the remainder was allocated to common shares. Upon transition date, the Company elected to allocate the proceeds received on the issuance of units, based on their relative fair values, calculated using the Black-Scholes option pricing model for warrants and the fair value of common shares. 97 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) Notes on reconciliations between Canadian GAAP and IFRS (continued)
The required adjustment has been calculated based on the outstanding options and warrants. As at February 1, 2010, the change in accounting policy resulted in an increase of $133,255 in share capital and a corresponding decrease in reserves for warrants. During the year ended January 31, 2011, the Company closed a private placement, which resulted in an increase of $591,135 in share capital and a corresponding decrease in reserves for warrants. Additionally, during the year ended January 31, 2011, warrants had been exercised and the fair value of the warrants is then transferred to share capital. As a result of the change in accounting policy, an adjustment was required, which resulted in a decrease of $40,018 in share capital and a corresponding increase to reserve for warrants.
Previously, under Canadian GAAP, the Company classified a consultant as a non-employee, whereas under IFRS, the consultant is classified as an employee and others providing similar services. The fair value of options granted to employees and others providing similar services is measured at grant date, and each tranche is recognized using the graded vesting method over the period during which the options vest. Under Canadian GAAP, transactions in which goods or services are received from non-employees in exchange for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. An adjustment is required for the options granted to this consultant and the share-based compensation recognized during the year ended January 31, 2011. At January 31, 2011, a decrease of $6,197 was recorded to share-based payments reserve with a corresponding increase to deficit for the same amount.
Previously, under Canadian GAAP, the Company recognized a deferred tax liability on the acquisition of Marcus Corporation where the fair value of some of the mineral properties acquired exceeded their tax values. Under IFRS, the deferred tax liability would not be recognized, either on acquisition or subsequently. This accounting policy change resulted in a reversal of the deferred tax liability of $297,755 (February 1, 2010 - $316,723), decrease in the carrying value of exploration and evaluation assets of $352,662 (February 1, 2010 - $352,662) and an increase in deficit of $54,907 (February 1, 2010 - $35,939). Under Canadian GAAP, income tax assets or liabilities were not recognized for differences arising between the historical exchange rate and the current exchange rate translation of the cost of non-monetary assets or liabilities of integrated foreign operations. Under IFRS, deferred tax is recognized on the difference between the accounting basis and tax basis of all items. For foreign currency non-monetary assets or liabilities where the tax basis currency differs from the functional currency of the entity, foreign exchange differences will result in tax assets or liabilities, which were not previously recognized under Canadian GAAP. This difference will result in added volatility in the tax expense as foreign exchange rate changes will have an impact on the tax expense. This accounting policy change resulted in an additional deferred tax liability of $930,041 (February 1, 2010 - $624,322) and an increase to deficit. 98 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) Reconciliation of Consolidated Statements of Financial Position
99 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) Reconciliation of Consolidated Statements of Financial Position
100 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) Reconciliation of Consolidated Statement of Operations and Comprehensive Loss
101 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 18. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) Reconciliation of Consolidated Statement of Cash Flows
102 CORAL GOLD RESOURCES LTD Notes to the Consolidated Financial Statements For the years ended January 31, 2012 and 2011 (Expressed in Canadian dollars) 19. EVENTS AFTER THE REPORTING PERIOD
SIGNATURE The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Exhibit Index
___________________________ * Previously filed.
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