UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| T | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009 |
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____ |
Commission file number 0-24393
AURORA GOLD CORPORATION
(Exact Name of registrant as specified in its charter)
| Delaware | 13-3945947 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
Baarerstrasse 10, 1st Floor, Zug, Switzerland | 6300 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (+41) 7887-96966
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12 (g) of the Exchange Act:
| Common stock, par value $0.001 per share | Pink Sheets |
| Title of each class | Name of each exchange on which registered |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o Yes T No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o Yes T No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
T Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
T Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o Yes T No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer: o | Accelerated Filer: o |
Non-accelerated filer: o (Do not check if a smaller reporting company) | Smaller reporting company: T |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
o Yes T No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
$14,145,830 as of June 30, 2009.
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 68,408,522 shares of Common Stock were outstanding as of March 31, 2010.
| Part I | |
| | | |
| Item 1. | | 4 |
| Item 1A | | 7 |
| Item 1B | | 11 |
| Item 2 | | 11 |
| Item 3 | | 18 |
| Item 4 | | 18 |
| | | |
| PART II | |
| | | |
| Item 5 | | 18 |
| Item 6 | | 19 |
| Item 7 | | 19 |
| Item 7A | | 27 |
| Item 8 | | 28 |
| Item 9 | | 29 |
| Item 9A | | 29 |
| Item 9B | | 32 |
| | | |
| PART III | |
| | | |
| Item 10 | | 32 |
| Item 11 | | 35 |
| Item 12 | | 37 |
| Item 13 | | 38 |
| Item 14 | | 39 |
| | | |
| PART IV | |
| | | |
| Item 15 | | 40 |
| | | |
| | | 44 |
PART I
This annual report contains statements that plan for or anticipate the future and are not historical facts. In this Report these forward looking statements are generally identified by words such as “anticipate,” “plan,” “believe,” “expect,” “estimate,” and the like. Because forward-looking statements involve future risks and uncertainties, these are factors that could cause actual results to differ materially from the estimated results. These risks and uncertainties are detailed in Item 1. “Description of Business,” Item 2. “Description of Properties,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Item 8. “Financial Statements” and Item. 13 “Certain Relationships and Related Transactions and Director Independence”.
The Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for such statements, may not apply to this Report.
Business Development
We were incorporated under the laws of the State of Delaware on October 10, 1995, under the name "Chefs Acquisition Corp." Initially formed for the purpose of engaging in the food preparation business, we redirected our business efforts in late 1995 following a change of control, which occurred on October 30, 1995, to the acquisition, exploration and, if warranted, the development of mineral resource properties. We changed our name to “Aurora Gold Corporation” on August 20, 1996 to more fully reflect our resource exploration business activities.
Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. Our continued operations and the recoverability of mineral property costs is dependent upon the existence of economically recoverable mineral reserves, confirmation of our interest in the underlying properties, our ability to obtain necessary financing to complete the development and upon future profitable production.
Since 1996 we have acquired and disposed of a number of properties. We have not been successful in any of our exploration efforts to establish reserves on any of the properties that we owned or in which we have or have had an interest.
We currently have interest in four (4) properties none of which contain any reserves. Please refer to “Description of Properties.” We have no revenues, have sustained losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We will not generate revenues even if any of our exploration programs indicate that a mineral deposit may exist on our properties. Accordingly, we will be dependent on future financings in order to maintain our operations and continue our exploration activities.
We have not been involved in any bankruptcy, receivership or similar proceedings.
Our Principal Products and Their Markets
We are a junior mineral exploration company. Our strategy is to concentrate our investigations into: (i) existing operations where an infrastructure already exists; (ii) properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) grass-roots exploration opportunities.
We are currently concentrating our property exploration activities in Brazil and Canada. We are also examining data relating to the potential acquisition of other exploration properties in the United States of America (the “USA”), Latin America and South America.
Our properties are in the exploration stage only and are without a known body of mineral reserves. Development of the properties will follow only if satisfactory exploration results are obtained. Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration and development activities will result in any discoveries of commercially viable bodies of mineralization. The long-term profitability of our operations will be, in part, directly related to the cost and success of our exploration programs, which may be affected by a number of factors. Please refer to “Item 1A Risk Factors”
Significant Developments in fiscal 2009 and Subsequent Events
For the year ended December 31, 2009 we recorded exploration expenses of $67,973 compared to $77,273 in fiscal year 2008. The following is a breakdown of the exploration expenses by property: Brazil $65,956 (2008 - $74,723) and Canada, Kumealon property $2,017 (2008 - $2,550).
In September 2009, 3,000,000 common shares were authorized for issuance at $0.10 per share for cash proceeds of $300,000. The shares were physically issued in January 2010 to individuals and companies who reside outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). The Company’s agent was paid a commission of 420,000 shares of common stock of the Company. The shares were physically issued to the agent in January 2010.
In September 2009, convertible notes payable and related accrued interest aggregating $739,152 (AUD $850,479) were settled through the issuance of 5,000,000 shares of common stock of the Company. The shares were issued to a company who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
In November 2009, 100,000 shares were authorized for issuance in connection with debt settlements at $0.18 per share. The shares were physically issued in January 2010 to a company who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
In November 2009, 150,000 shares were authorized for issuance in connection with debt settlements at $0.24 per share. The shares were physically issued in January 2010 to a company who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
In November 2009, the Company signed a letter agreement with Global Minerals Limited which was subsequently amended on February 24, 2010, to acquire an initial 70% interest in the Front Range Gold Project located in Boulder County, Colorado. The Company paid $100,000 on signing the letter agreement. A further $400,000 is due on signing of the formal agreement on or before April 12, 2010.
In December 2009, 1,666,667 common shares were authorized for issuance at $0.30 per share for net cash proceeds of $500,000. The shares were physically issued in January 2010 to an individual who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
In January 2010, the Company received four (4) advances totalling $1,350,000. The advances are non-interest bearing and due on demand.
Distribution Methods of Our Products and Services
We are a mineral exploration company and are not in the business of distributing any products or services.
Status of Any Publicly Announced New Product or Service
We have no plans for new products or services that we do not already offer.
Competitive Business Conditions and Our Competitive Position in the Industry and Methods of Competition
Vast areas of Brazil have been explored and in some cases staked through mineral exploration programs. Vast areas also remain unexplored. The cost of staking and re-staking new mineral claims and the costs of most phase one exploration programs are relatively modest. Additionally, in many more prospective areas, extensive literature is readily available with respect to previous exploration activities. These facts make it possible for a junior mineral exploration company such as ours to be very competitive with other similar companies. We are also competitive with senior companies who are doing grass roots exploration. In the event our exploration activities uncover prospective mineral showings, we anticipate being able to attract the interest of better financed industry partners to assist on a joint venture basis in more extensive exploration. We are at a competitive disadvantage compared to established mineral exploration companies when it comes to being able to complete extensive exploration programs on claims which we hold or may hold in the future. If we are unable to raise capital to pay for extensive claim exploration, we will be required to enter into joint ventures with industry partners which will result in our interest in our claims being substantially diluted.
Management of our company remains committed to building a portfolio of mineral exploration properties principally through their own efforts. We are one small company in a large competitive industry with many other junior exploration companies who are evaluating and re-evaluating prospective mineral properties in Brazil.
Sources and Availability of Raw Materials and the Names of Principal Suppliers
As a mineral exploration company, we do not require sources of raw materials and do not have principal suppliers in the way which applies to manufacturing companies. Our raw materials are, in effect, mineral exploration properties which we may stake or acquire from third parties. Our management team seeks to assemble a portfolio of quality mineral exploration properties in Brazil and the USA. Initially, we will operate in the field with our president, Technical director and various consultants on an as needed basis. This will enable us to assemble a portfolio of properties through grass roots exploration and staking. We will also acquire new properties through option agreements when the new properties can be acquired on favorable terms.
Dependence on One or a Few Major Customers
We are in the business of mining exploration. We are not selling any product or service and therefore have no dependence on one or a few major customers.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration
Our Company does not own any patents or trademarks. We are not party to any labor agreements or contracts. Licenses, franchises, concessions and royalty agreements are not part of our business.
Need for any government approval of principal products or services
As a mineral exploration company, we are not in a business which requires extensive government approvals for principal products or services. The Department National Production Minerals (DNPM) of Brazil outlines and governs the work that can be done on mining claims in Brazil.
In the event mining claims which we acquire in the future prove to host viable ore bodies, we would likely sell or lease the deposit to a company whose business is the extraction and treatment of ore. This company would undertake the sale of metals or concentrates and pay us a net smelter royalty as specified in a future lease agreement. All responsibility for government approvals pertaining to mining methods, environmental impacts and reclamation would be the responsibility of this contractor. All costs to obtain the necessary government approvals would be factored into technical and viability studies in advance of a decision being made to proceed with development of an ore body.
The mining industry in Brazil is highly regulated. Our president and Technical director have extensive industry experience and are familiar with government regulations respecting the initial acquisition and early exploration of mining claims in Brazil. The Company is required under law to meet government standards relating to the protection of land and waterways, safe work practices and road construction. We are unaware of any proposed or probable government regulations which would have a negative impact on the mining industry in Brazil. We propose to adhere strictly to the regulatory framework which governs mining operations in Brazil.
Effect of existing or probable governmental regulations on our business.
Management is unaware of any existing or probable government regulations which would have a positive or negative impact on our company's business.
Costs and effects of compliance with environmental laws (federal, state and local)
At the present time, our costs of compliance with environmental laws are minimal. In the event that claims which we may acquire in the future host a viable ore body, the costs and affects of compliance with environmental laws will be incorporated in the exploration plan for these claims. These exploration plans will be prepared by qualified mining engineers.
Number of total employees and number of full time employees
As of March 31, 2010 we had five (5) part time employees.
We are an exploration stage company and have incurred substantial losses since inception.
We have never earned any revenues. In addition, we have incurred net losses of $15,471,179 for the period from our inception (October 10, 1995) through December 31, 2009 and, based upon our current plan of operation, we expect that we will incur losses for the foreseeable future.
Potential investors should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such companies. We are subject to all of the risks inherent to an exploration stage business enterprise, such as limited capital, no defined mineral deposits on our properties, lack of manpower, and possible cost overruns associated with our exploration programs. Potential investors must also weigh the likelihood of success in light of any problems, complications, and delays that may be encountered with the exploration of our properties.
Because we are small and do not have much capital, we must limit our exploration activity. As such we may not be able to complete an exploration program that is as thorough as we would like. In that event, an existing ore body may go undiscovered. Without an ore body, we cannot generate revenues and you will lose your investment.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
Our independent registered public accounting firm has issued its report, which includes an explanatory paragraph for going concern uncertainty on our consolidated financial statements as of and for the year ended December 31, 2009. Because we have not yet generated revenues from our operations our ability to continue as a going concern is currently heavily dependent upon our ability to obtain additional financing to sustain our operations. Such financing may take the form of the issuance of common or preferred stock or debt securities, or may involve bank financing. Although we have completed several equity financings, the fact that our auditors have issued a “going concern” opinion may hinder our ability to obtain additional financing in the future. Currently, we have no commitments to obtain any additional financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.
Because we do not have any revenues, we expect to incur operating losses for the foreseeable future.
We have never generated revenues and we have never been profitable. Prior to completing exploration on our mineral properties, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. If we are unable to generate financing to continue the exploration of our properties, we will fail and you will lose your entire investment in this offering.
None of the properties in which we have an interest or the right to earn an interest have any known reserves.
We currently have an interest or the right to earn an interest in four (4) properties, none of which have any reserves. Based on our exploration activities through the date of this Prospectus, we do not have sufficient information upon which to assess the ultimate success of our exploration efforts. If we do not establish reserves we may be required to curtail or suspend our operations, in which case the market value of our common stock may decline and you may lose all or a portion of your investment.
We have only completed the initial stages of exploration of our properties, and thus have no way to evaluate whether we will be able to operate our business successfully. To date, we have been involved primarily in organizational activities, acquiring interests in properties and in conducting preliminary exploration of properties. We have not earned any revenues and have not achieved profitability as of the date of this Prospectus.
We are subject to all the risks inherent to mineral exploration, which may have an adverse affect on our business operations.
Potential investors should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unsuccessful in addressing these risks, our business will likely fail and you will lose your entire investment.
We are subject to the numerous risks and hazards inherent to the mining industry and resource exploration including, without limitation, the following:
| | · | interruptions caused by adverse weather conditions; |
| | · | unforeseen limited sources of supplies resulting in shortages of materials, equipment and availability of experienced manpower. |
The prices and availability of such equipment, facilities, supplies and manpower may change and have an adverse effect on our operations, causing us to suspend operations or cease our activities completely.
It is possible that our title for the properties in which we have an interest will be challenged by third parties.
We have not obtained title insurance for our properties. It is possible that the title to the properties in which we have our interest will be challenged or impugned. If such claims are successful, we may lose our interest in such properties.
Our failure to compete with our competitors in mineral exploration for financing, acquiring mining claims, and for qualified managerial and technical employees will cause our business operations to slow down or be suspended.
Our competition includes large established mineral exploration companies with substantial capabilities and with greater financial and technical mineralized materials than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We may also compete with other mineral exploration companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration programs may be slowed down or suspended.
Compliance with environmental regulations applicable to our operations may adversely affect our capital liquidity.
All phases of our operations in Brazil and Canada, where our properties are located, will be subject to environmental regulations. Environmental legislation in Brazil and Canada is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. It is possible that future changes in environmental regulation will adversely affect our operations as compliance will be more burdensome and costly.
Because we have not allocated any money for reclamation of any of our mining claims, we may be subject to fines if the mining claims are not restored to its original condition upon termination of our activities.
Our directors may face conflicts of interest in connection with our participation in certain ventures because they are directors of other mineral mineralized material companies.
Mr. Montgomery, who in addition to Mr. Pearl, serves as a director, may also be a director of other companies (including mineralized material exploration companies) and, if those other companies participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. It is possible that due to our directors’ conflicting interests, we may be precluded from participating in certain projects that we might otherwise have participated in, or we may obtain less favorable terms on certain projects than we might have obtained if our directors were not also directors of other participating mineral mineralized materials companies. In an effort to balance their conflicting interests, our directors may approve term s equally favorable to all of their companies as opposed to negotiating terms more favorable to us but adverse to their other companies. Additionally, it is possible that we may not be afforded certain opportunities to participate in particular projects because those projects are assigned to our directors’ other companies for which the directors may deem the projects to have a greater benefit
Our future performance is dependent on our ability to retain key personnel, loss of which would adversely affect our success and growth.
Our performance is substantially dependent on performance of our senior management. In particular, our success depends on the continued efforts of Mr. Pearl. The loss of his services could have a material adverse effect on our business, results of operations and financial condition as our potential future revenues would most likely dramatically decline and our costs of operations would rise. We do not have employment agreements in place with any of our officers or our key employees, nor do we have key person insurance covering our employees.
The value and transferability of our shares may be adversely impacted by the limited trading market for our shares.
There is only a limited trading market for our common stock on the Pink Sheets. This may make it more difficult for you to sell your stock if you so desire.
Our common stock is a penny stock and because "penny stock” rules will apply, you may find it difficult to sell the shares of our common stock.
Our common stock is a “penny stock” as that term is defined under Rule 3a51-1 of the Securities Exchange Act of 1934. Generally, a "penny stock" is a common stock that is not listed on a national securities exchange and trades for less than $5.00 a share. Prices often are not available to buyers and sellers and the market may be very limited. Penny stocks in start-up companies are among the riskiest equity investments. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the Securities and Exchange Commission. The document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information re garding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser's written agreement to the purchase. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of purchasers of our stock to sell their shares in the secondary market. It may also cause fewer broker dealers to make a market in our stock.
Many brokers choose not to participate in penny stock transactions. Because of the penny stock rules, there is less trading activity in penny stock and you are likely to have difficulty selling your shares.
In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, Financial Industry Regulatory Authority (the “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to r ecommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
Future sales of shares by us may reduce the value of our stock.
If required, we will seek to raise additional capital through the sale of our common stock. Future sales of shares by us could cause the market price of our common stock to decline and may result in further dilution of the value of the shares owned by our stockholders.
Not Applicable.
| Item 2. | Description of Properties |
Office Premises
We conduct our activities from our principal and technical office located at Baarerstrasse 10, 1st Floor, Zug, 6300, Switzerland. These offices are provided to us on a month to month basis. We believe that these offices are adequate for our purposes. We do not own any real property. Management believes that this space will meet our needs for the next 12 months.
Mining Properties
Our properties are in the preliminary exploration stage and do not contain any known bodies of ore.
We conduct exploration activities from our principal and technical office located at Baarerstrasse 10, 1st Floor, Zug, 6300, Switzerland. The telephone number is (+41) 7887-96966. We believe that these offices are adequate for our purposes and operations.
Our strategy is to concentrate our efforts on: (i) existing operations where an infrastructure already exists; (ii) properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) grass-roots exploration opportunities.
We are currently concentrating our property exploration activities in Brazil and Canada. We are also examining data relating to the potential acquisition of other exploration properties in Latin America, South America.
Our properties are in the exploration stage only and are without a known body of mineral reserves. Development of the properties will follow only if satisfactory exploration results are obtained. Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration and development activities will result in any discoveries of commercially viable bodies of mineralization. The long-term profitability of our operations will be, in part, directly related to the cost and success of our exploration programs, which may be affected by a number of factors. Please refer to “Item 1A. Risk Factors.”
We currently have an interest in three (3) projects located in Tapajos gold province in Para State, Brazil and one property located in British Columbia, Canada. We have conducted only preliminary exploration activities to date and may discontinue such activities and dispose of the properties if further exploration work is not warranted.
| Figure 1. | Brazil, South America |
Properties
Brazil
São Domingos
Location and access
The São Domingos property lies in the Tapajos Province of Para State, Brazil. It is situated approximately 250 km SE of Itaituba, the regional centre, and includes an area of nearly 8000 ha. Small aircraft service Itaituba daily and on this occasion flights were sourced via Manaus. Access from Itaituba to site is by small aircraft or unsealed road of average to poor quality. The road is subject to seasonal closures and as the visit was at the end of the ‘wet’ season site access was granted via light aircraft utilizing the local airstrip.
Tenure
The project covers an area of 6.100 hectares and was granted in 1995 as exploration license number 859.587/1995 and 850.990/1995 to 851.019/1995 by the Brazilian National department of Mineral Production DNPM - Departamento Nacional de Produção Mineral, and expires in 2012. These licenses were restructured by adding further applications and reductions of some areas under option. Currently the Company has tenure over Processo Nos 850.782/2005, 850.119/2006, 850.684/2006, 859.1995/1995. For ease of reference please see the map below.
(DNPM Processes 850.684/06
The Company has good title over the mineral rights which were granted as DNPM Process number 850.684/06 and which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The São Domingos mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of Aurora. On September 13, 2006 the Company applied to the DNPM for the conversion of the Application to an Exploration Permit covering and area of 4914.18 hectares. The DNPM Process 850.684/06 had assured priority over 525 hectares and therefore, the area will be reduced from 4914.18 to 525 hectares. No payments or royalties are due regarding DNPM Process 850.384/06.
DNPM Processes 850.782/05:
The company has good title over the mineral rights which were granted as DNPM Process number 850.782/05 and which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The São Domingos mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of Aurora. On November 8, 2005 the Company applied to the DNPM for the conversion of the Application to an Exploration Permit covering and area of 5651.93 hectares. The Exploration Permit was granted on November 28, 2006 for a three (3) year period, renewable for three (3) additional years. On September 28, 2009 the Company applied for the renewal of the Exploration Permit but it has not yet been granted by the DNPM. No payments or royalties are due regarding DNPM Process 850.782/05.
Geology
The geology of the São Domingos property is predominantly composed of paleo-proterozoic Parauari Granites that play host to a number of gold deposits in the Tapajos Basin. Typical Granites of the younger Maloquinha Intrusive Suite have been noticed in the vicinity of Molly Gold Target, and basic rocks considered to be part of the mesoproterozoic Cachoeira Seca Intrusive Suite occur around the Esmeril target area.
The São Domingos property was a previous large alluvial operation, and the property area covers numerous areas of workings.
São João – Samba Minerals farm in agreement
In May 2008 the Company signed an agreement with Samba Minerals Limited (“Samba”), which was subsequently amended in August 2008, whereby Samba can earn up to an 80% participating interest in the São João project by funding exploration expenditures to completion of a feasibility study on the property. Upon completion of a feasibility study, the Company will immediately transfer an 80% participation interest in the property to Samba and enter into a formal joint venture agreement to govern the development and production of minerals from the property. Samba can terminate its participation by providing the Company 30 days notice in writing. Upon withdrawal from its participation, Samba would forfeit to the Company all of its rights in relation to the project and would be free of any and all payment commitments yet to be due. Samba will be the manager of the São João project. A feasibility study has not been completed as of December 31, 2008 and thus no joint venture has been formed as of that date.
Location and access
The Sao Joao property is located in the central portion of the Southern Tapajos basin and is accessed by light aircraft from the regional centre of Itaituba. Access is also possible by unsealed roads linking up to the Transgarimpeiro highway and by a purpose cut heavy vehicle access track linking Sao Joao to the exploration centre at the primary project at Sao Domingo.
Tenure - São João Project - DNPM Processes 851.533/94 to 851.592/94 inclusive:
The company has good title over the mineral rights which were granted in 1994 and 2005 by the Brazilian National department of Mineral Production DNPM - Departamento Nacional de Produção Mineral, as DNPM Process numbers 851.533/94 to 851.592/94 and which are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The São João mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of the previous holder since an Exploration Permit has not yet been granted. The São João mineral rights comprise 60 Applications for Alluvial Mine of 50 hectares each which was presented to DNPM on May 16, 1994. On August 30, 2006 the previous holder of the Applications applied for the conversion of the Applications to Exploration Permits . When the conversion request is approved by the Authorities, the previous holder will be granted the Exploration Permit for an area of 3000 ha. The assignment of the São João mineral rights to Aurora can only be done after the approval of the Applications and the actual granting of an Exploration Permit to the previous Holder.
Option Agreement
The São João Option Agreement dated January 20, 2006 and amendments dated June 2, 2008 and December 2, 2008, allows the Company to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the São João property mineral rights. Under the terms of the Option Agreement and amendments, a total amount of USD $1,435,000 (one million four hundred and thirty five thousand dollars) is due by Aurora for the acquisition of the São João mineral rights. The total option agreement payments for the mineral rights are structured as follows: April 12, 2006 – USD $20,000 (paid); September 12, 2006 – USD $25,000 (paid); September 12, 2007 – USD $60,000 (paid); June 25, 2008 - $100,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); December 5, 2008 – USD $40.000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); January 15, 2009 – USD $30,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); February 15, 2009 – USD $30,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); April 30, 2009 to March 30, 2011 – USD $8,333.33 per month (April 30, 009 to December 31, 2009 paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); July 30, 2011 – USD $950,000. The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and the Company will be free of any and all payment commitments yet to be due.
Geology
The prime targets for the São João property are located around and on the intersection of regional NW and NNW faults within the Pararui Intrusive Suite and this area has been the focus of large-scale alluvial workings. The Pararui Intrusive Suite has proven to host the vast majority of gold deposits elsewhere within the Tapajos Gold Province. We conducted a rock chip program over an area currently being excavated for gold in quartz systems via shallow underground workings. The sample results have demonstrated that the quartz vein systems are highly mineralized and considered continuous for at least 200m. We are confident that the quartz vein systems are much more extensive and are currently planning to increase the sample density of rock and soil sampling over, and adjacent to, the current wor kings to locate further mineralized vein systems, and to drill test their depth extensions in the near future.
Previous mining activity over a number of years focused on the alluvial deposits within its many tributaries, and has now progressed to include the saprolite host rock and out cropping quartz veins.
Comandante Araras - Samba Minerals farm in agreement
In May 2008 the Company signed an agreement with Samba, which was subsequently amended in August 2008, whereby Samba can earn up to an 80% participating interest in the Comandante Araras projects by funding exploration expenditures to completion of a feasibility study on the property. Upon completion of a feasibility study, the Company will immediately transfer an 80% participation interest to Samba and enter into a formal joint venture agreement to govern the development and production of minerals from the property. Samba can terminate its participation by providing the Company 30 days notice in writing. Upon withdrawal from its participation, Samba would forfeit to the Company all of its rights in relation to the project and would be free of any and all payment commitments yet to be due. Samba will be the manager of the Comandante Ar aras project. A feasibility study has not been completed as of December 31, 2009 and thus no joint venture has been formed as of that date.
Location and access
The Comandante Araras property is located in the central portion of the Southern Tapajos basin and is accessed by light aircraft from the regional centre of Itaituba. The project adjoins the São João project to the south east. Access is also possible by unsealed roads linking up to the Transgarimpeiro highway and by a purpose cut heavy vehicle access track linking São João to the exploration centre at the primary project at Sao Domingo.
Tenure - Comandante Araras Project - DNPM Processes 853.785/93 to 853.839/93 inclusive:
The Company has good title over the mineral rights which were granted by the Brazilian Department of Mines (Departamento Nacional de Produção Mineral – “DNPM”) as DNPM Process numbers 853.785/93 to 853.839/93 and which are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The Comandante Araras mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of the previous holder since an Exploration Permit has not yet been granted. The Comandante Arara mineral rights comprise 55 Applications for Alluvial Mine of 50 hectares each and the Applications for the rights were presented to DNPM on October 05, 1993. The conversion to Exploration Permits has not been applied for yet. The assignment of the Comandante Araras minera l rights to Aurora can only be done after the approval for the conversion of the Applications and the actual granting of an Exploration Permit to the previous Holder.
Option Agreement
The Comandante Araras Option Agreement dated July 2, 2007, and amendments dated June 2, 2008, November 10, 2008, and September 18, 2009, allows the Company to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Comandante Araras property mineral rights via structured cash payments. The total option agreement payments for the mineral rights are structured as follows: November 1, 2006 R$20,000 (paid); November 15, 2006 – R$40,000 (paid); December 15, 2006 R$40,000 (paid); May 18, 2007 - R$15,000 (paid); May 29, 2007 – R$50,000 (paid); June 25, 2008 – USD $80,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); Nove mber 30, 2008 – USD $20,000 or 100,000 shares of Samba Minerals Limited at a deemed issue price of $0.20 per Samba share (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4 to the consolidated financial statements); November 30, 2008 – 400,000 shares of Samba Minerals Limited at a deemed issue price of $0.20 per Samba share (to be issued by Samba when the Exploration Permit is granted and transferred to Aurora). The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and the Company will be free of any and all payment commitments yet to be due.
Geology
The geology of the Comandante Araras property is dominated by two regional faults in the Parauari granite that strike North west in the northern half of the property and South east in the southern part of the property. The project was selected based on the potential trends of mineralisation striking towards Comandante Araras from the São João project.
British Columbia, Canada
Kumealon
Location and access
In February 1999, we acquired, by staking, a high grade limestone property three (3) square kilometres (741 acres) located on the north shore of Kumealon Inlet, 54 kilometres south-southeast of Prince Rupert, British Columbia, Canada.
This property is highlighted by consistence of purity and whiteness of the limestone zone outcropping along the southwest shore of Kumealon Lagoon. The zone is comprised mostly of white, recrystallized, fine to course grained limestone, striking 150 degrees and can be traced for at least 1200 meters. The zone is estimated to have an average stratigraphic thickness of 180 meters. Chip samples taken across the zone averaged 55.06% CaO, 2.11% insolubles and 43.51% ignition loss. This property has no known reserves.
We have conducted only preliminary exploration activities on these properties. None of the foregoing properties contain any known reserves.
The Company is not involved in any legal proceedings at this time.
PART II
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Our Common Stock is quoted on the Pink Sheets. The following table sets forth the high and low bid prices for the Common Stock for the calendar quarters indicated as reported by the NASD OTC Bulletin Board for the last two years. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.
| | | First Quarter | | | Second Quarter | | | Third Quarter | | | Fourth Quarter | |
| 2010 – High | | $ | 0.61 | (1) | | | | | | | | | |
| 2010 – Low | | $ | 0.38 | (1) | | | | | | | | | |
| 2009 – High | | $ | 0.50 | | | $ | 0.33 | | | $ | 0.50 | | | $ | 0.70 | |
| 2009 – Low | | $ | 0.16 | | | $ | 0.17 | | | $ | 0.06 | | | $ | 0.26 | |
| 2008 – High | | $ | 0.51 | | | $ | 0.26 | | | $ | 0.12 | | | $ | 0.50 | |
| 2008 – Low | | $ | 0.21 | | | $ | 0.05 | | | $ | 0.04 | | | $ | 0.04 | |
Our stock is also quoted on the Frankfurt Exchange under the symbols “A4G.FSE,” and “A4G.ETR” and on the Berlin-Bremen Exchange under the symbol “A4G.BER”.
(1) The high and low bid prices for our Common Stock for the First Quarter of 2010 were for the period January 1, 2010 to March 31, 2010.
As of March 31, 2010, there were 718 holders of record of the Common Stock.
No cash dividends were paid in 2008, 2009 and the subsequent period to March 31, 2010. The amount and frequency of cash dividends are significantly influenced by metal prices, operating results and our cash requirements.
We do not have securities authorized for issuance under an equity compensation plan.
No securities were issued without registration under the Securities Act of 1933, as amended (the "Act") during the fourth quarter of 2009.
We did not effect any repurchases of our securities during the fourth quarter of Fiscal 2009.
Not applicable
| Item 7. | Management’s Discussion and analysis of Financial Condition and results of Operations |
We are a mineral exploration company engaged in the exploration of base, precious metals and industrial minerals worldwide. We were incorporated under the laws of the State of Delaware on October 10, 1995, under the name "Chefs Acquisition Corp." We conduct our exploration and property acquisition activities through our head office which is located at is located at Baarerstrasse 10, 1st Floor, Zug, 6300 Switzerland. The telephone number is (+41) 7887-96966. Our Field office for exploration activities in Brazil is located at Estrada Do Bis, 476, Bairro, Bom Jardim, Itaituba, in the Tapajos gold province of the State of Para, Brazil.
We had no revenues during fiscal 2009 and 2008. Funds raised in fiscal 2009 and 2008 were used for exploration of our properties and general administration.
Year Ended December 31, 2009 (Fiscal 2009) versus Year Ended December 31, 2008 (Fiscal 2008)
For the year ended December 31, 2009 we recorded a loss of $1,779,477 or $0.03 per share, compared to a loss of $520,105 or $0.01 per share in 2008.
General and administrative expenses – For the year ended December 31, 2009 we recorded general and administrative expenses of $697,039 (fiscal 2008 - $442,832). The fiscal 2009 amount includes professional fees - accounting $43,263 (fiscal 2008 - $56,898) and legal $10,787 (fiscal 2008 - $79,540). Recent developments in capital markets have restricted access to debt and equity financing for the Company. As a result, the Company reduced its 2009 capital spending requirements in light of the current and anticipated, global economic environment.
Exploration expenditures - For the year ended December 31, 2009 we recorded exploration expenses of $67,973 compared to $77,273 in fiscal 2008. The following is a breakdown of the exploration expenses by property: Brazil $65,956 (2008 - $74,723) and Canada, Kumealon property $2,017 (2008 - $2,550).
Depreciation expense – For the year ended December 31, 2009 we recorded depreciation expense of $13,172 compared to $14,426 in fiscal 2008.
| (C) | Capital Resources and Liquidity |
December 31, 2009 versus December 31, 2008:
Recent developments in capital markets have restricted access to debt and equity financing for many companies. The Company's exploration properties are in the exploration stage, have not commenced commercial production and consequently the Company has no history of earnings or cash flow from its operations. As a result, the Company is reviewing its 2010/2011 exploration and capital spending requirements in light of the current and anticipated, global economic environment.
The Company currently finances its activities primarily by the private placement of securities. There is no assurance that equity funding will be accessible to the Company at the times and in the amounts required to fund the Company’s activities. There are many conditions beyond the Company’s control which have a direct bearing on the level of investor interest in the purchase of Company securities. The Company may also attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its properties, however, there is no assurance that any such activity will generate funds that will be available for operations. Debt financing has not been used to fund the Company’s property acquisitions and exploration activities and the Company has no current plans to use debt financing. The Company does not have “standby” credit facilities, or off-balance sheet arrangements and it does not use hedges or other financial derivatives. The Company has no agreements or understandings with any person as to additional financing.
At December 31, 2009, we had cash of $556,957 (2008 - $16,511) and a working capital deficiency of $893,013 (2008 working capital deficiency - $1,092,000). Total liabilities as of December 31, 2009 were $1,523,226 as compared to $1,691,579 at December 31, 2008, a decrease of $168,353. In September 2009, 3,000,000 common shares were authorized for issuance at $0.10 per share for cash proceeds of $300,000. The shares were physically issued in January 2010 to individuals and companies who reside outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). The Company’s agent was paid a commission of 420,000 shares of common stock of the Company. The shares were physically issued to the agent in January 2010. In September 2009, co nvertible notes payable and related accrued interest aggregating $739,152 (AUD $850,479) were settled through the issuance of 5,000,000 shares of common stock of the Company. The shares were issued to a company who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). In November 2009, 100,000 shares were authorized for issuance in connection with debt settlements at $0.18 per share. The shares were physically issued in January 2010 to a company who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). In November 2009, 150,000 shares were authorized for issuance in connection with debt settlements at $0.24 per share. The shares were physically issued in January 2010 to a company who resides outside the United States of America (in accordance with the exemption from registration requirements af forded by Regulation S as promulgated thereunder). In December 2009, 1,666,667 common shares were authorized for issuance at $0.30 per share for net cash proceeds of $500,000. The shares were physically issued in January 2010 to an individual who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). In December 2008, 2,603,333 shares of the common stock of the Company were issued to settle debts of $156,200. The shares were issued to individuals and companies who reside outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder). Of the 2,603,333 common shares issued, 1,488,533 common shares were issued to a director in payment of his services valued at $75,108 and expenses valued at $14,204. In July 2008, the Company issued 250,000 shares of common stock of the Company valued at $25,000 to a direc tor of the Company’s subsidiary as consideration for arranging property acquisitions in the Tapajos Gold Province, State of Pará, Brazil. The shares were issued to an individual who reside outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
Our general business strategy is to acquire mineral properties either directly or through the acquisition of operating entities. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As discussed in note 1 to the consolidated financial statements, the Company has incurred recurring operating losses since inception, has not generated any operating revenues to date and used cash of $395,791 from operating activities in 2009. The Company requires additional funds to meet its obligations and maintain its operations. We do not have sufficient working capital to (i) pay our a dministrative and general operating expenses through December 31, 2010 and (ii) to conduct our preliminary exploration programs. Without cash flow from operations, we may need to obtain additional funds (presumably through equity offerings and/or debt borrowing) in order, if warranted, to implement additional exploration programs on our properties. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its properties, there is no assurance that any such activity will generate funds that will be available for operations. Failure to obtain such additional financing may result in a reduction of our interest in certain properties or an actual foreclosure of its interest. We have no agreements or understandings with any person as to such additional financing.
Our exploration properties have not commenced commercial production and we have no history of earnings or cash flow from its operations. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its property, there is no assurance that any such activity will generate funds that will be available for operations.
Cash Flow
Operating activities: The Company used cash of $395,791 (used cash in 2008 - $649,028) through the year ended December 31, 2009. The following is a breakdown of cash used for operating activities: Depreciation and amortization of $13,172 (2008 - $14,426), realized loss on debt settlement was $1,014,465 (2008 - $0), foreign exchange loss related to notes payable $144,701 (gain in 2008 - $169,235). Changes in prepaid expenses and other assets resulted in a decrease of $55,121 compared to a decrease of $19,190 in 2008. There was an increase in accounts payable and accrued expenses of $266,469 compared to an increase of $20,076 in 2008.
Investing Activities: During the year ended December 31, 2009 investing activities consisted of expenditures on the purchase of assets of $0 (2008 - $250) and proceeds from the disposal of assets of $0 (2008 - $2,312).
Financing Activities: The Company intends to finance its activities by raising capital through the equity markets. Proceeds from common stock were $800,000 (2008 - $0). During fiscal 2009 the Company did not repay any advances from a related party, in fiscal 2008 the Company repaid advances from a related party of $161,441.
Dividends
The Company has neither declared nor paid any dividends on its Common stock. The Company intends to retain it’s earnings to finance growth and expand its operations and does not anticipate paying any dividends on its Common shares in the foreseeable future.
Asset-Backed Commercial Paper
The Company has no asset-backed commercial paper.
Financial Instruments
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
The carrying value of cash, accounts payable and accrued expenses, accounts payable and accrued expenses – related parties, advances payable – related party, loans payable and loan payable - related party approximate their fair value because of the short-term nature of these instruments. The carrying value of the convertible notes payable approximate their fair value because interest rates of long-term convertible notes payable approximate market interest rates. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
The Company operates outside of the United States of America (primarily in Brazil) and is exposed to foreign currency risk due to the fluctuation between the currency in which the Company operates in and the U.S. dollar.
Share Capital
At March 31, 2010, the Company had:
| ° | Authorized share capital of 100,000,000 common shares with par value of $0.001 each. |
| ° | 68,408,522 common shares were issued and outstanding as at March 30, 2010 (December 31, 2009 – 68,408,522). If the holders were to acquire all 2,300,000 shares issuable upon the exercise of all incentive stock options outstanding, the Company would receive an additional $598,000. |
| ° | 2,300,000 stock options outstanding under the Company’s incentive stock option plan. The stock options are exercisable at of $0.26 per share, with expiry date of August 6, 2012. |
OUTLOOK
General Economic Conditions
Current problems in credit markets and deteriorating global economic conditions have lead to a significant weakening of exchange traded commodity prices in recent months, including precious and base metal prices. Volatility in these markets has also been unusually high. It is difficult in these conditions to forecast metal prices and demand trends for products that we would produce if we had current mining operations. Credit market conditions have also increased the cost of obtaining capital and limited the availability of funds. Accordingly, management is reviewing the effects of the current conditions on our business.
It is anticipated that for the foreseeable future, the Company will rely on the equity markets to meet its financing need. The Company will also consider entering into joint venture arrangements to advance its projects.
Capital and Exploration Expenditures
We are reviewing our capital and exploration spending in light of current market conditions. As a result of our review, the Company may curtail a portion of its capital and exploration expenditures during 2010/2011.
We are currently concentrating our exploration activities in Brazil and examining data relating to the potential acquisition or joint venturing of additional mineral properties in either the exploration or development stage.
Off-Balance Sheet Arrangements
During the year ended December 31, 2009, the Company was not a party to any off-balance-sheet arrangements that have, or are reasonably likely to have, a material current or future effect on the results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources of the Company.
Market Risk Disclosures
The Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes.
Forward-Looking Statements
This annual report contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.
Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows (b) our growth strategies, (c) expectations from our ongoing sponsored research and development activities (d) anticipated trends in the technology industry, (e) our future financing plans and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCI AL CONDITION AND RESULTS OF OPERATIONS” and “DESCRIPTIONS OF OUR BUSINESS AND PROPERTY,” as well as in this Form 10-K generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “RISK FACTORS” and matters described in this form 10-K generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.
Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commissi on which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. We will have little likelihood of long-term success unless we are able to continue to raise capital from the sale of our securities until, if ever, we generate positive cash flow from operations.
Plans for Next Twelve Months
The following Plan of Operation contains forward-looking statements that involve risks and uncertainties, as described below. The Company’s actual results could differ materially from those anticipated in these forward-looking statements. The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto.
Our audited consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
During the next 12 months we intend to raise additional funds through equity offerings and/or debt borrowing to meet our administrative/general operating expenses and to conduct work on our exploration properties. There is, of course, no assurance that we will be able to do so and we do not have any agreements or arrangements with respect to any such financing.
Our exploration properties have not commenced commercial production and we have no history of earnings or cash flow from its operations. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its property, there is no assurance that any such activity will generate funds that will be available for operations.
We will concentrate our exploration activities on the Brazilian Tapajos properties and examine data relating to the potential acquisition or joint venturing of additional mineral properties in either the exploration or development stage in Brazil, United States, Canada and other South American countries. Additional employees will be hired on a consulting basis as required by the exploration properties.
Our exploration work program in 2010 will focus on the Brazilian properties and will entail surface mapping of geology, sampling of soils on a grid basis to delineate geochemical anomalies, stream sediment sampling, geophysical surveying and drilling.
We have set up a field operations centre at the São Domingos property and intend to continue to focus our exploration activities on anomalies associated with the São Domingos Property. We selected the São Domingos property based on its proximity to our other properties, and the logistics currently in place. Access to the São Domingos property is by light aircraft to a well-maintained strip, by road along the government maintained Trans Garimpeiro highway, and by boat along the multitude of waterways in the Amazon Basin.
In late May 2006 we followed up previous exploration of the Sao Domingos property with the initiation of a projected 5,000 metre diamond-drilling program. Drilling targeted various soil anomalies and lithogical trends outlined by mapping and sampling of out cropping rocks. Drilling tested areas around the Atacadau gold occurrence, the Esmeril occurrence and Fofoca area. These areas have been the focus of both alluvial and relatively shallow underground hard rock (oxidized) mining. The lithology is porphyritic Pararui granite containing stockwork quartz veins. Limited historical underground production was carried out via shafts sunk in the oxidized material peripheral to the dominant quartz veins. No dewatering was utilized and generally mining ceased, as water became a problem. Dri lling completed during 2006 resulted in a volume of mineralized material which was calculated on the first 17 drill holes targeting high grade gold in quartz veins and altered host rocks. Drill hole line spacing of 40m was used in the initial appraisal.
After reviewing the geology and grade continuity from 2006 drilling on the Mineralized material at the Sao Domingos- Fofoca project, the Company initiated further drilling during July 2007 to test target extensions of the current mineralized material as well as to infill current drilling to increase the confidence levels. The initial calculation resulted in a volume of mineralized material containing approximately 130,000 ounces of gold at 2.0 g/t using a cut off 0f 0.5 g/t.
Currently the mineralized material still remains open along strike in both directions and at depth. Aurora will continue to evaluate the potential, and is confident that Fofoca could evolve along strike and link up with other noted targets further along strike. To test the strike continuity a ground geophysical survey was conducted during the third quarter of 2007 along the Fofoca mineralized structure. The results demonstrated that geophysical anomalism, similar to that recognized over the known mineralisation of the Fofoca mineralisation, was noted and the anomaly continues further west to join up with the known mineralisation of the Cacheira area. The results also show that this mineralisation may split into other loads of mineralisation of similar proportions to that known over the current mineralisation. ; This has the potential to increase the known resource by at least 50%.
In 2010, we will continue to follow up exploration on the Fofoca area and to initiate further exploration programs on other areas of the Sao Domingos property. It is anticipated that we will drill a series of holes within the Fofoca area for engineering and metallurgical test work as well as to test for depth extensions of the known mineralisation. Other Exploration on the São Domingos property areas will involve further mapping of the outcrop geology and sampling soils and scree from shafts of previous workers in order to confirm lithologies and structural trends noted from drilling and published government maps. Currently, four anomalous areas on the Sao Domingos property have been identified from soil and rock chip sampling, at Atacadao, Esmeril, Fofoca and Cachoeira, and we plan to c onduct further investigation.
A recent discovery was made on the Atatcadau area and has been called Colibri. Here artisanal miners uncovered an area of stock work mineralisation that was subsequently sampled and returned some high-grade assays. Further sampling of material that was exposed by artisanal activity around the Colibri occurrence was conducted. Whilst monitoring the artisanal activity mapping and measurements of the structures and orientations of theoretical mineralisation channels were conducted. The results showed that there are possible correlations to the Atacadau mineralisation noted from previous mapping and drilling. We intend to cut trenches across the strike of the mineralizing structures to better understand the size both laterally and along strike. We will then test the strike e xtent with geophysics in a similar manner as that conducted on the Fofoca area.
Exploration on the São João, and the adjoining Comandante Araras properties during early 2007 included trenching and mapping. Sample results of a trench on the main vein resulted in 80m at 30.94 g/t gold. Recent sampling and mapping has shown this vein system to be extensive and a series of other veins have been located and sampled.
Together with our joint venture partner, Samba, we completed a ground geophysics program on the São João property. The program targeted areas of known mineralisation and covered the area along to the northeast to link up with other known mineralisation. Results to date show that the area has a geophysical trend continuing on from the known mineralisation. During the geophysics program, other veins were noted and sampled and returned anomalous gold grades. Together with Samba, in 2010, we intend to evaluate the geophysics and determine various targets to test the sub surface extent of the known mineralisation, and to test the geophysical anomalies within the area.
We are not planning to do any exploration work on the British Columbia Kumealon limestone property in 2010.
We are currently conducting due diligence on the Front Range Property in Boulder Colorado and should we go forward with the acquisition Aurora plans to update all permits and schedule operations with a view to recommencing the production of gold concentrate.
| (D) | Application of Critical Accounting Policies |
The accounting policies and methods we utilize in the preparation of our consolidated financial statements determine how we report our financial condition and results of operations and may require our management to make estimates or rely on assumptions about matters that are inherently uncertain. Our accounting policies are described in note 2 to our December 31, 2009 consolidated financial statements. Our accounting policies relating to mineral property and exploration costs and depreciation and amortization of property, plant and equipment are critical accounting policies that are subject to estimates and assumptions regarding future activities.
Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method. Equipment is recorded at cost. Depreciation is provided over the following useful lives: vehicles 10 years and office equipment, furniture and fixtures 2 to 10 years.
Exploration costs are charged to operations as incurred until such time that proven reserves are discovered. From that time forward, the Company will capitalize all costs to the extent that future cash flow from mineral reserves equals or exceeds the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. As at December 31, 2009 and 2008, the Company did not have proven reserves.
Exploration activities conducted jointly with others are reflected at the Company's proportionate interest in such activities.
Costs related to site restoration programs are accrued over the life of the project.
US GAAP requires us to consider at the end of each accounting period whether or not there has been an impairment of the capitalized property, plant and equipment. This assessment is based on whether factors that may indicate the need for a write-down are present. If we determine there has been an impairment, then we would be required to write-down the recorded value of its property, plant and equipment costs which would reduce our earnings and net assets.
| (E) | Related Party Transactions |
During the fiscal year 2009, consulting fees of $86,380 (2008 – $134,558) were paid to directors of the Company and its subsidiary. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.
Included in accounts payable - related parties at December 31, 2009 is $127,813 payable to directors of the Company for consulting fees and various expenses incurred on behalf of the Company.
Included in advances payable - related party at December 31, 2009 is $50,000 payable to a director of the Company. The advance is non-interest bearing and due on demand.
| (F) | Off-balance Sheet Arrangements and Contractual Obligations |
We do not have any off-balance sheet arrangements or contractual obligations that are likely to have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that have not been disclosed in our consolidated financial statements.
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable
| Item 8. | Financial Statements and Supplementary Data |
Our audited consolidated financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
The following audited consolidated financial statements are filed as part of this annual report:
Report of Independent Registered Public Accounting Firm, dated April 1, 2010
Consolidated Balance Sheets as of December 31, 2009 and 2008
Consolidated Statements of Operations from October 10, 1995 (commencement of operations) to December 31, 2009 and for the years ended December 31, 2009 and 2008
Consolidated Statements of Stockholders’ Equity (Deficiency) and Comprehensive Income (loss) for period from October 10, 1995(commencement of operations) to December 31, 2009
Consolidated Statements of Cash Flows for period from October 10, 1995(commencement of operations) to December 31, 2009 and for the years ended December 31, 2009 and 2008
Notes to the Consolidated Financial Statements
AURORA GOLD CORPORATION
(An exploration stage enterprise)
Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 2009 and 2008
Index
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity (Deficiency) and Comprehensive Income (Loss)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
 |
| CERTIFIED PUBLIC ACCOUNTANTS | TEL 206.382.7777 Ÿ FAX 206.382.7700 |
| 601 UNION STREET. SUITE 2300 | www.pscpa.com |
| SEATTLE, WASHINGTON 98101 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Aurora Gold Corporation
We have audited the accompanying consolidated balance sheets of Aurora Gold Corporation (an exploration stage company) and Subsidiary ("the Company") as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders' equity (deficiency) and comprehensive income (loss), and cash flows for the years then ended, and for the period from October 10, 1995 (date of inception) to December 31, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes ex amining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aurora Gold Corporation (an exploration stage company) and Subsidiary as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, and for the period from October 10, 1995 (date of inception) to December 31, 2009, in conformity with accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred operating losses since inception, has not been able to generate any operating revenues to date, and used cash from operations of $395,791 in 2009. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ PETERSON SULLIVAN LLP
Seattle, Washington
April 1, 2010
| AURORA GOLD CORPORATION | | | | | | |
| (An exploration stage enterprise) | | | | | | |
| | | | | | | |
| Consolidated Balance Sheets | | | | | | |
| December 31, 2009 and 2008 | | December 31 | | | December 31 | |
| (Expressed in U.S. Dollars) | | 2009 | | | 2008 | |
| | | | | | | |
| ASSETS | | | | | | |
| Current assets | | | | | | |
| Cash | | $ | 556,957 | | | $ | 16,511 | |
| Prepaid expenses and other assets | | | 73,256 | | | | 30,555 | |
| Total current assets | | | 630,213 | | | | 47,066 | |
| | | | | | | | | |
| Equipment, net | | | 105,201 | | | | 88,973 | |
| Total assets | | $ | 735,414 | | | $ | 136,039 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) | | | | | |
| | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 795,413 | | | $ | 639,066 | |
| Accounts payable and accrued expenses - related party | | | 127,813 | | | | - | |
| Advances payable | | | 50,000 | | | | - | |
| Advances payable – related party | | | 50,000 | | | | - | |
| Loans payable | | | 500,000 | | | | 500,000 | |
| Total current liabilities | | | 1,523,226 | | | | 1,139,066 | |
| Convertible notes payable | | | - | | | | 518,025 | |
| Accrued interest on convertible notes payable | | | - | | | | 34,488 | |
| Total liabilities | | | 1,523,226 | | | | 1,691,579 | |
| | | | | | | | | |
| Stockholders' Equity (Deficiency) | | | | | | | | |
| Common stock | | | | | | | | |
| Authorized: | | | | | | | | |
| 100,000,000 common shares, (December 31, 2008 - 100,000,000) with par value $0.001 each | | | | | | | | |
| Issued and outstanding: | | | | | | | | |
| 68,408,522 (December 31, 2008 - 58,071,855) common shares | | | 68,408 | | | | 58,071 | |
| Additional paid-in capital | | | 14,707,818 | | | | 12,110,779 | |
| Accumulated deficit during the exploration stage | | | (15,471,179 | ) | | | (13,691,702 | ) |
| Accumulated other comprehensive income (loss) | | | (92,859 | ) | | | (32,688 | ) |
| Stockholders' equity (deficiency) | | | (787,812 | ) | | | (1,555,540 | ) |
| Total liabilities and stockholders' equity (deficiency) | | $ | 735,414 | | | $ | 136,039 | |
The accompanying notes are an integral part of these consolidated financial statements
AURORA GOLD CORPORATION
| (An exploration stage enterprise) | | | | | | | | | |
| | | Cumulative | | | | | | | |
| Consolidated Statements of Operations | | October 10 | | | Year Ended | | | Year Ended | |
| (Expressed in U.S. Dollars) | | 1995 (inception) | | | Ended | | | Ended | |
| | | to December 31 | | | December 31 | | | December 31 | |
| | | 2009 | | | 2009 | | | 2008 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | |
| Administrative and general | | $ | 1,388,411 | | | $ | 122,061 | | | $ | 152,309 | |
| Depreciation and amortization | | | 99,491 | | | | 13,172 | | | | 14,426 | |
| Imputed interest on loan payable - related party | | | 1,560 | | | | - | | | | - | |
| Interest and bank charges | | | 360,242 | | | | 90,554 | | | | 115,501 | |
| Foreign exchange loss (gain) | | | (21,484 | ) | | | 150,181 | | | | (171,902 | ) |
| Professional fees - accounting and legal | | | 1,138,368 | | | | 54,050 | | | | 136,438 | |
| Property search and negotiation | | | 329,695 | | | | 104,497 | | | | - | |
| Salaries, management and consulting fees | | | 2,172,532 | | | | 162,524 | | | | 196,060 | |
| | | | 5,468,815 | | | | 697,039 | | | | 442,832 | |
| Exploration expenses | | | 8,779,413 | | | | 67,973 | | | | 77,273 | |
| Write-off of mineral property costs | | | 172,981 | | | | - | | | | - | |
| | | | 14,421,209 | | | | 765,012 | | | | 520,105 | |
| | | | | | | | | | | | | |
| Other income (loss) | | | | | | | | | | | | |
| Gain on disposition of subsidiary | | | 216,474 | | | | - | | | | - | |
| Interest income | | | 22,353 | | | | - | | | | - | |
| Gain on sale of rights to the Matupa agreement, net of expenses of $138,065 | | | 80,237 | | | | - | | | | - | |
| Loss on investments | | | (37,971 | ) | | | - | | | | - | |
| Loss on spun-off operations | | | (316,598 | ) | | | - | | | | - | |
| Loss on debt extinguishment | | | (1,014,465 | ) | | | (1,014,465 | ) | | | - | |
| | | | (1,049,970 | ) | | | (1,014,465 | ) | | | - | |
| Net loss for the period | | $ | (15,471,179 | ) | | $ | (1,779,477 | ) | | $ | (520,105 | ) |
| | | | | | | | | | | | | |
| Loss per share | | | | | | | | | | | | |
| - basic and diluted | | | | | | $ | (0.03 | ) | | $ | (0.01 | ) |
| | | | | | | | | | | | | |
| Weighted average number of common shares outstanding | | | | | | | | | | | | |
| - basic and diluted | | | | | | | 60,442,661 | | | | 55,325,371 | |
The accompanying notes are an integral part of these consolidated financial statements
| AURORA GOLD CORPORATION | | | | | | | | | | | | | |
| (An exploration stage enterprise) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated Statements of Stockholders' Equity (Deficiency) and Comprehensive Income (loss) | | | | | | | | | | | | | | | | |
| October 10, 1995 (inception) to December 31, 2009 | | | | | | | | | | | | |
| (Expressed in U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Accumulated | | | | | | Accumulated | | | Total | |
| | | | | | | | | Additional | | | Compre- | | | (deficit) during | | | Advances for | | | other | | | stockholders' | |
| | | Common Stock | | | paid-in | | | hensive | | | exploration | | | Stock | | | comprehensive | | | equity | |
| | | Shares | | | Amount | | | capital | | | (loss) | | | stage | | | Subscriptions | | | income (loss) | | | (deficiency) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 1994 | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - settlement of indebtedness | | | 11,461,153 | | | | 11,461 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 11,461 | |
| Net (loss) for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total comprehensive (loss) | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 1995 | | | 11,461,153 | | | | 11,461 | | | | - | | | | | | | | - | | | | - | | | | - | | | | 11,461 | |
| Adjustment for reverse stock split | | | (7,640,766 | ) | | | (7,641 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (7,641 | ) |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - cash at $0.001 per share | | | 5,800,000 | | | | 5,800 | | | | 341,761 | | | | - | | | | - | | | | - | | | | - | | | | 347,561 | |
| - resource property | | | 300,000 | | | | 300 | | | | 2,700 | | | | - | | | | - | | | | - | | | | - | | | | 3,000 | |
| Net (loss) for the period | | | - | | | | - | | | | - | | | | (361,208 | ) | | | (361,208 | ) | | | - | | | | - | | | | (361,208 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (361,208 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 1996 | | | 9,920,387 | | | | 9,920 | | | | 344,461 | | | | | | | | (361,208 | ) | | | - | | | | - | | | | (6,827 | ) |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - cash in March 1997 at $1.00 per share (less issue costs of $4,842) | | | 750,000 | | | | 750 | | | | 744,408 | | | | - | | | | - | | | | - | | | | - | | | | 745,158 | |
| Net (loss) for the period | | | - | | | | - | | | | - | | | | 615,880 | | | | (615,880 | ) | | | - | | | | - | | | | (615,880 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | 615,880 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 1997 | | | 10,670,387 | | | | 10,670 | | | | 1,088,869 | | | | | | | | (977,088 | ) | | | - | | | | - | | | | 122,451 | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - settlement of indebtedness | | | 96,105 | | | | 96 | | | | 68,601 | | | | - | | | | - | | | | - | | | | - | | | | 68,697 | |
| - cash in May 1998 at $1.25 per share | | | 200,000 | | | | 200 | | | | 249,800 | | | | - | | | | - | | | | - | | | | - | | | | 250,000 | |
| - cash in November 1998 at $0.75 per share | | | 71,667 | | | | 72 | | | | 53,678 | | | | - | | | | - | | | | - | | | | - | | | | 53,750 | |
| - cash in December 1998 at $0.75 per share | | | 143,333 | | | | 143 | | | | 107,357 | | | | - | | | | - | | | | - | | | | - | | | | 107,500 | |
| Grant of options to employees and directors | | | - | | | | - | | | | 518,900 | | | | - | | | | - | | | | - | | | | - | | | | 518,900 | |
| Grant of options to consultants | | | - | | | | - | | | | 172,100 | | | | - | | | | - | | | | - | | | | - | | | | 172,100 | |
| Net (loss) for the period | | | - | | | | - | | | | - | | | | (1,151,604 | ) | | | (1,151,604 | ) | | | - | | | | - | | | | (1,151,604 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (1,151,604 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 1998 | | | 11,181,492 | | | | 11,182 | | | | 2,259,304 | | | | | | | | (2,128,692 | ) | | | - | | | | - | | | | 141,794 | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - settlement of indebtedness | | | 231,286 | | | | 231 | | | | 160,151 | | | | - | | | | - | | | | - | | | | - | | | | 160,382 | |
| - cash in March 1999 at $0.656 per share | | | 22,871 | | | | 23 | | | | 14,977 | | | | - | | | | - | | | | - | | | | - | | | | 15,000 | |
| - finder's fee in February 1999 at $0.81 per share | | | 25,000 | | | | 25 | | | | 20,287 | | | | - | | | | - | | | | - | | | | - | | | | 20,312 | |
| Grant of options to consultants | | | - | | | | - | | | | 29,500 | | | | - | | | | - | | | | - | | | | - | | | | 29,500 | |
| Cash advanced on stock subscriptions | | | - | | | | - | | | | - | | | | - | | | | - | | | | 425,000 | | | | - | | | | 425,000 | |
| Net (loss) for the period | | | - | | | | - | | | | - | | | | (855,391 | ) | | | (855,391 | ) | | | - | | | | - | | | | (855,391 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (855,391 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 1999 | | | 11,460,649 | | | | 11,461 | | | | 2,484,219 | | | | | | | | (2,984,083 | ) | | | 425,000 | | | | - | | | | (63,403 | ) |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - settlement of indebtedness | | | 199,000 | | | | 199 | | | | 99,301 | | | | - | | | | - | | | | - | | | | - | | | | 99,500 | |
| - cash in March 2000 at $0.50 per share | | | 350,000 | | | | 350 | | | | 174,650 | | | | - | | | | - | | | | (175,000 | ) | | | - | | | | - | |
| - cash in March 2000 at $0.455 per share | | | 550,000 | | | | 550 | | | | 249,450 | | | | - | | | | - | | | | (250,000 | ) | | | - | | | | - | |
| Cancellation of shares in April 2000 | | | (90,706 | ) | | | (91 | ) | | | (56,600 | ) | | | - | | | | - | | | | - | | | | - | | | | (56,691 | ) |
| Exercise of options in June 2000 | | | 405,000 | | | | 405 | | | | 3,645 | | | | - | | | | - | | | | - | | | | | | | | 4,050 | |
| Spin-off of Aurora Metals (BVI) Limited | | | - | | | | - | | | | 316,498 | | | | - | | | | - | | | | - | | | | - | | | | 316,498 | |
| Net (loss) for the period | | | - | | | | - | | | | - | | | | (677,705 | ) | | | (677,705 | ) | | | - | | | | - | | | | (677,705 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (677,705 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 2000 | | | 12,873,943 | | | | 12,874 | | | | 3,271,163 | | | | | | | | (3,661,788 | ) | | | - | | | | - | | | | (377,751 | ) |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net income for the period | | | - | | | | - | | | | - | | | | 128,545 | | | | 128,545 | | | | - | | | | - | | | | 128,545 | |
- Unrealized holding losses on available-for-sale securities | | | - | | | | - | | | | - | | | | (141,928 | ) | | | - | | | | - | | | | (141,928 | ) | | | (141,928 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (13,383 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance December 31, 2001 | | | 12,873,943 | | | | 12,874 | | | | 3,271,163 | | | | | | | | (3,533,243 | ) | | | - | | | | (141,928 | ) | | | (391,134 | ) |
| Issuance of common stock for - settlement of indebtedness | | | 3,708,038 | | | | 3,708 | | | | 351,492 | | | | - | | | | - | | | | - | | | | - | | | | 355,200 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net income for the period | | | - | | | | - | | | | - | | | | (137,329 | ) | | | (137,329 | ) | | | - | | | | - | | | | (137,329 | ) |
- Unrealized holding losses on available-for-sale securities | | | - | | | | - | | | | - | | | | 141,928 | | | | - | | | | - | | | | 141,928 | | | | 141,928 | |
| Total comprehensive (loss) | | | | | | | | | | | | | | | 4,599 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2002 | | | 16,581,981 | | | | 16,582 | | | | 3,622,655 | | | | | | | | (3,670,572 | ) | | | - | | | | - | | | | (31,335 | ) |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - settlement of indebtedness | | | 2,752,450 | | | | 2,752 | | | | 114,806 | | | | - | | | | - | | | | - | | | | - | | | | 117,558 | |
| - cash in December 2003 at $0.25 per share | | | 100,000 | | | | 100 | | | | 24,900 | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net income for the period | | | - | | | | - | | | | - | | | | (96,404 | ) | | | (96,404 | ) | | | - | | | | - | | | | (96,404 | ) |
- Unrealized holding losses on available-for-sale securities | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (96,404 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2003 | | | 19,434,431 | | | | 19,434 | | | | 3,762,361 | | | | | | | | (3,766,976 | ) | | | - | | | | - | | | | 14,819 | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - cash in January 2004 at $0.25 per share, less issuance costs | | | 100,000 | | | | 100 | | | | 22,400 | | | | - | | | | - | | | | - | | | | - | | | | 22,500 | |
| Imputed interest | | | - | | | | - | | | | 1,560 | | | | - | | | | - | | | | - | | | | - | | | | 1,560 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net income for the period | | | - | | | | - | | | | - | | | | (223,763 | ) | | | (223,763 | ) | | | - | | | | - | | | | (223,763 | ) |
- Unrealized holding losses on available-for-sale securities | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (223,763 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2004 | | | 19,534,431 | | | | 19,534 | | | | 3,786,321 | | | | | | | | (3,990,739 | ) | | | - | | | | - | | | | (184,884 | ) |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - cash in July 2005 at $0.05 per share | | | 13,000,000 | | | | 13,000 | | | | 637,000 | | | | - | | | | - | | | | - | | | | - | | | | 650,000 | |
| - settlement of indebtedness | | | 3,684,091 | | | | 3,684 | | | | 158,816 | | | | - | | | | - | | | | - | | | | - | | | | 162,500 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net (loss) for the period | | | - | | | | - | | | | - | | | | (457,271 | ) | | | (457,271 | ) | | | - | | | | - | | | | (457,271 | ) |
- Unrealized holding losses on available-for-sale securities | | | - | | | | - | | | | - | | | | (4,614 | ) | | | - | | | | - | | | | (4,614 | ) | | | (4,614 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | | (461,885 | ) | | | | | | | | | | | | | | | | |
| Balance, December 31, 2005 | | | 36,218,522 | | | | 36,218 | | | | 4,582,137 | | | | | | | | (4,448,010 | ) | | | - | | | | (4,614 | ) | | | 165,731 | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - cash in February 2006 at $0.50 per share less issuance costs of $110,000 | | | 8,000,000 | | | | 8,000 | | | | 3,882,000 | | | | - | | | | - | | | | - | | | | - | | | | 3,890,000 | |
| - non cash finder's fee in December 2006 at $0.70 per share | | | 250,000 | | | | 250 | | | | 174,750 | | | | - | | | | - | | | | - | | | | - | | | | 175,000 | |
| - cash in December 2006 at $0.50 per share | | | 1,000,000 | | | | 1,000 | | | | 499,000 | | | | - | | | | - | | | | - | | | | - | | | | 500,000 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net (loss) for the period | | | - | | | | - | | | | - | | | | (5,463,855 | ) | | | (5,463,855 | ) | | | - | | | | - | | | | (5,463,855 | ) |
| - Foreign currency translation adjustments | | | - | | | | - | | | | - | | | | (3,692 | ) | | | - | | | | - | | | | (3,692 | ) | | | (3,692 | ) |
- Reclassification adjustment for losses on available-for-sale securities included in net loss | | | - | | | | - | | | | - | | | | 4,614 | | | | - | | | | - | | | | 4,614 | | | | 4,614 | |
| Total comprehensive (loss) | | | | | | | | | | | | | | $ | (5,462,933 | ) | | | | | | | | | | | | | | | | |
| Balance, December 31, 2006 | | | 45,468,522 | | | $ | 45,468 | | | $ | 9,137,887 | | | | | | | $ | (9,911,865 | ) | | $ | - | | | $ | (3,692 | ) | | $ | (732,202 | ) |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - cash in March 2007 at $0.50 per share | | | 500,000 | | | | 500 | | | | 249,500 | | | | - | | | | - | | | | - | | | | - | | | | 250,000 | |
| - cash and settlement of debt in July 2007 at $0.25 per share | | | 5,000,000 | | | | 5,000 | | | | 1,245,000 | | | | - | | | | - | | | | - | | | | - | | | | 1,250,000 | |
| - settlement of indebtedness in August 2007 at $0.20 per | | | 250,000 | | | | 250 | | | | 49,750 | | | | - | | | | - | | | | - | | | | - | | | | 50,000 | |
| - cash in September 2007 at $0.20 per share | | | 4,000,000 | | | | 4,000 | | | | 796,000 | | | | - | | | | - | | | | - | | | | - | | | | 800,000 | |
| Stock option compensation expense | | | - | | | | - | | | | 454,295 | | | | - | | | | - | | | | - | | | | - | | | | 454,295 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net (loss) for the period | | | - | | | | - | | | | - | | | | (3,259,732 | ) | | | (3,259,732 | ) | | | - | | | | - | | | | (3,259,732 | ) |
| - Foreign currency translation adjustments | | | - | | | | - | | | | - | | | | (65,255 | ) | | | - | | | | - | | | | (65,255 | ) | | | (65,255 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | $ | (3,324,987 | ) | | | | | | | | | | | | | | | | |
| Balance, December 31, 2007 | | | 55,218,522 | | | $ | 55,218 | | | $ | 11,932,432 | | | | | | | $ | (13,171,597 | ) | | $ | - | | | $ | (68,947 | ) | | $ | (1,252,894 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - non cash finder's fee in July 2008 at $0.10 per share | | | 250,000 | | | | 250 | | | | 24,750 | | | | - | | | | - | | | | - | | | | - | | | | 25,000 | |
| - settlement of indebtedness in December 2008 at $0.06 per share | | | 2,603,333 | | | | 2,603 | | | | 153,597 | | | | - | | | | - | | | | - | | | | - | | | | 156,200 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net (loss) for the period | | | - | | | | - | | | | - | | | | (520,105 | ) | | | (520,105 | ) | | | - | | | | - | | | | (520,105 | ) |
| - Foreign currency translation adjustments | | | - | | | | - | | | | - | | | | 36,259 | | | | - | | | | - | | | | 36,259 | | | | 36,259 | |
| Total comprehensive (loss) | | | | | | | | | | | | | | $ | (483,846 | ) | | | | | | | | | | | | | | | | |
| Balance, December 31, 2008 | | | 58,071,855 | | | $ | 58,071 | | | $ | 12,110,779 | | | | | | | $ | (13,691,702 | ) | | $ | - | | | $ | (32,688 | ) | | $ | (1,555,540 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - settlement of indebtedness in September 2009 | | | 5,000,000 | | | | 5,000 | | | | 1,748,616 | | | | - | | | | - | | | | - | | | | - | | | | 1,753,616 | |
| - cash in September 2009 at $0.10 per share net of finder’s fee (paid in stock) | | | 3,000,000 | | | | 3,000 | | | | 255,000 | | | | - | | | | - | | | | - | | | | - | | | | 258,000 | |
| - non cash finder’s fee in September 2009 at $0.10 per share | | | 420,000 | | | | 420 | | | | 41,580 | | | | - | | | | - | | | | - | | | | - | | | | 42,000 | |
| - settlement of indebtedness in November 2009 at $0.18 per share | | | 100,000 | | | | 100 | | | | 17,899 | | | | - | | | | - | | | | - | | | | - | | | | 17,999 | |
| - settlement of indebtedness in November 2009 at $0.24 per share | | | 150,000 | | | | 150 | | | | 35,611 | | | | - | | | | - | | | | - | | | | - | | | | 35,761 | |
| - cash in December 2009 at $0.30 per share | | | 1,666,667 | | | | 1,667 | | | | 498,333 | | | | - | | | | - | | | | - | | | | - | | | | 500,000 | |
| Components of comprehensive income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| - Net (loss) for the period | | | - | | | | - | | | | - | | | | (1,779,477 | ) | | | (1,779,477 | ) | | | - | | | | - | | | | (1,779,477 | ) |
| - Foreign currency translation adjustments | | | - | | | | - | | | | - | | | | (60,171 | ) | | | - | | | | - | | | | (60,171 | ) | | | (60,171 | ) |
| Total comprehensive (loss) | | | | | | | | | | | | | | $ | (1,839,648 | ) | | | | | | | | | | | | | | | | |
| Balance, December 31, 2009 | | | 68,408,522 | | | $ | 68,408 | | | $ | 14,707,818 | | | | | | | $ | (15,471,179 | ) | | $ | - | | | $ | (92,859 | ) | �� | $ | (787,812 | ) |
The accompanying notes are an integral part of these consolidated financial statements
| AURORA GOLD CORPORATION | | Cumulative | | | | | | | |
| (An exploration stage enterprise) | | October 10 | | | Year | | | Year | |
| Consolidated Statements of Cash Flows | | 1995 (inception) | | | Ended | | | Ended | |
| (Expressed in U.S. Dollars) | | to December 31 | | | December 31 | | | December 31 | |
| | | 2009 | | | 2009 | | | 2008 | |
| | | | | | | | | | |
| Cash flows from operating activities | | | | | | | | | |
| Net loss for the period | | $ | (15,471,179 | ) | | $ | (1,779,477 | ) | | $ | (520,105 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | |
| - depreciation and amortization | | | 99,491 | | | | 13,172 | | | | 14,426 | |
| - stock compensation expense on stock option grants | | | 1,174,795 | | | | - | | | | - | |
| - expenses satisfied with issuance of common stock | | | 748,800 | | | | - | | | | 25,000 | |
| - expenses satisfied with transfer of marketable securities | | | 33,903 | | | | - | | | | - | |
| - imputed interest on loan payable - related party | | | 1,560 | | | | - | | | | - | |
| - write-off of mineral property costs | | | 172,981 | | | | - | | | | - | |
| - adjustment for spin-off of Aurora Metals (BVI) Limited | | | 316,498 | | | | - | | | | - | |
| - realized loss on investments | | | 37,971 | | | | - | | | | - | |
| - gain on sale of rights to Matupa agreement, net of expenses | | | (80,237 | ) | | | - | | | | - | |
| - realized loss on debt extinguishment | | | 1,014,465 | | | | 1,014,465 | | | | - | |
| - foreign exchange (gain) loss related to notes payable | | | (24,534 | ) | | | 144,701 | | | | (169,235 | ) |
| Changes in assets and liabilities: | | | | | | | | | | | | |
| - (increase) in receivables | | | (206,978 | ) | | | - | | | | - | |
| - (increase) decrease in prepaid expenses and other assets | | | (95,252 | ) | | | (55,121 | ) | | | (19,190 | ) |
- increase (decrease) in accounts payable and accrued expenses (including related party) | | | 1,454,924 | | | | 266,469 | | | | 20,076 | |
| Net cash used in operating activities | | | (10,822,792 | ) | | | (395,791 | ) | | | (649,028 | ) |
| | | | | | | | | | | | | |
| Cash flows from investing activities | | | | | | | | | | | | |
| Purchase of equipment | | | (187,548 | ) | | | - | | | | (250 | ) |
| Proceeds on disposal of equipment | | | 16,761 | | | | - | | | | 2,312 | |
| Proceeds from disposition of marketable securities | | | 32,850 | | | | - | | | | - | |
| Acquisition of mineral property costs | | | (172,981 | ) | | | - | | | | - | |
| Payment for incorporation cost | | | (11,511 | ) | | | - | | | | - | |
| Net cash used in investing activities | | | (322,429 | ) | | | - | | | | 2,062 | |
| | | | | | | | | | | | | |
| Cash flows from financing activities | | | | | | | | | | | | |
| Proceeds from common stock less issuance costs | | | 9,642,339 | | | | 800,000 | | | | - | |
| Loan proceeds from related party | | | 289,000 | | | | - | | | | - | |
| Net proceeds from (payments on) convertible notes and loans | | | 1,469,252 | | | | - | | | | 687,260 | |
| Net proceeds from advances payable | | | 50,000 | | | | 50,000 | | | | - | |
| Net proceeds from (payments on) advances payable -related party | | | 50,000 | | | | 50,000 | | | | (161,441 | ) |
| Net cash provided by financing activities | | | 11,500,591 | | | | 900,000 | | | | 525,819 | |
| | | | | | | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | 201,587 | | | | 36,237 | | | | 133,749 | |
| Increase (decrease) in cash and cash equivalents | | | 556,957 | | | | 540,446 | | | | 12,602 | |
| Cash, beginning of year | | | - | | | | 16,511 | | | | 3,909 | |
| Cash, end of period | | $ | 556,957 | | | $ | 556,957 | | | $ | 16,511 | |
The accompanying notes are an integral part of these consolidated financial statements
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | 1. | Nature of Business and Going Concern |
Aurora Gold Corporation ("the Company") was formed on October 10, 1995 under the laws of the State of Delaware and is in the business of location, acquisition, exploration and, if warranted, development of mineral properties. The Company’s focus is on the exploration and development of its exploration properties located in the Tapajos Gold Province, State of Pará, Brazil (see Note 3). The Company has not yet determined whether its properties contain mineral reserves that may be economically recoverable and has not generated any operating revenues to date.
These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The general business strategy of the Company is to acquire mineral properties either directly or through the acquisition of operating entities. The Company has incurred recurring operating losses since inception, has not generated any operating revenues to date and used cash of $395,791 from operating activities in 2009. The Company requires additional funds to meet its obligations and maintain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in this regard are to raise equity financing through private or public equity investment in order to support existing operations and expand its business. There is no assurance that such additional funds will be available to the Company when required or on terms acceptable to the Company. These consolidated financial statements do not include any adjustments that might result from this uncertainty.
| | 2. | Significant Accounting Policies |
| | (a) | Principles of Accounting |
The Company follows accounting standards set by the Financial Accounting Standards Board, referred to as the “FASB”. The FASB sets generally accepted accounting principles (“GAAP”) that the Company follows to ensure they consistently report their financial condition, results of operations, and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification, referred to as Codification or “ASC”. The FASB finalized the codification effective for periods ending on or after September 15, 2009.
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiary, Aurora Gold Mineração Ltda ("Aurora Gold Mineracao"). Collectively, they are referred to herein as "the Company". Significant inter-company accounts and transactions have been eliminated. Aurora Gold Mineração was incorporated on October 27, 2005.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.
Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when purchased. The Company did not have any cash equivalents at December 31, 2009 and 2008. No amounts were paid for income taxes or interest in 2009 or 2008.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 2. | Significant Accounting Policies (continued) |
Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method. Equipment is recorded at cost. Depreciation is provided over the following useful lives:
| Vehicles | 10 years |
| Office equipment, furniture and fixtures | 2 to 10 years |
| | (e) | Mineral Properties and Exploration Expenses |
The Company accounts for its mineral properties on a cost basis whereby all direct costs, net of pre-production revenue, relative to the acquisition of the properties are capitalized. All sales and option proceeds received are first credited against the costs of the related property, with any excess credited to earnings. Once commercial production has commenced, the net costs of the applicable property will be charged to operations using the unit-of-production method based on estimated proven and probable recoverable reserves. The net costs related to abandoned properties are charged to operations.
Exploration costs are charged to operations as incurred until such time that proven reserves are discovered. From that time forward, the Company will capitalize all costs to the extent that future cash flow from mineral reserves equals or exceeds the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. As at December 31, 2009 and 2008, the Company did not have proven reserves. Exploration activities conducted jointly with others are reflected at the Company's proportionate interest in such activities.
Estimated costs related to site restoration programs during the commercial development stage of the property are accrued over the life of the project.
The Company accounts for share-based payments under the fair value method of accounting for stock-based compensation consistent with GAAP.
Under the fair value method, stock-based compensation cost is measured at the grant date based on the fair value of the award using the Black-Sholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.
Interest expense was approximately $107,781 in 2009 (2008 - $109,660) respectively.
| | (h) | Foreign Currency Translations and Transactions |
The Company's reporting currency is the U.S. Dollar. Aurora Gold Mineracao Ltda is a foreign operation and its functional currency is the Brazilian Real (Real). Certain contractual obligations in these consolidated financial statements are stated in Brazilian Reals. The Brazilian Real to U.S. dollar exchange rate at December 31, 2009 was U.S. $0.57660 to 1 Real.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 2. | Significant Accounting Policies (continued) |
| | (h) | Foreign Currency Translations and Transactions (continued) |
The Company translates foreign assets and liabilities of its subsidiaries, other than those denominated in U.S. dollars, at the rate of exchange at the balance sheet date. Income and Expenses are translated at the average rate of exchange throughout the year. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations.
Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in foreign exchange (gain) loss in the consolidated statements of operations.
| | (i) | Concentration of Credit Risk |
The Company places its cash with high credit quality financial institutions in Canada and Brazil. The Company had funds deposited in banks beyond the insured limits as of December 31, 2009 but not as of December 31, 2008.
| | (j) | Long-Lived Assets Impairment |
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with GAAP. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.
The amount of the impairment loss to be recorded is calculated by the excess of the asset's carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. The Company has not recognized any impairment losses through December 31, 2009.
The Company has adopted ASC 220, Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Consolidated Statement of Stockholders’ Equity (Deficiency) and Comprehensive Income (loss). Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. Accumulated other comprehensive income consists entirely of foreign currency translation adjustments at December 31, 2009 and 2008.
| | (l) | Fair Value of Financial Instruments and Risks |
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
The carrying value of cash, accounts payable and accrued expenses, accounts payable and accrued expenses – related parties, advances payable, and loans payable approximate their fair value because of the short-term nature of these instruments. The carrying value of the convertible notes payable approximate their fair value because interest rates of long-term convertible notes payable approximate market interest rates.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 2. | Significant Accounting Policies (continued) |
(l) Fair Value of Financial Instruments and Risks (continued)
Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
The Company operates outside of the United States of America (primarily in Brazil) and is exposed to foreign currency risk due to the fluctuation between the currency in which the Company operates in and the U.S. dollar.
The Company has adopted ASC 740, Accounting for Income Taxes, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
In July 2006, the FASB issued an interpretation which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with GAAP. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Estimated interest and penalties related to recording uncertain tax positions when recorded are included as a component of income tax expense on the consolidated statement of operations. The Company has not recorded any liabilities for uncertain tax positions or any related interest and penalties. The Company̵ 7;s tax returns are open to audit for the years ending December 31, 2004 to 2009.
| | (n) | Earnings (Loss) Per Share |
Earnings (loss) per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding during the year including common stock issued effective the date committed. Common stock issuable is considered outstanding as of the original approval date for the purposes of earnings per share computations. Diluted loss per common share is computed by dividing net loss by the sum of (a) the basic weighted average number of shares of common stock outstanding during the period and (b) additional shares that would have been issued and potentially dilutive securities and is equivalent to basic loss per share for 2009 and 2008 because potentially dilutive securities were anti-dilutive due to the net losses incurred in each year. Potentially dilutive securities outstanding consi st of 2,300,000 stock options in 2009 and 2008 and the convertible note payable (convertible into 1,726,750 common shares at December 31, 2008) in 2008.
| | (o) | New Accounting Pronouncements |
The Company considers the effects of new accounting pronouncements on the accounting, presentation and disclosure of its consolidated financial statements as such pronouncements become known. At present, there are no such pronouncements that the Company expects will have a material impact on these consolidated financial statements.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 3. | Mineral Properties and Exploration Expenses |
British Columbia, Canada – Kumealon Property
In February 1999, the Company acquired, by staking, a 741 acre limestone property located on the north shore of Kumealon Inlet, southeast of Prince Rupert, British Columbia, Canada. A finder’s fee of 25,000 shares of common stock of the Company was issued in connection with these claims.
In fiscal year 2000, there were no proven mineral reserves discovered and the Company continuously operated with a working capital deficiency. These conditions raised substantial doubt regarding the recovering of the capitalized acquisition cost. Pursuant to GAAP the Company wrote off the capitalized acquisition cost of $23,630 to operations. The Company's ownership interest in this property is still in good standing.
Gold properties in the Municipality of Itaituba, in the Tapajos gold province of the State of Para, Brazil
Comandante Araras Project - DNPM Processes 853.785/93 to 853.839/93 inclusive:
Aurora has good title over the mineral rights which were granted by the Brazilian Department of Mines (Departamento Nacional de Produção Mineral – “DNPM”) as DNPM Process numbers 853.785/93 to 853.839/93 inclusive and which are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The Comandante Arara mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of the previous holder since an Exploration Permit has not yet been granted. The Comandante Arara mineral rights comprise 55 Applications for Alluvial Mine of 50 hectares each and the Applications for the rights were presented to DNPM on October 05, 1993. The conversion to Exploration Permits has not been applied for yet. The assignment of the Comandante Araras m ineral rights to Aurora can only be done after the approval for the conversion of the Applications and the actual granting of an Exploration Permit to the previous Holder.
The Comandante Araras Option Agreement dated July 2, 2007, and amendments dated June 2, 2008, November 10, 2008, and September 18, 2009, allows the Company to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the Comandante Araras property mineral rights via structured cash payments. The total option agreement payments for the mineral rights are structured as follows: November 1, 2006 R$20,000 (paid); November 15, 2006 – R$40,000 (paid); December 15, 2006 R$40,000 (paid); May 18, 2007 - R$15,000 (paid); May 29, 2007 – R$50,000 (paid); June 25, 2008 – USD $80,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); November 30, 2008 – USD $20,000 or 100 ,000 shares of Samba Minerals Limited at a deemed issue price of $0.20 per Samba share (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); November 30, 2008 – 400,000 shares of Samba Minerals Limited at a deemed issue price of $0.20 per Samba share (to be issued by Samba when the Exploration Permit is granted and transferred to Aurora). The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and the Company will be free of any and all payment commitments yet to be due.
São João Project - DNPM Processes 851.533/94 to 851.592/94 inclusive:
Aurora has good title over the mineral rights which were granted as DNPM Process numbers 851.533/94 to 851.592/94 inclusive and which are valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The São João mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of the previous holder since an Exploration Permit has not yet been granted. The São João mineral rights comprise 60 Applications for Alluvial Mine of 50 hectares each which was presented to DNPM on May 16, 1994. On August 30, 2006 the previous holder of the Applications applied for the conversion of the Applications to Exploration Permits. When the conversion request is approved by the Authorities, the previous holder will be
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 3. | Mineral Properties and Exploration Expenses |
São João Project - DNPM Processes 851.533/94 to 851.592/94 inclusive: (continued)
granted the Exploration Permit for an area of 3000 ha. The assignment of the São João mineral rights to Aurora can only be done after the approval of the Applications and the actual granting of an Exploration Permit to the previous Holder.
The São João Option Agreement dated January 20, 2006 and amendments dated June 2, 2008 and December 2, 2008, allows the Company to perform geological surveys and assessment work necessary to ascertain the existence of possible mineral deposits which may be economically mined and to earn a 100% interest in the São João property mineral rights. Under the terms of the Option Agreement and amendments, a total amount of USD $1,435,000 (one million four hundred and thirty five thousand dollars) is due by Aurora for the acquisition of the São João mineral rights. The total option agreement payments for the mineral rights are structured as follows: April 12, 2006 – USD $20,000 (paid); September 12, 2006 – USD $25,000 (paid); September 12, 2007 – USD $60,000 (paid); June 25, 2008 - $100,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); December 5, 2008 – USD $40.000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); January 15, 2009 – USD $30,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); February 15, 2009 – USD $30,000 (paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); April 30, 2009 to March 30, 2011 – USD $8,333.33 per month (April 30, 009 to December 31, 2009 paid by Samba Minerals Limited as part of the agreement with them discussed in note 4); July 30, 2011 – USD $950,000. The vendor will have a 1.5% Net Smelter Royalty. The Royalty payment can be purchased at any time upon written notice to the vendor and payment in Reals (Brazilian currency) of the equivalent of USD $1,000,000. The option agreement can be terminated at any time upon written notice to the vendor and the Company will be free of any and all payment commitments yet to be due.
São Domingos Project - DNPM Processes 850.684/06 and 850.782/05:
| | (a) | DNPM Processes 850.684/06 |
Aurora has good title over the mineral rights which were granted as DNPM Process number 850.684/06 and which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The São Domingos mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of Aurora. On September 13, 2006 the Company applied to the DNPM for the conversion of the Application to an Exploration Permit covering and area of 4914.18 hectares. The DNPM Process 850.684/06 had assured priority over 525 hectares and therefore, the area will be reduced from 4914.18 to 525 hectares. No payments or royalties are due regarding DNPM Process 850.384/06.
| | (b) | DNPM Processes 850.782/05: |
Aurora has good title over the mineral rights which were granted as DNPM Process number 850.782/05 and which is valid and in force, free and clear of any judicial and extrajudicial encumbrances and taxes. The São Domingos mineral rights are located at the Municipality of Itaituba, State of Pará, and are registered in the name of Aurora. On November 8, 2005 the Company applied to the DNPM for the conversion of the Application to an Exploration Permit covering and area of 5651.93 hectares. The Exploration Permit was granted on November 28, 2006 for a three (3) year period, renewable for three (3) additional years. On September 28, 2009 the Company applied for the renewal of the Exploration Permit but it has not yet been granted by the DNPM. No payments or royalties are due regarding DNPM Process 850.782/05.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 3. | Mineral Properties and Exploration Expenses (continued) |
Boulder County, Colorado, U.S.A. – Front Range Gold Project
In November 2009, the Company signed a letter agreement with Global Minerals Limited which was subsequently amended on February 24, 2010, to acquire an initial 70% interest in the Front Range Gold Project located in Boulder County, Colorado. The Company paid a one-time nonrefundable fee of $100,000 on signing the letter agreement which is included in property search and negotiation expenses in the consolidated statement of operations for 2009. A further $400,000 is due on signing of the formal agreement on or before April 12, 2010, which as of the date of this report, has not yet occurred. Because of the uncertainty of the signing of the formal agreement, no liability for the amount due to be paid on signing has been recorded at December 31, 2009.
| | 4. | Joint Venture with Samba Minerals Limited |
In May 2008, the Company signed an agreement with Samba Minerals Limited (“Samba”), which was subsequently amended in August 2008, whereby Samba can earn up to an 80% participating interest in the São João and/or the Commandante Araras projects by funding exploration expenditures on each of the projects to completion of a feasibility study on each property. The properties are located in the Municipality of Itaituba, State of Pará, Brazil. Upon completion of a feasibility study on either property, the Company will immediately transfer an 80% participation interest in the relevant property to Samba and enter into a formal joint venture agreement to govern the development and production of minerals from the property. Samba can terminate its participation in either of the projects by providing the Company 30 day s notice in writing. Upon withdrawal from its participation in either property, Samba would forfeit to the Company all of its rights in relation to the projects and would be free of any and all payment commitments yet to be due. Samba will be the manager of the São João and the Commandante Araras projects. The Company has also granted Samba a right of first refusal to acquire an interest in, or enter into a joint venture or farm-in agreement on the Company’s São Domingos and Bigode (since dropped) projects. The term of the first right of refusal expires on August 1, 2010. Feasibility studies have not been completed as of December 31, 2009, and thus no joint venture has been formed as of that date.
| | | December 31, 2009 | | | December 31, 2008 | |
| Vehicles | | $ | 86,778 | | | $ | 64,265 | |
| Office equipment | | | 64,544 | | | | 52,459 | |
| Furniture and fixtures | | | 21,258 | | | | 15,742 | |
| | | | 172,580 | | | | 132,466 | |
| Accumulated depreciation | | | (67,379 | ) | | | (43,493 | ) |
| | | $ | 105,201 | | | $ | 88,973 | |
The majority of equipment held at December 31, 2009 and 2008 is located in Brazil.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 6. | Advances, Notes and Loans Payable |
The Company has two loans payable of $250,000 each totaling $500,000 at December 31, 2009 and 2008, that bear interest at 6% per annum, are due on demand and are unsecured. The Company also has two advances payable (one to a related party) of $50,000 each totaling $100,000 at December 31, 2009. The advances are non-interest bearing and are due on demand.
In September 2009, convertible notes payable and related accrued interest aggregating US $739,152 (Australian Dollars $850,479) were settled through the issuance of 5,000,000 shares of common stock of the Company. The issuance price of the shares issued on settlement was lower than the stated conversion price in the loan agreements of $0.30 per share. Thus, this transaction was considered an inducement to convert and accounted for as such resulting in a loss of $1,014,465 being recorded on the consolidated statement of operations for 2009.
In 2007, the Company's Board of Directors approved the 2007 Stock Option Plan (“the Plan”) to offer an incentive to obtain services of key employees, directors and consultants of the Company. The Plan provides for the reservation for awards of an aggregate of 10% of the total shares of Common Stock outstanding from time to time. No Plan participant may receive stock options exercisable for more than 2,500,000 shares of Common Stock in any one calendar year. Under the Plan, the exercise price of an incentive stock option must be at least equal to 100% of the fair market value of the common stock on the date of grant (110% of fair market value in the case of options granted to employees who hold more than 10% of the Company's capital stock on the date of grant). The term of stock options granted under the Plan is not to exce ed ten years and the stock options vest immediately upon granting.
The following is a summary of stock option activity for the years ended December 31, 2009 and 2008, and the status of stock options outstanding at December 31, 2009:
| | | Shares | | | Exercise price | | | Remaining Contractual Life (yrs) at 12/31/09 | | | Aggregate Intrinsic value at 12/31/09 | |
| Outstanding at January 1, 2008 | | | 2,300,000 | | | $ | 0.26 | | | | | | $ | | |
| Granted | | | - | | | | - | | | | - | | | | - | |
| Outstanding and exercisable at December 31, 2009 and 2008 | | | 2,300,000 | | | $ | 0.26 | | | | 2.6 | | | $ | 667,000 | |
The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of 2009 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2009.
There were no stock options granted during 2008 and 2009.
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 8. | Related Party Transactions |
Related party transactions not disclosed elsewhere in these consolidated financial statements:
| | a. | During the fiscal year 2009, consulting fees of $86,380 (2008 – $134,558) were paid to directors and officers of the Company and its subsidiary. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties. |
| | b. | Included in accounts payable - related party at December 31, 2009 is $127,813 payable to an officer and director of the Company for consulting fees and various expenses incurred on behalf of the Company. |
| | 9. | Non-Cash Investing and Financing Activities |
In November 2009, 150,000 shares of common stock of the Company were authorized for issuance to settle debts of $35,761.
In November 2009, 100,000 shares of common stock of the Company were authorized for issuance to settle debts of $17,999.
In September 2009, 5,000,000 shares of common stock of the Company were issued to settle an outstanding note payable and related accrued interest of $739,152.
In September 2009, 420,000 shares of common stock of the Company were authorized for issuance to pay a finders fee of $42,000 related to a private placement of 3 million shares of common stock of the Company.
In December 2008, 2,603,333 shares of common stock of the Company were issued to settle debts of $156,200. Of the 2,603,333 common shares issued, 1,488,533 common shares were issued to a director in payment of his services valued at $75,108 and expenses valued at $14,204.
In July 2008, the Company issued 250,000 shares of common stock of the Company valued at $25,000 to a director of the Company’s subsidiary as consideration for arranging property acquisitions in the Tapajos Gold Province, State of Pará, Brazil.
| | a. | The Company and its subsidiary operate in several tax jurisdictions, and its income is subject to various rates of taxation. The Company has net losses for tax purposes in the United States and Brazil totaling approximately $6,312,000 and $6,621,000, respectively, which may be applied against future taxable income. Accordingly, there is no tax expense for the years ended December 31, 2009 and 2008. The potential tax benefits arising from these losses have not been recorded in the consolidated financial statements as a full valuation allowance has been recorded against them. The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management's judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations. |
AURORA GOLD CORPORATION
Notes to the consolidated financial statements
December 31, 2009 and 2008
| | 10. | Income Taxes (continued) |
The right to claim the losses in the United States expire as follows:
| 2011 | | $ | 231,000 | |
| 2012 | | | 564,000 | |
| 2018 | | | 331,000 | |
| 2019 | | | 795,000 | |
| 2020 | | | 550,000 | |
| 2022 | | | 138,000 | |
| 2023 | | | 90,000 | |
| 2024 | | | 222,000 | |
| 2025 | | | 457,000 | |
| 2026 | | | 1,094,000 | |
| 2027 | | | 800,000 | |
| 2028 | | | 561,000 | |
| 2029 | | | 479,000 | |
| | | $ | 6,312,00 | |
Tax loss carryforwards in Brazil have no expiration dates and are available to offset up to 30% of annual income before tax in any year.
| | b. | The tax effects of temporary difference that give rise to the Company's net deferred tax asset are as follows: |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Tax loss carry forwards | | $ | 4,397,000 | | | $ | 4,195,000 | |
| Valuation allowance | | | (4,551,000 | ) | | | (4,291,000 | ) |
| Stock compensation expense | | | 154,000 | | | | 154,000 | |
| Foreign exchange gain related to outstanding notes payable | | | - | | | | (58,000 | ) |
| | | $ | - | | | $ | - | |
| | c. | The reconciliation of income tax computed at the federal statutory rate to income tax expense is as follows: |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Tax at statutory rate | | $ | (605,000 | ) | | $ | (177,000 | ) |
| Loss on debt extinguishment (non deductible) | | | 345,000 | | | | - | |
| Change in valuation allowance for deferred tax asset | | | 260,000 | | | | 177,000 | |
| Income tax expense | | $ | - | | | $ | - | |
During the month of January 2010, the Company received four advances totaling $1,350,000. The advances are non-interest bearing and are due on demand.
| Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
There have been no disagreements with our Accountants concerning accounting or financial disclosure.
Attached as exhibits to this Annual Report on Form 10-K are certifications of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), which are required pursuant to Rule 13a-14 of the Exchange Act. This “Controls and Procedures” section of this Annual Report on Form 10-K includes information concerning the controls and controls evaluation referenced in the certifications. This section of the Annual Report on Form 10-K should be read in conjunction with the certifications for a more complete understanding of the matters presented.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and m anagement necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Evaluation of disclosure controls and procedures
We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2009. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Based on the evaluation, our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), have concluded that, subject to the inherent limitations noted below, as of December 31, 2009 our disclosure controls and procedures were not effective due to the existence of several material weaknesses in our internal control over financial reporting, as discussed below.
Management’s annual report on internal control over financial reporting
The Company’s Management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control over financial reporting as of December 31, 2009.
Based on its evaluation under the framework in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, our management concluded that our internal control over financial reporting was not effective as of December 31, 2009, due to the existence of material weaknesses, as described in greater detail below. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, 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 a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Material Weaknesses Identified
In connection with the preparation of our consolidated financial statements for the period ended December 31, 2009, certain deficiencies in internal control became evident to management that represent material weaknesses, including,
| (i) | Lack of a sufficient number of independent directors for our board and audit committee. We currently do not have an independent director on our board, which is comprised of 2 directors, and on our audit committee, which is comprised of 2 directors. As a publicly-traded company, we should strive to have a majority of our board of directors be independent. |
| (ii) | Lack of an independent financial expert on our audit committee. Our board of directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended. We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. |
| (iii) | Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the period ended December 31, 2009, we had one person on staff at our executive office and two persons at our Brazil office that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual consoli dated financial statements that would not be prevented or detected. |
| (iv) | There is a lack of sufficient supervision and review by our corporate management of the accounting functions performed at the Company’s foreign subsidiary in Brazil. |
| (v) | Insufficient corporate governance policies. Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management. |
| (vi) | Accounting for Non-Standard Transactions. Occasionally the Company enters into transactions that are more complex from an accounting perspective. These transactions by their nature require greater technical accounting expertise and greater consideration of related facts and circumstances to ensure that the accounting and reporting are accurate and in accordance with generally accepted accounting principles. Such a transaction in 2009 included accounting for a loss on extinguishment of convertible debt. To be stated properly, a material audit adjustment was required. This condition is indicative of the existence of a material weakness. |
Plan for Remediation of Material Weaknesses
We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2010 assessment of the effectiveness of our internal control over financial reporting.
We have implemented certain remediation measures and are in the process of designing and implementing additional remediation measures for the material weaknesses described in this Annual Report on Form 10-K. Such remediation activities include the following:
| | • | We continue to recruit one or more additional independent board members to join our board of directors. |
| | • | We are initiating a formal monthly reporting and approval process with our Brazilian operations to ensure timely provision of information effecting our quarterly and annual consolidated financial statements. |
| | • | In addition to the foregoing remediation efforts, we will continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes. |
Changes in Internal Controls over Financial Reporting
There were no significant changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2009 that materially affected, or are reasonably likely to materially affect, our internal control over financing reporting.
None.
PART III
| Item 10. | Directors, Executive Officers and Corporate Governance |
All directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors, executive officers and significant employees, their ages, positions held, and duration as such, are as follows:
| Name and Address | Age and Position |
| | |
Michael E Montgomery 100 Lewis Street Lamington, Western Australia, 6430 Australia | Age 44, Director since 27 April 2007. |
| | |
Lars M. Pearl Hofnerstrasse 13 6314 Unterageri, Switzerland | Age 48, President, CEO and Director since 27 April 2007. |
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Our officers and director will serve until the next annual meeting of the shareholders or until his death, resignation, retirement, removal, or disqualification, or until his successors have been elected. Vacancies in the existing Board of Directors are filled by majority vote of the remaining directors. Our officer serves at the will of the Board of Directors. There are no family relationships between any executive officer or director. No officer or director of our company has, during the past five years, been named or involved in any bankruptcy proceedings, criminal proceedings, securities or banking regulatory enforcement action or federal or state securities or commodities law enforcement proceeding.
Michael Montgomery, 44, has been the Senior Geologist with Kalgoorlie Consolidated Gold Mines from February 2006 to present; he served as the Senior Mine Geologist with Gold Fields Australia Ltd. from July 2004 to February 2006; he was a contract Senior Geologist with Haoma Mining (April to July 2004); he was a senior Mine Geologist with Mount Gibson Mining (October 2003 to April 2004); he was a senior Mine Geologist with Consolidated Minerals (May 2001 to October 2004). Mr. Montgomery was a geological consultant to various resource companies from 1989 to 2001. Mr. Montgomery was appointed to the Board on April 27, 2007 in order to fill the vacancy created by the resignation of Antonino Cacace as a director.
Lars Pearl, 48, President, Director and Chief Executive Officer of Cigma Metals Corporation (2004 to 2008); Mr. Pearl has been self employed as a geological consultant from 1993 to 2004. Mr. Pearl has spent over 10 years as a geological consultant to projects in Australia, Tanzania, Russia, Kazakhstan, Peru, Colombia and Ecuador. During the last 5 years Mr. Pearl was acting as a consultant geologist to various companies, including Aurora Gold Corporation in Australia, Brazil and Tanzania before joining the board of Aurora Gold Corporation in April 2007. Mr. Pearl devotes approximately 50% of his time dealing with the affairs of Aurora Gold.
Involvement in Certain Legal Proceedings
During the past five years none of our directors, executive officers, promoters or control persons has been:
| | (a) | the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| | (b) | convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| | (c) | subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
| | (d) | found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law. |
Compliance with Section 16(a) Beneficial Ownership Reporting Compliance, of the Exchange Act of 1934
Based on information provided to the Company, it is believed that all of the Company’s directors, executive officers and persons who own more than 10% of the Company’s common stock were in compliance with Section 16(a) of the Exchange Act of 1934 during the last fiscal year. During the year ended December 31, 2009, all of the Company’s directors, executive officers and Company’s common stock were in compliance with section 16(a) of the Exchange Act of 1934.
Directors
Our Board of directors consists of two members. Directors serve for a term of one year and stand for election at our annual meeting of stockholders. Pursuant to our Bylaws, any vacancy occurring in the Board of directors, including a vacancy created by an increase in the number of directors, may be filled by the stockholders or by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of directors. A director elected to fill a vacancy shall hold office only until the next election of directors by the stockholders. If there are no remaining directors, the vacancy shall be filled by the stockholders.
At a meeting of stockholders, any director or the entire Board of directors may be removed, with or without cause, provided the notice of the meeting states that one of the purposes of the meeting is the removal of the director. A director may be removed only if the number of votes cast to remove him exceeds the number of votes cast against removal.
Committees
During the years ended December 31, 2009 and 2008 and the subsequent period to March 31, 2010 our entire board of directors acted as our Executive, Audit, Compensation and Benefits and Nominating and Corporate Governance Committees. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.
During fiscal 2009 and the subsequent period to March 31, 2010 the Compensation and Benefits Committee held one meeting by telephone conference call and the audit committee held five meetings by telephone conference call.
During fiscal years 2009/2010, there were informal meetings held by the Audit Committee. The business of the Audit Committee was conducted by resolutions consented to in writing by all the members and filed with the minutes of the proceedings of the Audit Committee. During fiscal 2009 and the period ended March 31, 2010 the audit committee reviewed the December 31, 2008 audited consolidated financial statements, the first, second and third quarter of 2009 interim unaudited consolidated financial statements and the December 31, 2009 audited consolidated financial statements.
Audit Committee Financial Expert
Our board of directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.
Compensation of Directors
During the fiscal year 2009 we paid Consulting Fees of $86,380 (2008 - $134,558) to directors of the Company and its subsidiary for their services as officers of the Company (see the Executive Compensation table on page 35). The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.
Standard Arrangements
We do not pay a fee to our outside, non-officer directors. We reimburse our directors for reasonable expenses incurred by them in attending meetings of the Board of Directors. During the years ended December 31, 2009 and 2008, we paid non-officer directors $0 and $0, respectively, in consulting fees.
Corporate Governance Principles / Code of Ethics
Effective in 2004, our Company's board of directors adopted Corporate Governance Principles / Code of Business Conduct and Ethics that applies to, among other persons, all Officers, Directors, Employees and consultants of the company and its affiliates
Our Code of Business Conduct and Ethics requires, among other things, that all of our company's Senior Officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly Senior Officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any Senior Officer, who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.
Our Code of Business Conduct and Ethics was filed with the Securities and Exchange Commission as Exhibit 99.1 on Form 10-KSB filed on March 25, 2004 (SEC File No. 000-24393-04689262). We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Aurora Gold Corporation Baarerstrasse 10, 1st Floor, Zug, 6300, Switzerland.
The following table sets forth information concerning the compensation of the named executive officers for each of the registrant's last two completed fiscal years:
Executive Compensation
| | | | | Annual Compensation | | Long-Term Compensation | |
| | | | | | | | | | | | | Awards | | | | Payments | | | |
Name And Principal Position (a) | | Year (b) | | Salary ($) (c) | | | Bonuses ($) (d) | | | Other Annual Compen- sation ($) (e) | | Restricted Stock Award(s) ($) (f) | | Securities Under- Lying Options/ SARs (#) (g) | | LTIP Payouts ($) (h) | | All other Compen- sation ($) (i) | |
| | | | | | | | | | | | | | | | | | | | |
| Lars M. Pearl (1) | | 2009 | | 86,380 | | | -0- | | | -0- | | None | | 1,000,000 | | None | | -0- | |
| President, CEO and | | 2008 | | 75,108 | | | -0- | | | -0- | | None | | 1,000,000 | | None | | -0- | |
| Director | | 2007 | | 80,650 | | | -0- | | | -0- | | None | | 1,000,000 | | None | | -0- | |
| | | | | | | | | | | | | | | | | | | | |
| Hans Biener | | 2009 | | -0- | | | -0- | | | -0- | | None | | 500,000 | | None | | -0- | |
| Director of | | 2008 | | 38,707 | | | -0- | | | -0- | | None | | 500,000 | | None | | -0- | |
| Subsidiary | | 2007 | | 86,810 | | | -0- | | | -0- | | None | | 500,000 | | None | | -0- | |
None of our officers or directors is a party to an employment agreement with us.
Options/SAR Grants Table
We awarded no stock purchase options, or any other rights, to any of our directors or officers during the year ended December 31, 2009.
On August 6, 2007, we awarded 2,300,000 stock purchase options to directors, officers and employees at $0.26 per share. The term of these options is five years. The options are exercisable at any time from the grant date up to and including the 6th day of August 2012. The stock purchase options were fully vested on the date of grant.
A summary of the options granted is as follows:
| Optionee | Number of Shares Subject to Option | Exercise Price | Expiry Date |
| Thomas Bartel | 100,000 | | $0.26 per share | August 6, 2012 |
| Hans W. Biener | 500,000 | | $0.26 per share | August 6, 2012 |
| Michael Montgomery | 500,000 | | $0.26 per share | August 6, 2012 |
| Lars Pearl | 1,000,000 | | $0.26 per share | August 6, 2012 |
| Cameron Richardson | 200,000 | | $0.26 per share | August 6, 2012 |
| Total: | 2,300,000 | | | |
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
At December 31, 2008 and 2009 and the period ended March 31, 2010 we had 2,300,000 stock purchase options outstanding.
At no time during the last completed fiscal year did we, while a reporting company pursuant to Section 13(a) of 15(d) of the Exchange Act, adjust or amend the exercise price of the stock options or SARs previously awarded to any of the named executive officers, whether through amendment, cancellation or replacement grants, or any other means.
Corporate Governance
The Board of Directors has determined that to be considered independent, an outside director may not have a direct or indirect material relationship with the Company. A material relationship is one which impairs or inhibits -- or has the potential to impair or inhibit -- a director's exercise of critical and disinterested judgment on behalf of the Company and its stockholders. In determining whether a material relationship exists, the Board consults with the Company's counsel to ensure that the Board's determinations are consistent with all relevant securities and other laws, recent relevant cases and regulations regarding the definition of "independent director," including those set forth in NASDAQ Marketplace Rule 4200(a)(15)as in effect from time to time. Consistent with these considerations, the Board affirmatively has determined t hat as of April 1, 2010 the Board of directors does not have an independent director.
Compliance with Section 16(a) Beneficial Ownership Reporting Compliance, of the Exchange Act of 1934
Based on information provided to the Company, it is believed that all of the Company’s directors, executive officers and persons who own more than 10% of the Company’s common stock were in compliance with Section 16(a) of the Exchange Act of 1934 during the last fiscal year. During the year ended December 31, 2009, all of the Company’s directors, executive officers and Company’s common stock were in compliance with section 16(a) of the Exchange Act of 1934.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Compensation of Directors
We reimburse our directors for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments incurred in connection with attending board meetings in the year ended December 31, 2009.
Employment Contracts
During the fiscal year 2009, consulting fees of $86,380 (2008 - $134,558) were paid to directors of the Company and its subsidiary for their services as officers of the Company. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties.
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 31, 2010 by (i) each person who is known by us to own beneficially more than five percent (5%) of our outstanding common stock; (ii) each of the our directors and officers; and (iii) all of our directors and officers as a group. As at March 31, 2010 there were 68,408,522 shares of common stock issued and outstanding.
Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Owner | | | | |
| | | | | | | |
| | | | | | |
| | | | | | | |
Michael E Montgomery 100 Lewis Street Lamington, Western Australia, 6430 Australia | | | 500,000 | (1) | | | * | |
| | | | | | | | | |
Lars M. Pearl Hofnerstrasse 13 6314 Unterageri, Switzerland | | | 2,488,533 | (2) | | | 3.58 | % |
| | | | | | | | | |
| Officers and directors (2 persons) | | | 2,988,533 | | | | 4.27 | % |
| | (1) | Includes 500,000 stock purchase options awarded on August 6, 2007. The stock purchase options are exercisable at $0.26 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 6th day of August 2012. |
| | (2) | Includes 1,000,000 stock purchase options awarded on August 6, 2007. The stock purchase options are exercisable at $0.26 per share and have a term of five years. The options are exercisable at any time from the grant date up to and including the 6th day of August 2012. |
Changes in Control
There were no arrangements during the last completed fiscal year or subsequent period to March 31, 2010 which would result in a change in control. We do not believe that the issuance by us of an aggregate of 13,190,000 shares between December 29, 2007 and March 31, 2010 have resulted in a change of control.
No securities were authorized for issuance under equity compensation plans.
| Item 13. | Certain Relationships and Related Transactions and Director Independence |
Certain Relationships
Our proposed business raises potential conflicts of interests between certain of our officers and directors and us. Certain of our directors are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In appropriate cases, we will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. From time to time, several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, involvement in a greater number of programs and reduction of the financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment.
In determining whether we will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to us, the degree of risk to which we may be exposed and its financial position at that time. Other than as indicated, we have no other procedures or mechanisms to deal with conflicts of interest. We are not aware of the existence of any conflict of interest as described herein.
Director Independence
Our Company has two members on its board of directors. We consider a director to be “independent” if that person serves only as a member of our board of directors and is not otherwise employed by our company as an employee, officer or consultant. Mr. Lars Pearl serves as our company’s President, Chief Executive Officer and Chief Financial Officer. Effective March 1, 2010, Mr. Michael Montgomery became our Chief Operating Officer. As of March 1, 2010, our Board of Directors did not have an independent director.
Transactions with Related Persons
Other than as disclosed below, during the fiscal year ended December 31, 2009, none of our current directors, officers or principal shareholders, nor any family member of the foregoing, nor, to the best of our information and belief, any of our former directors, senior officers or principal shareholders, nor any family member of such former directors, officers or principal shareholders, has or had any material interest, direct or indirect, in any transaction, or in any proposed transaction which has materially affected or will materially affect us.
There have been no transactions or proposed transactions with officers and directors during the last two years to which we are a party except as follows:
In December 2008, 1,488,533 common shares were issued at $0.06 per share to settle debts of $14,204 and pay $75,108 in consulting fees. The shares were issued to Lars Pearl, a director who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
In June 2008, 250,000 common shares were issued at $0.10 per share in payment of a finder’s fee. The shares were issued to Hans Biener, a director of the subsidiary who resides outside the United States of America (in accordance with the exemption from registration requirements afforded by Regulation S as promulgated thereunder).
During the fiscal year 2009, consulting fees of $86,380 (2008 – $134,558) were paid to directors of the Company and its subsidiary. The transactions were recorded at the exchange amount, being the value established and agreed to by the related parties
| Item 14. | Principal Accountant Fees and Services |
Audit Fees:
The aggregate fees billed and expected to be billed for professional services by Peterson Sullivan LLP for the audit of our annual consolidated financial statements and review of consolidated financial statements included in our Form 10-Q (17 CFR 249.308b) or services that were normally provided by the accountant in connection with statutory and regulatory filings or engagements for the 2009 fiscal year are $40,000 (2008 - $44,500).
Audit-Related Fees:
The aggregate fees billed to us for assurance and related services by Peterson Sullivan LLP that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under audit fees for fiscal 2009 were $0 (2008 - $0).
Tax Fees:
The aggregate fees billed to us for professional services by Peterson Sullivan LLP for tax compliance for fiscal 2009 were $0 (2008 - $5,175).
All Other Fees:
The aggregate fees billed to us for products and services provided by Peterson Sullivan LLP, other than reported under Audit Fees, Audit-Related Fees and Tax Fees for fiscal 2009 were $0 (2008 - $0).
The Audit Committee feels that the services rendered by Peterson Sullivan LLP were compatible with maintaining the principal accountant's independence.
PART IV
| Item 15. | Exhibits, and Financial Statement Schedules |
| (1) | the following documents are filed as part of this report: |
| (a) | Financial Statements: The following audited consolidated financial statements and report of independent registered public accounting firm are set forth in Part II, Item 8 of this report: |
Report of Independent Registered Public Accounting Firm, April 1, 2010
Consolidated Balance Sheets as of December 31, 2009 and 2008
Consolidated Statements of Operations from October 10, 1995 (commencement of operations) to December 31, 2009 and for the years ended December 31, 2009 and 2008
Statements of Stockholders’ Equity (Deficit) for period from October 10, 1995 (commencement of operations) to December 31, 2009
Consolidated Statements of Cash Flows for period from October 10, 1995 (commencement of operations) to December 31, 2008 and for the years ended December 31, 2009 and 2008
Notes to the Consolidated Financial Statements
| (2) | Financial statement schedules: Not Applicable |
| 3.1.1 | Certificate of Incorporation incorporated by reference to the registration statement on Form 10SB filed on June 4, 1998 (SEC File No. 000-24393 98720970). * |
| 3.1.2 | Certificate of Amendment to the Certificate of Incorporation incorporated by reference to the registration statement on Form 10SB filed on June 4, 1998 (SEC File No. 000-24393 98720970). * |
| 3.1.3 | Certificate of Restoration and Renewal of Certificate of Incorporation incorporated by reference to the registration statement on Form 10SB filed on June 4, 1998 (SEC File No. 000-24393 98720970). * |
| 3.2.1 | By-laws incorporated by reference to the registration statement on Form 10SB filed on June 4, 1998 (SEC File No. 000-24393 98720970). * |
| 3.2.2 | Amended and Restated By-laws incorporated by reference to the registration statement on Form 10SB filed on June 4, 1998 (SEC File No. 000-24393 98720970). * |
| 4.1 | Form of Subscription Agreement (SEC File No. 333-164706 10575353). * |
| 4.2 | Debt Settlement Agreement with Samba Minerals Limited (SEC File No. 333-164706 10575353). * |
| 4.3 | Form of Debt Settlement Agreement with Axino AG, Heroe Investments Inc, Jolanda Investments Ltd, Gemeinhardt GmbH, Lars Pearl and WS Marketing GmbH (SEC File No. 333-164706 10575353). * |
| 10.1 | Consulting Agreement between Hans W. Biener of SupplyConsult GbR and Aurora Gold Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.2 | Confidentiality Agreement between Hans W. Biener of SupplyConsult GbR and Aurora Gold Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.3 | Assignment of Novo Porto and Santa Clara Memorandum of Understanding to Aurora Gold Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.4 | Novo Porto Memorandum of Understanding Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.5 | Declaration of Translator for translation of Porto Novo Memorandum of Understanding from Portuguese to English Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.6 | Novo Porto Option Agreement incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.7 | Declaration of Translator for translation of Novo Porto Option Agreement from Portuguese to English Corporation incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.8 | Santa Clara Memorandum of Understanding incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.9 | Declaration of Translator for translation of Santa Clara Memorandum of Understanding from Portuguese to English Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.10 | Assignment of Ouro Mil Memorandum of Understanding to Aurora Gold Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.11 | Ouro Mil Memorandum of Understanding Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.12 | Declaration of Translator for translation of Ouro Mil Memorandum of Understanding from Portuguese to English Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.13 | Ouro Mil Option Agreement incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.14 | Declaration of Translator for translation of Ouro Mil Option Agreement from Portuguese to English incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.15 | Assignment of Sao Domingos Memorandum of Understanding to Aurora Gold Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.16 | Sao Domingos Memorandum of Understanding Corporation incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-30379 051269300). * |
| 10.17 | Declaration of Translator for translation of Sao Domingos Memorandum of Understanding from Portuguese to English incorporated by reference to the registration statement on Form SB filed on December 16, 2005 (SEC File No. 333-130379 051269300). * |
| 10.18 | São Domingos Option Agreement incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.19 | Declaration of Translator for translation of São Domingos Option Agreement from Portuguese to English incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.20 | Santa Isabel Option Agreement incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.21 | Declaration of Translator for translation of Santa Isabel Option Agreement from Portuguese to English incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.22 | São João Option Agreement incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.23 | Declaration of Translator for translation of São João Option Agreement from Portuguese to English incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.24 | Piranhas Memorandum of Understanding incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.25 | Declaration of Translator for translation of Piranhas Memorandum of Understanding from Portuguese to English incorporated by reference to the Form 10-KSB filed on March 28, 2006 (SEC File No. 000-24393-06715925). * |
| 10.26 | Branca de Neve Memorandum of Understanding incorporated by reference to the Form 10-QSB filed on July 26, 2006 (SEC File No. 000-24393-06981489). * |
| 10.27 | Declaration of Translator for translation of Branca de Neve Memorandum of Understanding from Portuguese to English incorporated by reference to the Form 10-QSB filed on July 26, 2006 (SEC File No. 000-24393-06981489). * |
| 10.28 | Bigode Memorandum of Understanding incorporated by reference to the Form 10-QSB filed on July 26, 2006 (SEC File No. 000-24393-06981489). * |
| 10.29 | Declaration of Translator for translation of Bigode Memorandum of Understanding from Portuguese to English incorporated by reference to the Form 10-QSB filed on July 26, 2006 (SEC File No. 000-24393-06981489). * |
| 10.30 | Santa Lucia Memorandum of Understanding incorporated by reference to the Form 10-QSB filed on July 26, 2006 (SEC File No. 000-24393-06981489). * |
| 10.31 | Declaration of Translator for translation of Santa Lucia Memorandum of Understanding from Portuguese to English incorporated by reference to the Form 10-QSB filed on July 26, 2006 (SEC File No. 000-24393-06981489). * |
| 10.34 | Settlement Agreement dated as of August 9, 2007 between the Company and Luis Mauricio incorporated by reference to the Form SB-2 filed on November 13, 2007 (SEC File No. 333-147341 071238655). * |
| 10.35 | Form of Subscription Agreement between the Selling Stockholders and the Company incorporated by reference to the Form SB-2 filed on November 13, 2007 (SEC File No. 333-147341 071238655). * |
| 10.36 | Comandante Araras Memorandum of Understanding incorporated by reference to the Form 10-KSB filed on April 15, 2008 (SEC File No. 000-24393-147341 08758054). * |
| 10.37 | 2007 Stock Option Plan incorporated by reference to the Form 10-KSB filed on April 15, 2008 (SEC File No. 000-24393-147341 08758054). * |
| Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 99.1 | Corporate Governance Principles incorporated by reference to the Form 10-KSB filed on March 25, 2004 (SEC File No. 000-24393-04689262). * |
_____
* Previously Filed
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | Aurora Gold Corporation |
| | | | Registrant |
| | | | |
| Date: | April 1 2010 | BY: | /s/ Lars Pearl |
| | | | Lars Pearl |
| | | | Director |
| | | | |
| Date: | April 1, 2010 | BY: | /s/ Michael Montgomery |
| | | | Michael Montgomery |
| | | | Director |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | Aurora Gold Corporation |
| | | | Registrant |
| | | | |
| Date: | April 1, 2010 | BY: | /s/ Lars Pearl |
| | | | Lars Pearl |
| | | | President, Chief Executive Officer, Chief Financial Officer and Director |
| | | | |
| Date: | April 1, 2010 | BY: | /s/ Michael Montgomery |
| | | | Michael Montgomery |
| | | | Director |
44
