White Mountain Titanium (WMTM) 10-Q 2008 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from to

Commission File Number 333-129347

WHITE MOUNTAIN TITANIUM CORPORATION

(Name of small business issuer in its charter)

NEVADA	87-0577390
(State of incorporation or	(IRS Identification No.)
organization)

Enrique Foster Sur 20, Piso 19

Las Condes, Santiago

Chile

(Address of principal executive offices)

(56 2) 231-5780

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed under Section 13 or 15(d) of the Exchange Act during the past 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. Yes x 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 Accelerate Filer ¨	Accelerated Filer ¨
Non-Accelerated Filer ¨ (Do not check if a smaller reporting company)	Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

32,030,709 shares of the issuer’s common stock, $.001 par value, were outstanding at October 30, 2008.

Transitional Small Business Disclosure Format (Check One) Yes ¨ No x

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Condensed Balance Sheets

(US Funds)

	September 30			December 31
	2008			2007
	Unaudited			Audited
Assets
Current
Cash and cash equivalents	$	1,925,701		$	2,678,652
Prepaid expenses		50,842			51,687
Receivables		65,383			39,953
Total Current Assets		2,041,926			2,770,292
Property and Equipment		126,763			58,466
Mineral Properties		651,950			651,950
Total Assets	$	2,820,639		$	3,480,708
Liabilities
Current
Accounts payable and accrued liabilities	$	77,366		$	69,397
Total Current Liabilities and Total Liabilities		77,366			69,397
Stockholders’ Equity
Preferred Stock and Paid-in Capital in Excess of $0.001 Par Value
20,000,000 Shares authorized
625,000 Shares issued and outstanding		500,000			500,000
(December 31, 2007 – 625,000)
Common Stock and Paid-in Capital in Excess of $0.001 Par Value
100,000,000 Authorized
32,030,709 (December 31, 2007 – 29,189,133)
shares issued and outstanding		15,975,578			15,918,522
Share Subscriptions Received		1,994,651			-
Accumulated Deficit		(15,726,956	)		(13,007,211	)
Total Stockholders’ Equity		2,743,273			3,411,311
Total Liabilities and Stockholders’ Equity	$	2,820,639		$	3,480,708

See notes to the unaudited consolidated condensed financial statements

2

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Condensed Statements of Operations

(US Funds)

	Three months ended September 30						Nine months ended September 30						Cumulative From Inception November 13, 2001 through
	2008 Unaudited			2007 Unaudited			2008 Unaudited			2007 Unaudited			Sept. 30, 2008 Unaudited
Expenses
Advertising and promotion	$	3,461		$	14,230		$	30,160		$	42,273		$	172,954
Amortization		5,995			4,755			17,483			13,142			73,296
Bank charges and interest		1,217			967			4,428			2,961			21,534
Consulting fees		32,715			220,939			146,419			373,017			1,902,196
Consulting fees – directors and officers officers		91,964			263,669			288,156			382,549			2,811,060
Exploration		458,744			103,865			1,411,642			333,239			4,008,599
Filing fees		71			250			2,570			250			47,867
Insurance		14,595			10,182			46,575			24,185			174,588
Investor relations		4,809			(7,708	)		4,809			(7,708	)		73,798
Licenses and taxes		50,248			13,262			145,330			25,283			424,695
Management fees		34,800			610,411			104,400			658,411			1,361,590
Office		15,749			4,777			34,313			14,772			142,941
Professional fees		39,906			24,007			171,159			118,202			1,296,176
Rent		23,857			21,474			76,635			67,867			292,383
Telephone		4,170			7,166			16,160			22,368			67,686
Transfer agent fees		560			245			1,913			835			10,782
Travel and vehicle		34,947			35,534			123,110			136,061			827,215
Loss before other items		(817,808	)		(1,328,025	)		(2,625,262	)		(2,207,707	)		(13,709,360	)
Gain on sale of marketable securities		-			-			-			-			87,217
Adjustment to market for marketable securities		-			-			-			-			(67,922	)
Foreign exchange - realized		(19,941	)		8,573			(3,474	)		14,167			(24,692	)
Foreign exchange - unrealized		(121,394	)		-			(121,394	)		-			(121,394	)
Dividend income		-			608			-			2,343			4,597
Interest income		3,269			23,904			30,385			56,973			337,703
Financing agreement penalty		-			(187,500	)		-			(187,500	)		(330,000	)
Net loss for the period		(955,874	)		(1,482,440	)		(2,719,745	)		(2,321,724	)		(13,823,851	)
Preferred stock dividends		-			-			-			-			(1,537,500	)
Net Loss Available for Distribution	$	(955,874	)	$	(1,482,440	)	$	(2,719,745	)	$	(2,321,724	)	$	(15,361,351	)
Loss per Common Share	$	(0.03	)	$	(0.08	)	$	(0.09	)	$	(0.14	)		-
Weighted average number of Common Shares Outstanding		29,199,542			18,006,905			29,189,133			16,854,756			-

See notes to the unaudited consolidated condensed financial statements

3

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Condensed Statements of Stockholders’ Equity

(US Funds)

	Shares		Common Stock and Paid-In Capital in Excess of Par Value		Shares of Preferred Stock		Preferred Stock and Paid-in Capital in Excess of Par Value		Subscriptions Receivable		Subscriptions Received		Accumulated Deficit			Total Stockholders’ Equity
Balance, December 31, 2007		29,189,133	$	15,918,522		625,000	$	500,000	$	-	$	-	$	(13,007,211	)	$	3,411,311
Private placement		2,841,576										1,994,651					1,994,651
Stock-based compensation				57,056													57,056
Net loss for the period														(2,719,745	)		(2,719,745	)
Balance, September 30, 2008		32,030,709	$	15,975,578		625,000	$	500,000	$	-	$	1,994,651	$	(15,726,956	)	$	2,743,273

See notes to the unaudited consolidated condensed financial statements

4

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Condensed Statements of Cash Flows

(US Funds)

							Cumulative
							From Inception
							November 13,
							2001 through
	Nine months ended Sept. 30						Sept 30
	2008			2007			2008
	Unaudited			Unaudited			Unaudited
Operating Activities
Net loss for period	$	(2,719,745	)	$	(2,321,724	)	$	(13,823,851	)
Items not involving cash
Amortization		17,483			13,142			73,297
Stock-based compensation		57,056			534,915			2,175,806
Common stock issued for services		-			533,271			1,957,630
Financing agreement penalty		-			187,500			330,000
Adjustment to market – securities		-			-			67,922
Gain on sale of marketable securities		-			-			(87,217	)
Non-cash resource property expenditures		-			-			600,000
Changes in Non-Cash Working Capital
Receivables		(25,430	)		(7,577	)		(65,383	)
Marketable securities		-			-			19,295
Accounts payable and accrued liabilities		7,969			(84,520	)		77,366
Prepaid expenses		845			(14,238	)		(50,839	)
Cash Used in Operating Activities		(2,661,822	)		(1,159,231	)		(8,725,974	)
Investing Activities
Addition to property and equipment		(85,780	)		(21,060	)		(200,060	)
Mineral property acquisition costs		-						(651,950	)
Cash Used in Investing Activities		(85,780	)		(21,060	)		(852,010	)
Financing Activities
Repayment of long-term debt		-			-			(100,000	)
Issuance of Preferred Stock								5,000,000
Issuance of common stock		-			2,340,684			4,497,862
Stock subscriptions received		1,994,651			-			1,994,651
Stock subscriptions receivable		-			-			111,000
Working capital acquired on acquisition		-			-			172
Cash Provided by Financing Activities		1,994,651			2,340,684			11,503,685
(Outflow) Inflow of Cash and equivalents		(752,951	)		(1,160,393	)		1,925,701
Cash and equivalents, begining of period		2,678,652			2,049,315			-
Cash and Cash Equivalents, End of Period	$	1,925,701		$	3,209,708		$	1,925,701
Supplemental Cash Flow Information
Income tax paid	$	-		$	-		$	-
Interest paid	$	-		$	-		$	-
Shares Issued for
Preferred stock converted to common	$	-		$	5,000.000		$	-
Settlement of debt	$	-		$	-		$	830,000
Services	$	-		$	533,271		$	1, 957,630
Penalty	$	-		$	187,500		$

See notes to the unaudited consolidated condensed financial statements

5

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

White Mountain Titanium Corporation (the “Company”) currently has no ongoing operations. Its principal business is to advance exploration and development activities on the Cerro Blanco rutile (titanium dioxide) property (“Cerro Blanco”) located in Region III of northern Chile. The Company is considered an exploration stage company and its financial statements are presented in a manner similar to a development stage company as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7.

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2008 and 2007 and for the periods then ended have been made.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2007 audited financial statements included in the Company’s annual report on Form 10-K filed with the SEC.  The results of operations for the periods ended September 30, 2008 and 2007 are not necessarily indicative of the operating results for the full year

.

2. PROPERTY AND EQUIPMENT

	September 30, 2008 Unaudited
			Accumulated
	Cost		Amortization		Net
Vehicles	$	88,995	$	19,652	$	69,343
Office furniture		2,702		1,279		1,423
Office equipment		5,417		2,281		3,136
Computer equipment		7,553		3,255		4,298
Computer software		1,142		379		763
Field equipment		62,421		14,621		47,800
	$	168,230	$	41,467	$	126,763

	December 31, 2007 Audited
			Accumulated
	Cost		Amortization		Net
Vehicles	$	42,549	$	10,226	$	32,323
Office furniture		2,704		860		1,844
Office equipment		5,417		1,442		3,975
Computer equipment		7,553		2,121		5,432
Computer software		1,142		207		935
Field equipment		23,085		9,128		13,957
	$	82,450	$	23,984	$	58,466

6

3. CAPITAL STOCK

(a) Common stock

The Company’s authorized common stock with a par value of $0.001 is 100,000,000 shares.

During the second quarter, the Company commenced an offering of up to 5,000,000 shares at a price of $0.75 per share. During the third quarter, the Company closed on 2,841,576 shares for gross proceeds of $2,131,182. Net of commissions, registration fees and expenses, $1,994,651 was received.

(b) Stock options

During the three months ended September 30, 2008, no stock options were granted. A portion of the 165,000 stock options granted in the second quarter to two new independent directors vested. Therefore, of the 165,000 options, 82,500 options are outstanding and exercisable while 82,500 options will be vested in the future. As a result, compensation expense of $14,264 was recognized during the quarter using the Black-Scholes option pricing model.

The Black-Scholes model was calculated based on the following assumptions:

	2008
Expected life (years)		5
Interest rate		4.4	%
Volatility		91.55	%
Dividend yield		0	%

	Period ended
	September 30, 2008 Unaudited				December 31, 2007 Audited
			Weighted				Weighted
			Average				Average
	Number		Exercise		Number		Exercise
	of Options		Price		of Options		Price
Outstanding - beginning of period		2,975,000	$	0.50		1,650,000	$	0.50
Granted		165,000	$	1.00		1,325,000	$	0.50
Exercised		-	$	0.00		-	$	0.00
Outstanding – end of period		3,140,000	$	0.53		2,975,000	$	0.50
Exercisable - end of period		3,057,500	$	0.54		2,975,000	$	0.50

7

3. CAPITAL STOCK

(b) Stock options (continued)

At the quarter end, the following director and consultant stock options were outstanding:

			September 30,		December 31,
Expiry Date	Exercise Price		2008 Unaudited		2007 Audited
August 1, 2009	$	2.00		100,000		100,000
April 5, 2010	$	0.50		250,000		250,000
January 31, 2011	$	0.50		400,000		400,000
May 31, 2011	$	0.50		600,000		600,000
August 1, 2011	$	0.50		200,000		200,000
August 31, 2011	$	0.50		350,000		350,000
August 31, 2012	$	0.50		1,075,000		1,075,000
June 23, 2013	$	1.00		165,000		-
				3,140,000		2,975,000

The shares under option at September 30, 2008 were in the following exercise price ranges:

		Options Exercisable
Exercise Price		Weighted Average Exercise Price		Number of Shares Under Option		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life in Years
$	0.50	$	0.50		2,875,000	$	0.00		3.03
$	1.00	$	1.00		82,500	$	0.00		4.73
$	2.00	$	2.00		100,000	$	0.00		0.84
		$	0.57		3,057,500	$	0.00		3.01

(c) Stock-based compensation

During the three and nine months ended September 30, 2008, the total stock-based compensation recognized under the fair value method was $14,264 and 57,056 respectively, which was charged to Consulting fees – directors and officers (2007: $211,869 for both the three and nine month periods respectively, charged to consulting fees and consulting fees - directors and officers) using the Black-Scholes option pricing model (Note 3 (b)).

During 2007 stock-based compensation was reallocated to the underlying expense account where the cost of compensation was expensed. Accordingly, for presentation purposes, comparative 2007 information reallocates stock-based compensation to the underlying expense as follows:

As reported in 2007:	Three months ended Sept. 30, 2007 Unaudited		Nine months ended Sept. 30, 2007 Unaudited		Cumulative from inception to Sept. 30, 2007 Unaudited
Consulting fees	$	40,117	$	124,393	$	861,205
Consulting fees – directors and officers		51,800		147,800		884,834
Management fees		558,869		606,869		1,330,000
Stock based compensation		444,233		534,915		2,106,995
	$	1,095,019	$	1,413,977	$	5,183,034

8

3. CAPITAL STOCK

(b) Stock-based compensation (continued)

2007 comparatives restated in 2008:	Three months ended Sept. 30, 2007 Unaudited		Nine months ended Sept. 30, 2007 Unaudited		Cumulative from inception to Sept. 30, 2007 Unaudited
Consulting fees	$	220,939	$	373,017	$	1,447,836
Consulting fees – directors and officers		263,669		382,549		1,836,096
Management fees		610,411		658,411		1,899,482
Stock based compensation		-		-		-
	$	1,095,019	$	1,413,977	$	5,183,414

4. WEIGHTED AVERAGE NUMBER OF SHARES

	Three months ended Sept. 30,				Nine months ended Sept. 30,
	2008 Unaudited		2007 Unaudited		2008 Unaudited		2007 Unaudited
Share allocation for distributed amounts
Preferred stock (common stock equivalent)		625,000		6,732,337		625,000		6,822,289
Common stock		29,199,542		18,006,905		29,189,133		16,854,756
Weighted average number of shares for undistributed amounts
Preferred stock (common stock equivalent)		625,000		6,732,337		625,000		6,822,289
Common stock		29,199,542		18,006,905		29,189,133		16,854,756

5. LOSS CONTINGENCY

The Company’s Securities Purchase Agreement with Rubicon and Phelps Dodge required that a registration statement for the resale of the shares underlying the preferred shares and warrants issued to them be effective by January 30, 2006 and that the Company file a prospectus in Canada. In May 2006, the Company amended the Securities Purchase Agreement and issued 400,000 shares to Rubicon and 40,000 shares to Phelps Dodge in consideration for extending the registration period to September 30, 2006 and eliminating the Canadian filing requirement. These 440,000 shares may not have been eligible for an exemption from registration under the Securities Act of 1933. In the absence of such an exemption, these parties could bring suit against the Company to rescind the purchase of the 440,000 shares, in which event the Company could be liable for rescission payments to these persons.

During the year ended December 31, 2006, Rubicon agreed not to require registration of the 400,000 shares issued to it. A similar agreement is being sought from Phelps Dodge, but has not yet been received.

If the Company were to rescind the sale of the shares to Phelps Dodge, it would be liable for liquidated damages since January 30, 2006 equal to $5,000 per month for failure to meet the registration deadlines in the Securities Purchase Agreement. Through September 30, 2008, these damages could be as much as $160,000, plus interest at the rate of 1.5% per month. The Company believes that because of the relative amount of the liquidated damages collectable by Phelps Dodge, the likelihood of exercising a right of rescission and the attendant potential aggregate liability is not probable.

During the year ended December 31, 2006 the Company recorded the $330,000 as shares issued for settlement of this amount and believes no additional accruals are required.

9

Item 2. Management’s Discussion and Analysis

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes thereto as filed with this report.

Background

We are a mineral exploration company. We hold mining concessions composed of 33 registered mining exploitation concessions, and 5 exploration concessions, over approximately 8,225 hectares located approximately 39 kilometers west of the City of Vallenar in the Atacama, or Region III, geographic region of northern Chile (hereinafter referred to as “Cerro Blanco”). We are in the exploration stage, which means we are engaged in the search for mineral deposits or reserves which could be economically and legally extracted or recovered. Our primary expenditures at this stage consist of acquisition and exploration costs and general and administration expenses. We have produced no revenues, have achieved losses since inception, have no operations, and currently rely upon the sale of our securities to fund our operations.

Corporate Changes

During the quarter ended September 30, 2008 we closed on our previously announced private placement of up to 5,000,000 shares at a price of $0.75 per share. 2,841,576 shares were subscribed for gross proceeds of $2,131,182. Net of commissions and expenses, $1,994,651 was received.

Plan of Operation

We completed the acquisition of an undivided interest in Cerro Blanco in September 2005. Exploration drilling by us and the previous owner has defined rutile mineralization. Metallurgical test work performed by Lakefield Research has demonstrated that this mineralization can be concentrated to a level meeting buyer specifications and can be produced using a conventional milling and flotation process.

Over the next twelve to twenty-four months we have two principal objectives: to advance the project towards a final engineering feasibility level and to secure off-take contracts for the planned rutile concentrate output. We also continue to investigate the commercial viability of producing a feldspar co-product. The feldspar could find applications in the glass and ceramics industries. On a year over year comparative basis, our activity in 2008, while initially budgeted to closely track that of 2007, exceeded the 2007 levels of expenditure, specifically in the areas of exploration and engineering.

Geology and Engineering

In early 2008 the Company built a 12 kilometer, 5 meter wide access road to and around Eli. Drill pads were constructed on 50 meter centers adjacent to the road grid covering the prospect. An initial drill program, which involved two diamond drill rigs, commenced in late April and ran through June. Approximately 4,000 meters of drilling was completed. The Company is awaiting final analyses and a compilation report on the program.

In January, 2008 the Company retained Thomas A. Henricksen, PhD. and a qualified person under Canadian National Instrument 43-101 to prepare a NI 43-101 compliant technical report on the Cerro Blanco property (the “Technical Report”). The Technical Report, which was dated February 25, 2008, was based on extensive geological mapping, surface sampling, 14,078 metres of drilling and a geological model developed by the Company. In his report, Dr. Henricksen confirmed a current estimate of rutile resources under CIM classifications at the Las Carolinas and La Cantera prospects of measured and indicated resources of 32.9 million tonnes grading 2.23% TiO2 and inferred resources of 132 million tonnes grading 2.1% TiO2, all at a cut off grade of 1.0% TiO2.

Following completion of the Technical Report, the Company retained Dr. Henricksen to compile a NI 43-101 compliant preliminary assessment of the Cerro Blanco project (the “Assessment”). The Assessment, which was dated May 30, 2008, incorporated by reference the Technical Report as well as reports prepared for the Company by other independent experts in their fields. The latter reports include preliminary process engineering and costing report prepared by AMEC-Cade dated March, 2008, a preliminary pit design report prepared by NCL Ingenieria y Construccion dated May 2008, various metallurgical reports prepared by SGS Lakefield, an environmental base line study prepared by Arcadis Geotecnica dated December 2004 and titanium marketing information provided by the Company’s marketing consultant.

For engineering design purposes, the Assessment adopted a base case set of assumptions, the major assumptions being the construction of an open pit mine, processing plant and ancillary facilities capable of producing 100,000 tonnes per year of high grade rutile concentrate grading plus 94.5% TiO₂ at start up, scaling to 130,000 tonnes per year in production Year 4 at an assumed undiluted head grade to the plant of 2.3% TiO₂. Mining would commence on the Las Carolinas prospect and feed would be conveyed downhill to a processing plant located less than two kilometers to the northeast. Within the plant, the process flow sheet consisted of a semi-autogenous grinding mill, gravity pre-concentration and column flotation circuits and high intensity magnetic separation with process water sourced from a desalination plant constructed at the port of Huasco. AMEC-Cade assumed that mining would be done under contract at a cost of US$1.20 per tonne mined and that the price of high grade rutile concentrates would be US$500 per tonne FOB port.

10

Based on these assumptions AMEC-Cade, our internationally recognized engineering contractor, designed a processing plant with an initial operating capacity of approximately 5.1 million tonnes per year, increasing to approximately 6.1 million tonnes per year by Year 4. They estimated a cost to construct the plant and ancillary facilities of US$117 million in direct costs and US$42 million in indirect costs, for a total of US$159 million. To this figure, and as this was a preliminary study, AMEC-Cade added a 20% contingency to arrive at a total estimated cost of US$190 million. With respect to processing plant operating costs, AMEC-Cade estimated site and transportation costs to port of US$3.60 per tonne processed (US$184 per tonne of rutile concentrate) in Year 1, dropping to US$3.50 per tonne processed (US$180 per tonne of rutile concentrate) in Year 4. The anticipated reduction in operating costs is attributed to increased volumes as well as increased efficiencies from the gravity pre-concentration circuit. Electric power consumption was the highest single cost item, comprising approximately 31% of the total estimated unit operating costs. AMEC-Cade recommended that the Company proceed to the pilot stage and investigate two possibilities for reducing capital costs: the use of sea water rather than desalinated water in the processing plant and siting the plant elsewhere on the property to lower the installed cost of the conveyor. Two alternate sites were identified.

With respect to mining, mining costs would be in addition to the processing plant operating costs estimates set out above. A preliminary mine plan will be prepared once further drilling has been completed. At present NCL have modelled preliminary optimized pits for only the Central Zone of the Las Carolinas prospect on the assumption that this could be the initial pit area. The pits were modelled using 10 x 10 x 10 metre blocks and base case pit wall angles of 45 degrees, with sensitivities run at 50 degrees. Incorporating 45 degree wall angles and in pit measured, indicated and inferred resources, the derived strip ratio was 1.13 to 1.00, waste to mineralized resources at a grade of approximately 2.2% TiO₂. Increasing the wall angle to 50 degrees reduced the derived strip ratio to 0.96 to 1.00, waste to mineralized resources at the same grade. For clarification, under NI 43-101 policy, inferred resources must be upgraded to a measured and indicated classification before they can be included in an economic assessment. Whilst the objective of the Company’s mapping, surface sampling and drilling programs is to both increase the quantity and classification of TiO₂ resources on the Cerro Blanco property, the project is at an exploration stage and there is no guarantee of future exploration success or of economic viability. For these reasons, project cash flow estimates are not included in the Assessment.

Arcadis Geotecnica conducted an environmental base line study over the Las Carolinas and La Cantera prospects. Based on field information gathered, vegetation in the area was comprised mostly of bushes, cactus and plants characteristically found in desert regions and areas of sandy and stony soils. Whilst no native animals were observed, animals potentially living in the area would include foxes, rodents, pumas, guanacos, rabbits and reptiles. The study stated that a mining operation as contemplated would have no significant impact on land vertebrates but care would need to be exercised on the northern slopes favoured by reptiles. Six underground springs were identified, several with only seasonal flow. As well six houses were observed extending from the project north towards Vallenar, three of which are occupied on a permanent basis. Conversations with the inhabitants suggested that they would have a positive view of the project due to the economic and social benefits it would bring. Arcadis Geotecnica recommended an intensive follow up survey of one ravine for possible archaeological relics and indentified two areas for the possible stockpiling of waste rock. The Company retained Arcadis Geotechnica to complete the recommended follow up survey and no archaeological relics were found.

The Assessment concluded that results from the considerable body of work completed on the project to date support the Company’s recommended, phased work programs and that the estimated costs for the work programs were reasonable and adequate to the present stage of the project. The overall objective of the Company’s work programs is to complete an independent final feasibility study which supports the construction of a natural rutile, TiO2 mining operation on the property.

We now have a considerable body of engineering design and process engineering work completed, both by us and previous owners, for the development of a large open pit mine and milling operation. The extent to which this engineering work could be incorporated into a feasibility study will depend on factors such as optimal plant sizing and configuration based on product volumes and specifications set out in off-take contracts and process design, the latter to be determined by refinements coming out of this year’s planned metallurgical test work and pilot scale testing. With off-take contracts in hand, we would undertake a program of drilling to provide data for mine planning and design,, for an environmental impact assessment and permitting program, and to commission a feasibility study. As some of these activities would be undertaken in tandem, we believe a feasibility study could be completed within twelve to fourteen months of us receiving off-take contracts, subject to the availability of funds, personnel and equipment. We estimate the cost to take the project to the point of commissioning a final engineering feasibility study at approximately $3,408,000. This figure includes a 20 per cent contingency but excludes general and administrative expenses. As of November 12, 2008, our cash position was approximately $1,745,000. We currently do not have sufficient capital to complete this plan and estimate that we will require additional financing to do so, as discussed in Liquidity below

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Marketing

In April 2008 executive management and our marketing team attended the Industrial Minerals Conference, in Athens Greece. At this event we also met with buyers of high grade rutile concentrate. We believe that market conditions are moving favorably towards the producers of concentrate as supply is tightening on a worldwide basis and prices are tending upwards. We received considerable interest in our proposed product(s), with questions concentrating on tonnage as opposed to pricing, a major change in perspective from past conferences.

Based on these discussions and preliminary marketing results, we believe that demand for our proposed product(s) will meet or exceed the planned capacity of the currently proposed physical plant. The market for TiO₂ feedstock, particularly high grade rutile, appears to be entering a growth period, with increased demand coming not only from the paint and pigment industries, but also from welding rod manufacturers and metal producers. Our ability to enter this market, however, is subject to significant risk factors, including our ability to raise sufficient funds to meet the engineering plans noted above, as well as the successful completion of pilot plant operations which demonstrate our ability to produce a product(s) that meets purchaser’s specifications.

Results of Operations

We recorded a loss for the three months ended September 30, 2008 of $955,874 ($(0.03) per weighted average common share outstanding) compared to a loss of $1,482,440 ($(0.08) per share) for the comparable interim period in the preceding year. On a year to date basis, for the nine months ended September 30, 2008 the loss was $2,719,745 ($0.09 per share) compared to $2,321,724 ($0.14 per share) for the comparable period in 2007.

The 35% decrease in loss in the current quarter is primarily attributable to the recognition of $444,233 of stock based compensation expense in third quarter of 2007. Stock based compensation expense in third quarter of 2008 was $14,264, reflecting the much lower number of options issued or vesting this year.

Exploration expenditures during the quarter were $458,744 (YTD: $1,141,642) compared to $103,865 in third quarter of 2007 (YTD: $333,239). This is a result of the work carried out during the quarter on the Eli prospect, which was discovered last year,

For the first time, unrealized foreign exchange losses were a material part of the loss during the quarter. During 2007 and for the first three months of this fiscal year, the Chilean peso was strengthening against the US dollar. This started to reverse direction during the second quarter of 2008, and during the third quarter alone, the peso weakened 7% against the dollar, closing out the quarter at 551 pesos to the dollar.peso. As most of our expenses are incurred in - and many of our assets are held in - Chile, upon consolidation at quarter end this fluctuation resulted in an unrealized foreign exchange loss of $121,394. In comparison, the unrealized loss in third quarter of 2007 was immaterial at less than $500 and was recorded as part of total foreign exchange expense of $8,573.

Subsequent to the quarter end, the peso has weakened significantly against the dollar, with the current peso to dollar exchange rate quoted at 690 pesos to the dollar. Our practice to date has been to hold the vast majority of our funds in US dollars. However, as significant expenditures are anticipated in the next two quarters, we may in future hold some funds in Chilean pesos to meet these expenses. We believe that the volatility of the currency markets is such that both gains and/or losses are possible during the current quarter, and the results for the year as a whole are not determinable at this time.

Many other expenses are comparable, or lower, this quarter to the corresponding quarter last year. The most significant items are:

· Advertising and promotion expense for the quarter were $3,461 (YTD – 30,160) compared to $14,230 and $42,273 for the comparable periods of 2007. This reduction is a result of lower expenses being incurred in raising awareness of the company ;

· Consulting fees for the quarter were $32,715 (YTD – $146,419). During 2007 the respective figures were $220,939 and $373,017. However, the 2007 numbers include stock based compensation expense attributable to options issued to consultants. Excluding stock based compensation the 2007 expense was comparable to 2008 at $40,117 and $124,393 respectively;

· Consulting fees – directors and officers were $91,964 (YTD - $286,166; 2007: $263,669 and $382,549 respectively). Again the 2007 expenses include stock based compensation. Excluding such compensation the 2007 comparatives are 51,800 and $147,800. During the first half of 2007 the fees of the CFO of approximately $27,000 were charged to consulting. Subsequent to his appointment to the board these fees were, and continue to be, charged to consulting fees- directors and officers. The balance of the increase reflects the use of various technical consultants and nominally increased officer compensation;

· Insurance was $14,595 (YTD - $46,575 – 2007: 10,182 and $24,185) as insurance premiums rose significantly during the year;

· Licenses and taxes were $50,248 for the three month period (YTD - $145,330), compared to $13,262 and $25,283 for the comparable periods of 2007. These increases were entirely incurred in Chile, as a result of increased land holding taxes and costs and IVA (Chilean value-added tax);

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· Management fees of $34,800 (YTD $104,400; 2007 - $610,411 and $658,411 respectively) are comparable when the third quarter of 2007 management stock bonus payment of $533,269 is excluded; and

· Professional fees were $39,906 (YTD $171,159; 2007 $24,007 and $118,202 respectively). This reflects ongoing increases in accounting expenses, as well as increased legal expenditures due to the corporate reorganization in Chile and increased regulatory filing, including the S-1 registration statement and the BC Securities Commission issue. The latter issue alone cost approximately $34,000 to the end of June.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS 141(R)), which replaces SFAS 141. SFAF 141(R) requires assets and liabilities acquired in a business combination, contingent consideration, and certain acquired contingencies to be measured at their fair values as of the date of acquisition. SFAS 141(R) also requires that acquisition-related costs and restructuring costs be recognized separately from the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008 and will be effective for business combinations entered into after January 1, 2009. There is no impact on the Company’s financial statements

In December 2007, the FASB issued SFAS No. 160, “Non-controlling interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (SFAS 160). SFAS 160 clarifies the accounting for non-controlling interests and establishes accounting and reporting standards for the non-controlling interest in a subsidiary, including classification as a component of equity. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company does not currently have any minority interests.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities ("SFAS 161"). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. SFAS 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity's liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS 161 will be effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, will be adopted by the Company beginning in the first quarter of 2009. The Company does not expect there to be any significant impact of adopting SFAS 161 on its financial position, cash flows and results of operations.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of non-governmental entities that are presented in conformity with GAAP in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 163, “Accounting for Financial Guarantee Insurance Contracts – An interpretation of FASB Statement No. 60”. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.

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Forward Looking Statements

The statements contained in this report that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position, potential growth opportunities, potential operating performance improvements, ability to retain and recruit personnel, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “will,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements. Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this report. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to, the cyclicality of the titanium dioxide industry, global economic and political conditions, global productive capacity, customer inventory levels, changes in product pricing, changes in product costing, changes in foreign currency exchange rates, competitive technology positions and operating interruptions (including, but not limited to, labor disputes, leaks, fires, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities). Mining operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental protection controls, all of which are subject to change and are becoming more stringent and costly to comply with. Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those expected. We disclaim any intention or obligation to update publicly or revise such statements whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our principal executive officer, Michael P. Kurtanjek, and principal financial officer, Charles E. Jenkins, have concluded, based on their evaluation, as of the end of the period covered by this report, that our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) are (1) effective to ensure that material information required to be disclosed by us in reports filed or submitted by us under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (2) effective to ensure that information required to be disclosed by us in such reports filed or submitted by the Company under the Exchange Act is accumulated and communicated to management of the Company, including the principal executive officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act) that occurred during our most recent quarter ended September 30, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their stated goals under all potential future conditions.

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PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

s of September 30,, 2008, the Company had closed on its previously announced offering of up to 5,000,000 shares at a price of $0.75 per share. The offering was made concurrently to persons within the United States and to non-U.S. persons located outside the United States. We sold a total of 2,841,576 shares of common stock in the offering for gross proceeds of $2,131,182. During the second quarter we had previously reported 138,707 shares as being sold, which shares are included in the preceding total. Of these 2,841,576 shares sold in this offering, 2,817,869 were sold within the United States without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Section 4(6) and/or Section 4(2) thereof, and Rule 506 promulgated thereunder, as a transaction by an issuer not involving any public offering. Each of the purchasers was an accredited investor as defined in Regulation D. The remaining 23,707 shares were sold outside the United States to non-U.S. persons in accordance with the provisions of Regulation S. Each investor delivered appropriate investment representations with respect to this stock sale and consented to the imposition of restrictive legends upon the stock certificate representing the shares. No investor entered into the transaction with us as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting. Each investor was also afforded the opportunity to ask questions of our management and to receive answers concerning the terms and conditions of the transaction. No underwriting discounts or commissions were paid in connection with these stock sales.

Item 6. Exhibits

The following exhibits are furnished with this report:

31.1 Rule 15d-14(a) Certification by Principal Executive Officer

31.2 Rule 15d-14(a) Certification by Chief Financial Officer

32.1 Section 1350 Certification of Principal Executive Officer

32.2 Section 1350 Certification of Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	White Mountain Titanium Corporation
Date: November 13, 2008	By	/s/ Michael P. Kurtanjek
		Michael P. Kurtanjek, President
		(Principal Executive Officer)
Date: November 13, 2008	By	/s/ Charles E. Jenkins
		Charles E. Jenkins, Chief Financial Officer (Principal Financial Officer)

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