SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the financial period ended December 31 , 2005 Commission file number: 2-99518-D
State of incorporation: Colorado I.R.S. employer identification number: 74-2446999 GOLD HILL CORPORATION
2233 West Lindsey
Suite 117
Norman, Oklahoma 73069
Registrant's telephone number, including area code:
(405) 321-8371
Securities registered pursuant to Section 12 (B) of the Act:
Title of each class: None
Name of each exchange
on which registered: None
Securities registered pursuant to Section 12 (G) of the Act:
Common Stock, $0.002 Par Value
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 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
The number of shares of the common stock of the registrant outstanding as of September 30, 2005:
5,565,822 shares
PART I
ITEM 1. BUSINESS Results of Operations.
Earnings and Cash Flows from Operating Activities. For the current quarter, Gold Hill Corporation ("the Company") realized a small net loss which is detailed in the financial section of this report. The decrease in earnings and cash flows reported for the period was due primarily to expenses related to the N. Goldfield gold prospect located in Nevada. Mineral Exploration. During the quarter, the Company continued its search for gold in Nevada, focusing on drilling its north Goldfield prospect located 10-15 miles north of the town of Goldfield, where it holds 156 unpatented lode mining claims in a contiguous block. As previously reported, the Company is exploring this part of Nevada for Goldfield-type deposits, which consist of rich gold-bearing quartz veins mined through vertical shafts. This type of deposit can be placed into production in less time and at much less cost than the large low-grade open pit deposits that are more environmentally sensitive. Also, a Goldfield-type depost can be highly profitable even in times of low gold prices because of their richness. The drillsites were approved and bonded with the Bureau of Land Management (BLM). During November and December, 2005, the Company drilled seven of the drillsites which included eight test holes amounting to a 6,070 ft of reverse circulation drilling. The drilling program was not completed due to winter weather conditions. Hopefully, drilling will be resumed in late spring or early summer depending upon the weather, drill rig availability, and approval by the BLM to change the location of our remaining three drillsites. To drill more than the approved ten drillsites will require going to a Plan of Operation with the BLM because it exceeds the five acres of surface disturbance allowed under a Notice of Operation which we are presently under. This can cause delays unless the BLM can make an exception. Although only slightly anomalous gold was encountered in our drilling program to date, the holes confirmed the presence of a large rhyodacite intrusive, which at Goldfield 10 miles to the south is the primary host rock for the bonanza gold deposits discovered in 1902. At Goldfield, the rich deposits occur in siliceous "ledges" within an altered portion of the intrusive dacite associate with deep-seated faulting and fracturing along which the mineralizing solutions ascended. According to the USGS in their studies published in 1909, the prospective "ledge matter" which is the best material for the ore deposits that were developed along the contact of the rhyodacite intrusives can be hundreds of feet wide. Also, more recent studies have shown that all the characteristics of the Goldfield geologic model can be found in several of the major gold copper deposits located in the Pacific Rim area from South America to Indonesia and the Philippines. Further, our own surveys indicate that the frequencies of the rocks, minerals and trace elements making up the Goldfield deposits are detectable nowhere else in the region except over a broad area encompassing our prospect.
The price of gold is presently above $450 per ounce, which has inspired a significant amount of exploration. The result has been a shortage of drill rigs and a higher cost of exploration. In the event of a discovery, the Company plans to drill confirmation holes.
ITEM 2: PROPERTIES
Oil and Gas Properties.
The Company is also continuing to focus efforts toward oil and gas exploration. The Company is currently in search of oil and gas prospects in east-central and northern Oklahoma where several prospects have been identified. The prospects are considered “wildcat” plays with significant potential, but as “wildcats” these prospects should be considered high-risk. The prospects currently under study have potential of 1 to 5 million barrels each, which if successful could favorably impact the share value of Gold Hill stock. In May 2004, Gold Hill participated in a well with West Star Producing Company to earn a 25% working interest in the South Wanette Layton Oil unit, which includes 1520 unitized acres, five stripper wells, a tank battery and flow lines, and substantial oil reserves that may be recoverable by secondary recovery methods. The well was drilled to a depth of 4,000 feet and completed in the Calvin oil sand which was the main objective at about 3,860 ft. Initial production after a sand frac was about 700,000 cu ft of gas/day. Management believes it to be an edge well close to a channel sand having greater porosity, permeability, and thickness. Oil is the primary target rather than gas. The gas well has been producing steadily since the first of April at a little over 200,000 cfg/day. Since the gas has a high (22%) nitrogen content, the well is not producing at full capacity due to market conditions. The Layton oil sand was encountered in the well at about 3,100 feet and had good development. The Company was expecting to have a drill rig available in March 2006, but have decided not to drill the Calvin Sand channel oil prospect at this time. Instead, the Company is preparing to acquire oil and gas leases on some adjoining acreage and plans to rework one of the old Layton oil wells that indicated substantial unrecovered oil reserves. With the current price of oil, development of the Layton oil potential is becoming quite attractive. An oil reserve study made of the Layton oil sand unit (1,520 ac) indicates potentially recoverable oil reserves by improved waterflood methods to be several million barrels. The Layton oil zone was not adequately drained by previous production due to well spacing and failed waterflood attempts. Management will operate test wells through completion after which West Star will continue as operator of the unit. Development of the Layton and Calvin zones will be pursued by subsequent drilling. The current price of oil is over $65 per barrel, which has inspired a great deal of exploration, but has resulted in a shortage of drill rigs and much higher exploration costs. Drilling costs have nearly doubled in the past two years.
ITEM 3: OPERATIONS General Operations.
Gold Hill will continue its conservative policy of avoiding debt and maintaining very low overhead costs. No salaries will be paid or allowed to accrue at this time. Gold Hill will not be charged for the use of office space currently provided by its principals.
Private Placement.
Gold Hill is continuing to make a private placement of its common stock in order to finance a portion of the costs of the projects described above. During this quarter, the Company sold 270,000 shares.
Competition and Risks.
The business environment is very competitive and there are a number of significant risks associated with oil and gas, and mineral exploration and production, including operations as well as exploration. Gold Hill Corporation intends to seek high-risk, high-potential prospects as well as lower-risk, lower-potential development ones. However, the major effort will be towards wildcat oil prospects with potential of 1,000,000 bbls or greater, and gold prospects with potential greater than 1,000,000 oz.
Regulation.
The domestic exploration for mineral, including oil and gas is subject to various state and federal environmental laws, rules, and regulations. Operators in the industry are subject to the Clean Water Act and damages which could arise out of environmental pollution. Corporate History. Gold Hill Corporation is an exploration company focused on large wildcat gas and gold prospects, which if successful will significantly impact upon the value of the Company's stock. In addition to the Nevada Gold prospects, Gold Hill is active in oil and gas exploration.
Although Gold Hill is a public company, it is considered to be a developing company and its stock does not presently trade. Management's policy is to withhold stock trading until an important discovery is made. Gold Hill's management is comprised of experienced and successful explorationists who are qualified to carry forth the goals and aspirations of the company. The primary goal of the Company is to discover a major deposit while avoiding debt. At the same time, the company is focusing on retaining a large interest in each prospect so that a discovery will have a dramatic impact on stock value to the benefit of the shareholders. Gold Hill's executive and operations offices are located in Oklahoma at 2233 West Lindsey, Suite 117, Norman, Oklahoma 73069 (telephone 405-321-8371). Unless the context otherwise requires, the term "Gold Hill" as used herein refers to Gold Hill Corporation.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of Ron Kirkpatrick, C.P.A., are contained within this report.
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q as prescribed by the Securities and Exchange Commission. All material adjustments which, in the opinion of Management, were necessary for a fair presentation of the results for the interim periods have been reflected. Gold Hill Corporation
Balance Sheet December 31 , 2005 Current Assets
BANK OF OKLAHOMA $ 537,381.71
BANK OF OKLAHOMA ( $ 1,806.52)
ARVEST MONEY MARKET $107,741.39
A/R - Stockholders $ 2,075.51
North Goldfield BLM Bond $1,041.00
Tonopah Gold Bond $942.00
Treasury Fund Account $104,345.82
---------------------- Total Current Assets $ 751,720.91 Fixed Assets
FURNITURE AND FIXTURES $ 588.46
TANGIBLE EQUIPMENT 31,952.75
ACCUMULATED DEPRECIATION ($32,091.21) West Star 1-6 $186,951.00 Total Fixed Assets: $187,401.00
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Total Assets $ 939,121.91 Current Liabilities: none Equity
COMMON STOCK $ 1,593,900.00
RETAINED EARNINGS (813,404.43)
PAID-IN CAPITAL 247,904.00
Current Income (Loss) ( 89,277.66)
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Total Equity $ 939,121.91
Total Liabilities and Equity $ 939,121.91 SIGNATURES
Pursuant to the requirements of Sections 13 and 14 (D) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of Undersigned, there unto duly authorized. GOLD HILL CORPORATION | 