December 28, 2005
via facsimile and U.S. mail
Mr. William L. Thomas
Chief Financial Officer
Golden Phoenix Minerals Inc.
1675 E. Prater Way, Suite 102
Sparks, Nevada 89434
Re: Golden Phoenix Minerals Inc.
Form 10-K, filed April 18, 2005
File No 333-129130
Dear Mr. Thomas:
We have reviewed the above filing and have the following
engineering comments. Our review has been limited to the areas
identified below. Please provide us a response to the comments
and
include appropriate disclosure in amended filings. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with supplemental information so we may better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Engineering Comments
General
1. Insert a small-scale map showing the location and access to the
properties. Note that SEC`s EDGAR program now accepts digital
maps,
so please include these maps in any future amendments that are
uploaded to EDGAR. It is relatively easy to include automatic
links
at the appropriate locations within the document to GIF or JPEG
files, which will allow the figures and/or diagrams to appear in
the
right location when the document is viewed on the Internet. For
more
information, please consult the EDGAR manual, and if addition
assistance is required, please call Filer Support at 202-942-8900.
Otherwise, provide the map to the staff for review.
2. The cutoff grade is a critical component used to evaluate the
potential of the mineral properties. Disclose the operating costs
and
recovery parameters used to determine the cutoff grade estimates
for
the Mineral ridge and Ashdown properties. Show that these
calculations demonstrate the cutoff grade or tenor as used to
define
a mineral resource has reasonable prospects for economic
extraction.
In establishing the cut-off grade, it must realistically reflect
the
location, deposit scale, continuity, assumed mining method,
metallurgical processes, costs, and reasonable metal prices based
on
the recent historic three-year average.
Mineral Ridge Gold Mine - Esmeralda County, Nevada, page 4
3. The ore reserves for the Mineral Ridge mine as stated in Part
1,
on page 4 are not the same as those reserves shown in the
financial
statements, on page 23. Please correct the reserve tonnage
estimates. In addition to the above discrepancy, the stated
recovery
of 81 percent is not reflected in the recovered metal in either
location. The recovered metal figures quoted, could indicate a
gold
recovery of 87 percent. Include the leach dump recoverable ounces
as
a separate line item in the reserve estimates. Please correct in
both locations, using the appropriate metallurgical recovery
and/or
recovered metal estimates and as separate items all leach dump or
stockpile inventories. Disclose whether the reserve estimate
contains values for silver as this may be another source of
revenue.
Ashdown Project - Humboldt County, Nevada, page 6
4. Your Joint Venture (JV) partner of the Ashdown project (Win-
Eldrich Mines Ltd.) reports, on their website (www.win-
eldrich.com),
Probable Open Pit Gold Reserves of over 1 million tons averaging
0.088 Ounces per ton gold (OPT) and 957,326 tons averaging 0.363%
Molybdenum (Mo or MoS2). However your company only reported
mineralized material totaling 1,180,000 tons averaging 0.125 OPT
and
146,000 tons averaging 2.900% Molybdenum. Please clarify the
tonnage
and grade variances. Please recognize and restate as necessary
that
mineralized material is of uncertain economic potential and can
not
be referred to as ore in any manner, as this would imply that a
profit can be recognized by mining and processing this material.
Also reconcile and disclose the differences between your company`s
(Golden Phoenix) estimate and that of your JV partner as to the
quantities and quality of these reserves or mineralized material.
Another issue, in regard to reserves, is that your company cannot
capitalize the extensive construction costs of the Ashdown project
until a reserve estimate is declared. Mineralized material can
not
be used to capitalize and amortize costs, unlike proven & probable
reserves. Without a reserve estimate the construction costs of
the
Ashdown project will need to be expensed as incurred. It is the
staff`s position that prior to declaring reserves, the company
should
have obtained a "final" or "bankable" feasibility study, and
employed
the historic three-year average price for the economic analysis.
In
addition, the company should have submitted all necessary permits
and
authorizations, including environmental, to governmental
authorities.
Revise the filing accordingly.
5. The words "development" and "production" have very specific
meanings under Industry Guide 7(a) (4), (see
www.sec.gov/divisions/corpfin /forms/industry.htm#secguide7). The
terms reference the "development stage" when companies are engaged
in
preparing reserves for production, and "production stage" when
companies are engaged in commercial-scale, profit-oriented
extraction
of minerals. If the company does not disclose any "reserves," as
defined by Guide 7, please remove the terms "develop,"
"development"
or "production" throughout the document, and replace this
terminology, as needed, with the terms "explore" or "exploration."
This includes the using of the terms in the Financial Statement
head
notes and footnotes see Instruction 1 to paragraph (a), Industry
Guide 7.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
amendments to expedite our review. Please furnish a cover letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to the company`s disclosure, they
are responsible for the accuracy and adequacy of the disclosures
they
have made. In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging
that:
* The company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* Staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* The company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact George (Ken) Schuler, mining engineer, at
(202)
551-3718 or, in his absence, Roger Baer, mining engineer, at (202)
551-3705, if you have questions regarding engineering comments.
Please contact me at (202) 551-3745 with any other questions.
Direct
all correspondence to the following ZIP code: 20549-7010.
Sincerely,
H. Roger Schwall
Assistant Director
Mr. William L. Thomas
Golden Phoenix Minerals Inc.
December 28, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE