UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of JANUARY, 2006.
Commission File Number: 0-30390
ROCHESTER RESOURCES LTD
- --------------------------------------------------------------------------------
(Translation of registrant's name into English)
#1305 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7, Canada
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: FORM 20-F [X] FORM 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
ROCHESTER RESOURCES LTD
Date: January 27, 2006 /s/ Douglas Good
----------------------------- -------------------------------------
Doug Good,
President
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ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 2005
(UNAUDITED - PREPARED BY MANAGEMENT)
- --------------------------------------------------------------------------------
MANAGEMENT'S COMMENTS ON UNAUDITED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements of
Rochester Resources Ltd. (FORMERLY HILTON RESOURCES LTD.) for the six months
ended November 30, 2005 have been prepared by management and are the
responsibility of the Company's management. These statements have not been
reviewed by the Company's external auditors.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEETS
(UNAUDITED - PREPARED BY MANAGEMENT)
NOVEMBER 30, MAY 31,
2005 2005
$ $
ASSETS
CURRENT ASSETS
Cash 191,228 227,589
Amounts receivable 18,919 39,027
Prepaid expenses and deposits 242 9,636
------------ ------------
210,389 276,252
CAPITAL ASSET 4,050 4,764
OTHER ASSETS (Note 3) - 6,300
------------ ------------
214,439 287,316
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 17,797 31,006
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 4) 70,987,113 70,970,313
CONTRIBUTED SURPLUS 347,545 286,125
DEFICIT (71,138,016) (71,000,128)
------------ ------------
196,642 256,310
------------ ------------
214,439 287,316
============ ============
NATURE OF OPERATIONS AND CHANGE OF NAME (Note 1)
SUBSEQUENT EVENTS (Note 8)
APPROVED BY THE BOARD
/s/ DOUG GOOD , Director
- -----------------
/s/ ANDREW CARTER , Director
- -----------------
The accompanying notes are an integral part of these interim
consolidated financial statements.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED - PREPARED BY MANAGEMENT)
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
---------------------------- ----------------------------
2005 2004 2005 2004
$ $ $ $
EXPENSES
Accounting and administration 16,740 22,500 30,990 38,300
Audit 2,517 - 2,517 -
Depreciation 357 835 714 1,670
Investor relations - 9,000 3,000 18,000
Legal 2,424 6,773 3,374 10,317
Management fees 13,833 - 20,833 -
Office 5,631 3,756 6,774 5,584
Professional fees - 6,482 6,045 7,232
Regulatory 4,542 4,538 6,792 5,263
Shareholder costs 2,611 3,558 5,318 3,558
Stock-based compensation (Note 5) 61,420 64,700 61,420 64,700
Transfer agent 5,417 5,801 9,892 6,650
Travel 3,000 1,477 3,299 3,839
------------ ------------ ------------ ------------
118,492 129,420 160,968 165,113
------------ ------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (118,492) (129,420) (160,968) (165,113)
------------ ------------ ------------ ------------
OTHER ITEMS
Write-off of receivable (20,000) - (20,000) -
Gain on sale of other assets - - 40,980 5,880
Interest and other income 633 958 3,824 958
Foreign exchange 2,364 (20,992) (1,724) (16,809)
------------ ------------ ------------ ------------
(17,003) (20,034) 23,080 (9,971)
------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD (135,495) (149,454) (137,888) (175,084)
DEFICIT - BEGINNING OF PERIOD (71,002,521) (69,916,771) (71,000,128) (69,891,141)
------------ ------------ ------------ ------------
DEFICIT - END OF PERIOD (71,138,016) (70,066,225) (71,138,016) (70,066,225)
============ ============ ============ ============
BASIC AND DILUTED LOSS PER SHARE $(0.06) $(0.08) $(0.06) $(0.09)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,230,735 1,854,003 2,230,868 1,853,869
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - PREPARED BY MANAGEMENT)
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
---------------------------- ----------------------------
2005 2004 2005 2004
$ $ $ $
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Net loss for the period (135,495) (149,454) (137,888) (175,084)
Adjustment for items not involving cash
Depreciation 357 835 714 1,670
Stock-based compensation 61,420 64,700 61,420 64,700
Gain on sale of other assets - - (40,980) (5,880)
------------ ------------ ------------ ------------
(73,718) (83,919) (116,734) (114,594)
(Increase) decrease in amounts receivable 19,819 (8,200) 20,108 (43,387)
(Increase) decrease in prepaid expenses
and deposits 7,725 982 9,394 (380)
Increase (decrease) in accounts payable
and accrued liabilities (3,086) (140) (13,209) 13,068
------------ ------------ ------------ ------------
(49,260) (91,277) (100,441) (145,293)
------------ ------------ ------------ ------------
FINANCING ACTIVITY
Issuance of common shares 16,800 7,500 16,800 7,500
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Expenditures on capital assets - - - (200)
Expenditures on unproven mineral interests - (78,560) - (214,439)
Proceeds from sale of other assets - - 47,280 6,600
------------ ------------ ------------ ------------
- (78,560) 47,280 (208,039)
------------ ------------ ------------ ------------
DECREASE IN CASH FOR THE PERIOD (32,460) (162,337) (36,361) (345,832)
CASH - BEGINNING OF PERIOD 223,688 344,545 227,589 528,040
------------ ------------ ------------ ------------
CASH - END OF PERIOD 191,228 182,208 191,228 182,208
============ ============ ============ ============
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid in cash - - - -
============ ============ ============ ============
Income taxes paid in cash - - - -
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
(UNAUDITED - PREPARED BY MANAGEMENT)
1. NATURE OF OPERATIONS AND CHANGE OF NAME
The Company is engaged in the acquisition and exploration of unproven
mineral interests in Mexico. During the 2005 fiscal year, the Company
completed detailed exploration of its El Nayar Property in Mexico. No
further work was recommended and, accordingly, the costs relating to
the El Nayar Property was written off in the 2005 fiscal year. On
January 8, 2006, the Company completed negotiations and entered into an
option agreement to acquire up to a 51% interest in the Mina Real
Property in Mexico. See Note 8(a).
On August 25, 2005, the Company completed a consolidation of its share
capital on a basis of one new share for ten old shares and changed its
name from Hilton Resources Ltd. to Rochester Resources Ltd.
As at November 30, 2005, the Company had working capital of $192,592.
The Company will require additional financing to complete its earn-in
of the Mina Real Property, identify and evaluate additional potential
resource acquisitions and meet ongoing corporate overhead requirements.
The Company expects to generate the necessary resources for the 2006
fiscal year through the sale of equity securities. No assurances can be
given, however, that the Company will be able to obtain sufficient
additional resources. If the Company is unsuccessful in generating
anticipated resources from one or more of the anticipated sources and
is unable to replace any shortfall with resources from another source,
the Company may be unable to meet its obligations and continue its
operations. In January 2006, the Company raised gross proceeds of $2.5
million, as described in Note 8(b).
These interim consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles
("Canadian GAAP") applicable to a going concern which assumes that the
Company will realize its assets and discharge its liabilities in the
normal course of business. Realization values may be substantially
different from the carrying values shown in the interim consolidated
financial statements should the Company be unable to continue as a
going concern. The ability of the Company to settle its liabilities as
they come due and to fund ongoing operations is dependent upon the
ability of the Company to obtain additional funding from equity
financing. Failure to continue as a going concern would require
restatement of assets and liabilities on a liquidation basis, which
could differ materially from the going concern basis.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These interim consolidated financial statements of the Company have
been prepared by management in accordance with Canadian generally
accepted accounting principles. The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in these interim financial statements and accompanying notes.
Actual results could differ from those estimates. These interim
consolidated financial statements have, in management's opinion, been
properly prepared using careful judgement with reasonable limits of
materiality. These interim consolidated financial statements should be
read in conjunction with the most recent annual consolidated financial
statements. The significant accounting policies follow that of the most
recently reported annual consolidated financial statements.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
(UNAUDITED - PREPARED BY MANAGEMENT)
3. OTHER ASSETS
NOVEMBER 30, MAY 31,
2005 2005
$ $
Investment - 6,300
============ ============
During the six months ended November 30, 2005, the Company sold its
remaining 70,000 common shares of Halo Resources Ltd. for $47,280,
realizing a gain of $40,980.
4. SHARE CAPITAL
Authorized: Unlimited common shares without par value
Issued: NOVEMBER 30, 2005 MAY 31, 2005
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
$ $
Balance, beginning of period 2,230,735 70,970,313 1,853,735 70,593,713
------------ ------------ ------------ ------------
Issued during the period
For cash
Private placements - - 355,000 355,000
Exercise of options - - 3,000 7,500
Exercise of warrants 12,000 16,800 - -
Reallocation from contributed
surplus relating to the exercise
of stock options - - - 6,600
For unproven mineral interests - - 10,000 10,000
Finder's fee - - 9,000 9,000
------------ ------------ ------------ ------------
12,000 16,800 377,000 388,100
Less: share issue costs - - - (11,500)
------------ ------------ ------------ ------------
12,000 16,800 377,000 376,600
------------ ------------ ------------ ------------
Balance, end of period 2,242,735 70,987,113 2,230,735 70,970,313
============ ============ ============ ============
(a) On August 25, 2005, the Company completed a consolidation of
its share capital on a basis of one new share for ten old
shares. All comparative share amounts and balances have been
restated.
(b) A summary of the number of common shares reserved pursuant to
the Company's outstanding warrants at November 30, 2005, and
the changes for the six months ended November 30, 2005, is as
follows:
NUMBER
Balance, beginning period 688,500
Exercised (12,000)
Expired (352,000)
------------
Balance, end of period 324,500
============
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
(UNAUDITED - PREPARED BY MANAGEMENT)
4. SHARE CAPITAL (continued)
The following table summarizes information about the warrants
outstanding and exercisable at November 30, 2005:
EXERCISE
PRICE NUMBER EXPIRY DATE
$
3.10 142,500 March 4, 2006
1.50 182,000 February 7, 2007
----------
324,500
==========
(c) See Note 8.
5. STOCK OPTIONS AND STOCK-BASED COMPENSATION
The Company has established a rolling stock option plan (the "Plan"),
in which the maximum number of common shares which can be reserved for
issuance under the Plan is 10% of the issued and outstanding shares of
the Company. The exercise price of the options is set at the Company's
closing share price on the day before the grant date, less allowable
discounts in accordance with the policies of the TSX Venture Exchange.
The options have a maximum term of five years.
During the six months ended November 30, 2005, the Company granted
220,000 stock options to directors and consultants and recorded
compensation expense of $61,420.
The fair value of stock options granted to directors and consultants is
estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions used for the grants made during
the period:
Risk-free interest rate 3.26%
Estimated volatility 125%
Expected life 1.5 years
Expected dividend yield 0%
The weighted average fair value of all stock options granted during the
period to the Company's directors and consultants was $0.28 per share.
Option-pricing models require the use of estimates and assumptions
including the expected volatility. Changes in the underlying
assumptions can materially affect the fair value estimates and,
therefore, existing models do not necessarily provide reliable measure
of the fair value of the Company's stock options.
A summary of the Company's stock options at November 30, 2005 and the
changes for the six months ended November 30, 2005 is presented below:
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
(UNAUDITED - PREPARED BY MANAGEMENT)
5. STOCK OPTIONS AND STOCK-BASED COMPENSATION (continued)
WEIGHTED
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
$
Balance, beginning of period 217,500 1.30
Granted 220,000 0.50
Cancelled (217,500) 1.30
------------
Balance, end of period 220,000 0.50
============
The following table summarizes information about the stock options
outstanding and exercisable at November 30, 2005:
NUMBER
OUTSTANDING
AND
EXERCISABLE EXERCISE PRICE EXPIRY DATE
$
220,000 0.50 November 10, 2008
===========
6. CONTRIBUTED SURPLUS
The Company's contributed surplus is comprised of the following:
NOVEMBER 30,
2005
$
Balance, beginning of period 286,125
Stock-based compensation (Note 5) 61,420
------------
Balance, end of period 347,545
============
7. RELATED PARTY TRANSACTIONS
During the six months ended November 30, 2005, the Company incurred
$54,823 for accounting, management, professional and consulting
services provided by current and former directors and officers of the
Company. As at November 30, 2005, $3,333 remained outstanding to the
President of the Company on account of unpaid professional fees and has
been included in accounts payable and accrued liabilities.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
(UNAUDITED - PREPARED BY MANAGEMENT)
8. SUBSEQUENT EVENTS
(a) On January 8, 2005, the Company entered into an option
agreement with an arm's-length private company to acquire up
to a 51% interest in the Mina Real Property located in Tepic,
Mexico. The Mina Real Property is approximately 3,400
hectares. Under the agreement the Company is required to make
initial option payments of US $110,000 and issue 250,000
common shares on closing. The Company can then earn its
interests, as follows:
i) an initial 20% interest on funding the initial US
$750,000 on exploration expenditures;
ii) a further 20% interest on funding a further US
$750,000 on exploration expenditures; and
iii) a further 11% interest on payment of US $900,000, at
the minimum rate of US $75,000 per month, commencing
July 1, 2006, with each payment vesting at 0.9166%
interest.
Closing of the agreement is subject to regulatory approval.
(b) In January 2006, the Company completed private placements
totalling 5 million units at $0.50 per unit. Each unit
consisted of one common share and one half share purchase
warrant. One full warrant is exercisable into one common share
at $0.65 per common share on or before January 16, 2008,
subject to a forced conversion provision which comes into
effect once the common shares trade in excess of $1.00 for ten
consecutive trading days. The Company paid $22,000 as finders'
fees on the non-brokered portion of the private placement. On
the brokered portion of the private placement, the Company
paid $150,000, issued 25,000 common shares at a fair value of
$12,500, and granted 150,000 agent's warrants exercisable on
the same basis as the warrants. The Company also incurred
approximately $20,000 of costs relating to the private
placements.
(c) On January 17, 2005, the Company granted stock options to its
directors, employees and consultants to acquire 500,000 common
shares at a price of $0.62 per share, for a term of three
years.
ROCHESTER RESOURCES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2005
BACKGROUND
This discussion and analysis of financial position and results of operation is
prepared as at January 24, 2006 and should be read in conjunction with the
interim consolidated financial statements and the accompanying notes for the six
months ended November 30, 2005 of Rochester Resources Ltd. (the "Company").
Those financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). Except as otherwise
disclosed, all dollar figures included therein and in the following management
discussion and analysis ("MD&A") are quoted in Canadian dollars. Additional
information relevant to the Company's activities, can be found on SEDAR at
WWW.SEDAR.COM .
COMPANY OVERVIEW
The Company is currently a junior mineral exploration company and is actively
engaged in the acquisition and exploration of precious metals on mineral
interests located primarily in Mexico. During the 2005 fiscal year, the Company
completed a detailed first and second phase exploration program of the El Nayor
Property in Mexico and no further work was recommended on this mineral interest.
In January 2006, the Company completed its negotiation to acquire up to a 51%
interest in the Mina Real gold/silver property in Mexico.
On August 25, 2005, the Company completed a consolidation of its share capital
on a 1 new for 10 old basis and changed its name from Hilton Resources Ltd. to
Rochester Resources Ltd.
The Company is a reporting issuer in British Columbia, Alberta and Saskatchewan.
The Company trades on the TSX Venture Exchange ("TSXV") under the symbol "RCT"
and on the Over the Counter Bulletin ("OTCBB") under the symbol "RCTFF". The
Company is also registered with the U.S. Securities and Exchange Commission
("SEC") as a foreign private issuer under the Securities Act of 1934.
FORWARD LOOKING STATEMENTS
Certain information included in this discussion may constitute forward-looking
statements. Forward-looking statements are based on current expectations and
entail various risks and uncertainties. These risks and uncertainties could
cause or contribute to actual results that are materially different than those
expressed or implied. The Company disclaims any obligation or intention to
update or revise any forward-looking statement, whether as a result of new
information, future events, or otherwise.
APPOINTMENTS AND CHANGES IN DIRECTORS AND OFFICERS
At the annual general meeting held on November 17, 2005, Messrs. Des O'Kell,
Nick DeMare, William Lee and Andrew Carter were elected to the Board of
Directors. Mr. Des O'Kell was reappointed President and Mr. Harvey Lim was
appointed corporate secretary.
On November 29, 2005, the Company appointed Mr. Douglas Good as director,
President and Chief Executive Officer of the Company. Mr. Good has an extensive
background in providing strategic planning, corporate restructuring, finance and
senior management services to a range of companies in the start-up and early
development phase. He has served as a director and in senior management
positions of various public and private companies in the healthcare, software,
mining and automotive industries in the US and in Canada. Mr. Good was a
co-founder of Sonus Corp., a hearing healthcare provider, which grew from a
single clinic in 1990 to a major North American provider of hearing healthcare.
Mr. Good also has a strong background in commercial banking and leasing.
Also on November 29, 2005, Mr. Gil Leathley was appointed to the Company's
Advisory Board. Mr. Leathley has worked in the mining industry since 1962. He
has held various senior positions with major mining companies with his
-1-
last position being Senior Vice-President and Chief Operating Officer of
Homestake Resources. Since 2000, Mr. Leathley has been an independent consultant
to several senior and junior mining companies. Mr. Leathley's operating
experience will be an asset to the Company. On January 17, 2006, Mr. Leathley
was subsequently appointed as a director of the Company.
In order to accommodate the appointments, on November 29, 2005, Mr. Des O'Kell
resigned as President and Mr. Nick DeMare resigned as a director. On January 17,
2006, Mr. O'Kell also resigned as a director of the Company.
EXPLORATION PROPERTY
On January 8, 2006, the Company entered into a option agreement to acquire up to
a 51% interest in the Mina Real gold/silver property comprising approximately
3,400 hectares. The Mina Real Property is located near Tepic, Nayarit, Mexico.
Conditional on making initial option payments of US$110,000 and the issuance of
250,000 common shares, the Company will earn the following interests in the Mina
Real Property:
- an initial 20% interest on funding the first US$750,000 towards the
2006 work program;
- a further 20% interest on funding the second US$750,000 towards the
2006 work program; and
- a further 11% interest on payment of US$900,000 at the minimum rate of
US$75,000 per month commencing mid-2006, with each payment vesting a
0.9166% interest.
Closing of the option agreement is subject to regulatory approval.
2006 WORK PROGRAM
The Mina Real Property has been the subject of extensive due diligence and is
considered a core strategic asset which, in addition to having significant
exploration potential, can quickly be brought into production to generate cash
flow. The Company plans to proceed as soon as possible with the following
development program:
Phase 1:
- Continuation of the underground development program which should see
approximately 500 additional meters of drifts, raises and ramps
developed over a two month period.
- Complete the initial drill program to test high grade vein outcroppings
located in the Tajos Cuates structure.
- Obtain environmental approvals for mill.
Phase 2:
- Conditional on the results from Phase 1, the Company will proceed to:
- Complete costing and planning to establish a 200-300 tonne / day
conventional cyanidation plant.
- Construction of mill.
Phase 3:
- Commencement of mining by mid-2006
With the establishment of the cyanidation mill near the mine site by the
beginning of the third quarter of 2006, it is anticipated, that in addition to
proving out the continuity of the Florida vein structure to the northwest of the
current mine site, over 60,000 tonnes of material could be produced and
processed over a 10 month time frame. The proposed development work would block
out an estimated 400,000 tonnes of the Florida vein structure in preparation for
bulk mining and increased production. The estimates of 60,000 tonnes and 400,000
tonnes are based on the mine workings completed to date and extensions of these
same workings. These estimates are conceptual in nature and, while management is
confident they can be achieved, additional exploration and development work is
required and it is uncertain if further work will confirm these estimates.
Initial metallurgical testing, carried out in 2004 on samples taken from the
Florida development, indicated recoveries in excess of 90% from a conventional
milling operation. The Company plans to update this initial metallurgical
testing.
-2-
THE MINA REAL PROPERTY
This is an advanced property on which the owner has expended over US$3 million
to fund the initial high-risk exploration and development costs, including over
1,500 meters of mine development, involving five separate drifts at different
elevations ranging from the 1140 meter elevation to the 1260 meter elevation.
In April through June of 2005, approximately 4,400 tonnes of gold-silver bearing
quartz material was mined from the aforenoted segment of the Florida Vein
structure. The owner has reported that the average head grade of the material
processed was 8.3 grams per tonne of gold and 164.7 grams per tonne of silver.
Access is good to the mine location through 2.5 kilometers of recently developed
road with water and power sources close to the proposed site for construction of
an initial milling operation capable of processing 200-300 tonnes per day. To
date four veins have been identified on the Mina Real Property. The Florida
quartz veins 1, 2 and 3 and the Tajos Cuates vein. Other veins are known to
exist but require exploration mapping and sampling. Initial development at the
property consists of five portals ranging from 20 to 50 meters apart at
different elevations of the Florida vein system.
Recent geological field work, such as geological mapping, limited trenching and
drill core examination, indicate that the Florida Vein system may have good
continuity to the northwest for at least another kilometer from the mine area
and may have a vertical continuity of over 250 meters, as observed from surface
outcrop to the bottom lowermost developed adit. Though there has been limited
diamond drilling on the property one hole, F2-03, was drilled through the lower
levels of the area designated by the above workings diagram. All three veins
were intersected at elevations below the lowermost development adits with
intersections ranging in width from 1.1 to 2.5 meters with grades of 0.52 g/t Au
and 93.54 g/t Ag in the first vein, 12.73 g/t Au and 172 g/t Ag in the second
vein and 5.50 g/t Au and 171 g/t Ag in the third vein.
As part of its due diligence at Mina Real, the Company has taken 51 chip vein
samples, 1 grab sample, 4 duplicates, 3 blanks and 6 standards. Also, 20 pulp
samples were assayed. Some highlights of the underground chip vein samples taken
include:
SAMPLE NO. VEIN WIDTH GOLD SILVER DESCRIPTION
(M) G/T G/T
387322 Florida 3 1.00 8.4 226 Quartz Vein Level 260
387324 Florida 3 0.98 9.62 67.2 Quartz Vein Level 260
387325 Florida 3 1.07 11.5 123 Quartz Vein Level 260
387334 Florida 2 0.70 2.44 848 Quartz Vein Level 210
387339 Florida 3 2.10 9.61 202 Quartz Vein Level 160
387342 Florida 3 1.30 14.25 260 Quartz Vein Level 160
387362 Florida 2 1.55 6.27 501 Quartz Vein Level 185
387367 Florida 2 1.10 14.55 336 Quartz Vein Level 185
387369 Florida 3 1.60 9.15 119 Quartz Vein Level 185
387393 Florida 3 0.80 16.80 115 Quartz Vein Level 140
387397 Florida 3 1.13 4.66 723 Quartz Vein Level 140
387398 Tajo Cuates 1.70 2.77 1330 Quartz Vein 1 - Main adit
A vein system called Tajos Cuates, located just south of the Florida Veins, has
also been visited and sampled by the Company's qualified person. The vein where
sampled has a true width of 1.70 meters and is composed of fractured quartz and
concentrations of limonite and manganese oxides. The vein appears to be a large
zone of secondary enrichment. The assay returned 2.77 g/t Au and 1,330 g/t Ag.
Mr. Victor Jaramillo, M.Sc.(A), P.Geo, the qualified person who has visited the
property and prepared the geological technical disclosure in this release,
indicates the geological potential on the Florida Vein system and at Tajos
Cuates to be excellent. Mr Jaramillo will be completing the 43-101 qualifying
report.
-3-
Based on the geological field work done to date, the average head grades
experienced in the bulk samples mined in mid- 2005 and the identification of
over three kilometers of quartz gold-silver vein structure in the Florida and
Tajos Cuates structures, management believes there is excellent potential for
the early development of a significant long-term revenue stream.
SELECTED FINANCIAL DATA
The following selected financial information is derived from the unaudited
consolidated interim financial statements of the Company prepared in accordance
with Canadian GAAP.
FISCAL 2006 FISCAL 2005 FISCAL 2004
----------------------- ------------------------------------------------- ----------------------
THREE MONTH PERIODS ENDING NOV. 30 AUG. 31 MAY 31 FEB. 28 NOV. 30 AUG. 31 MAY 31 FEB. 29
$ $ $ $ $ $ $ $
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
OPERATIONS:
Revenues - - - - - - - -
Net income (loss) (135,495) (2,393) (781,151) (152,752) (149,454) (25,630) (106,071) (259,358)
Basic and diluted
income (loss) per share (1) (0.06) (0.00) (0.40) (0.08) (0.09) (0.01) (0.10) (0.21)
Dividends per share - - - - - - - -
BALANCE SHEET:
Working capital 192,592 249,510 245,246 313,811 235,799 390,778 550,932 483,189
Total assets 214,439 274,800 287,316 1,060,962 783,112 860,506 872,928 643,624
Total long-term liabilities - - - - - - - -
----------------------- ------------------------------------------------- ----------------------
(1) On August 25, 2005, the Company completed a consolidation of its share
capital on a basis of one new for ten old shares. The basic and diluted
income (loss) per share amounts have been restated.
RESULTS OF OPERATIONS
During the six months ended November 30, 2005, the Company recorded a loss of
$137,888 ($0.06 per share) compared to a loss of $175,084 ($0.09 per share) for
the six months ended November 30, 2004. The decrease in loss in the six months
ended November 30, 2005 compared to the six months ended November 30, 2004 is
primarily attributed to the gain on sale of marketable securities in the six
months ended November 30, 2005. During the six months ended November 30, 2005,
the Company sold its remaining 70,000 common shares of Halo Resources Ltd. for
$47,280 (the six months ended November 30, 2004 - $6,600), resulting in a gain
of $40,980 (the six months ended November 30, 2004 - $5,880).
General and administrative expenses of $160,968 were reported in the six months
ended November 30, 2005, a slight decrease of $4,145, from $165,113 in the six
months ended November 30, 2004. Specific expenses of note during the six months
ended November 30, 2005 and 2004 are as follows:
i) during the six months ended November 30, 2005, the Company
incurred accounting and administrative fees of $30,990 (2004 -
$38,300) provided by Chase Management Ltd., a private company
owned by Mr. Nick DeMare, a former director of the Company;
ii) effective June 29, 2005, Mr. Des O'Kell was appointed a
director and the President of the Company. Management fees of
$17,500 in 2005 were paid to Mr. O'Kell as the Company's
President. Effective November 10, 2005, Mr. O'Kell resigned as
President and Mr. Douglas Good was appointed director and
President of the Company. Management fees of $3,333 were paid
to Mr. Good.
iii) during the six months ended November 30, 2005, the Company
recorded a write-off of $20,000 due to the uncertainty of
collection of the amount receivable from the Company's former
joint venture partner. The Company is actively pursuing
collection;
iv) during the six months ended November 30, 2005, the Company
incurred professional fees of $6,045 mainly for services
rendered on the review of the results of the El Nayar Project;
and
-4-
v) regulatory fees, shareholder costs and transfer agent fees
increased by $6,531, from $15,471 in the six months ended
November 30, 2004 to $22,002 in the six months ended November
30, 2005,mainly due to the Company's share consolidation and
name change conducted in the six months ended November 30,
2005.
FINANCIAL CONDITION / CAPITAL RESOURCES
To date the Company has relied on equity financing to fund its commitments and
discharge its liabilities as they come due. As of November 30, 2005, the Company
had a working capital of $192,592. Subsequent to November 30, 2005, the Company
completed private placements for 5 million units at $0.50 per unit for gross
proceeds of $2.5 million. The Company believes that it currently has sufficient
funds to meet ongoing overhead expenditures and the 2006 work program planned
for the Mina Real Property. However, the Company will require additional
financing to complete its earn-in of the Mina Real Property. In addition,
exploration activities may change due to ongoing results and recommendations or
the Company may acquire additional mineral properties, which may entail
significant funding or exploration commitments. In the event that the occasion
arises, the Company may be required to obtain additional financing. The Company
has relied solely on equity financing to raise the requisite financial
resources. While it has been successful in the past, there can be no assurance
that the Company will be successful in raising future financings should the need
arise.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
PROPOSED TRANSACTIONS
The Company has entered into an option agreement to acquire up to a 51% interest
in the Mina Real Property. Closing of the agreement is subject to regulatory
approval.
CRITICAL ACCOUNTING ESTIMATES
A detailed summary of all the Company's significant accounting policies is
included in Note 2 to the May 31, 2005 audited consolidated financial
statements.
CHANGES IN ACCOUNTING POLICIES
The Company has no changes in accounting policies.
TRANSACTIONS WITH RELATED PARTIES
During the six months ended November 30, 2005 the Company was charged $54,823
for accounting, management, professional and consulting services provided by
current and former directors and officers of the Company. As at November 30,
2005, $3,333 remained outstanding to the President of the Company on account of
unpaid professional fees and has been included in accounts payable and accrued
liabilities.
RISKS AND UNCERTAINTIES
The Company competes with other mining companies, some of which have greater
financial resources and technical facilities, for the acquisition of mineral
concessions, claims and other interests, as well as for the recruitment and
retention of qualified employees.
The Company is in compliance in all material regulations applicable to its
exploration activities. Existing and possible future environmental legislation,
regulations and actions could cause additional expense, capital expenditures,
restrictions and delays in the activities of the Company, the extent of which
cannot be predicted. Before production can commence on any properties, the
Company must obtain regulatory and environmental approvals. There is no
assurance that such approvals can be obtained on a timely basis or at all. The
cost of compliance with changes in governmental regulations has the potential to
reduce the profitability of operations.
-5-
The Company's activities are conducted in Mexico. Consequently, the Company is
subject to certain risks, including currency fluctuations and possible political
or economic instability which may result in the impairment or loss of mining
title or other mineral rights, and mineral exploration and mining activities may
be affected in varying degrees by political stability and governmental
regulations relating to the mining industry.
INVESTOR RELATIONS ACTIVITIES
The Company had an investor relations arrangement with Eland Jennings Inc.
("Eland Jennings") at a rate of $3,000 per month. The arrangement was terminated
on June 28, 2005. During the six month period ended November 30, 2005, the
Company paid $3,000 (the six months ended November 30, 2004 - $18,000) to Eland
Jennings.
OUTSTANDING SHARE DATA
The Company's authorized share capital is unlimited common shares without par
value. As at January 24, 2006 , there were 7,267,735 issued and outstanding
common shares. In addition there were 720,000 stock options outstanding and
exercisable at exercise price ranging from $0.50 to $0.62 per share and
2,974,500 warrants outstanding, with exercise prices ranging from $0.65 to $3.10
per share.
-6-
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Douglas Good, a Director and Chief Executive Officer of Rochester Resources
Ltd., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of Rochester Resources Ltd., (the issuer)
for the interim period ending November 30, 2005;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with the issuer's GAAP; and
5. I have caused the issuer to disclose in the interim MD&A any change in
the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
Date: January 30, 2006
/s/ DOUGLAS GOOD
- ----------------------------------
Douglas Good,
Director & Chief Executive Officer
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Douglas Good, a Director and Chief Executive Officer of Rochester Resources
Ltd., and performing similar functions to that of a Chief Financial Officer,
certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of Rochester Resources Ltd., (the issuer)
for the interim period ending November 30, 2005;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with the issuer's GAAP; and
5. I have caused the issuer to disclose in the interim MD&A any change in
the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
Date: January 30, 2006
/s/ DOUGLAS GOOD
- ----------------------------------
Douglas Good,
Director & Chief Executive Officer