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 APRIL, 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: April 27, 2006 /s/ Douglas Good
----------------------------- -------------------------------------
Doug Good,
President
- --------------------------------------------------------------------------------
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
FEBRUARY 28, 2006
(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 nine months
ended February 28, 2006 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)
FEBRUARY 28, MAY 31,
2006 2005
$ $
A S S E T S
CURRENT ASSETS
Cash and cash equivalents 2,075,891 227,589
Amounts receivable 26,121 39,027
Prepaid expenses and deposits 38,174 9,636
------------ ------------
2,140,186 276,252
MINERAL INTERESTS (Note 3) 194,965 -
CAPITAL ASSET, net of accumulated
depreciation of $ 1,071 3,693 4,764
OTHER ASSETS - 6,300
------------ ------------
2,338,844 287,316
============ ============
L I A B I L I T I E S
CURRENT LIABILITIES
Accounts payable and accrued liabilities 41,403 31,006
------------ ------------
S H A R E H O L D E R S ' E Q U I T Y
SHARE CAPITAL (Note 4) 73,256,526 70,970,313
CONTRIBUTED SURPLUS (Note 6) 522,545 286,125
DEFICIT (71,481,630) (71,000,128)
------------ ------------
2,297,441 256,310
------------ ------------
2,338,844 287,316
============ ============
NATURE OF OPERATIONS AND CHANGE OF NAME (Note 1)
SUBSEQUENT EVENTS (Notes 3 and 4(b))
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 NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------------- ----------------------------
2006 2005 2006 2005
$ $ $ $
EXPENSES
Accounting and administration 17,730 23,788 48,720 62,088
Audit - - 2,517 -
Corporate finance fee 12,500 - 12,500 -
Depreciation 357 835 1,071 2,505
General exploration 7,639 - 7,639 -
Investor relations - 9,000 3,000 27,000
Legal 15,928 5,109 19,302 15,426
Management fees 67,304 - 88,137 -
Office 1,086 1,875 7,860 7,459
Professional fees 24,767 37,010 30,812 44,242
Regulatory 3,867 950 10,659 6,213
Rent 2,323 - 2,323 -
Shareholder costs 3,200 209 8,518 3,767
Stock-based compensation (Note 5) 175,000 70,963 236,420 135,663
Transfer agent 5,328 2,490 15,220 9,140
Travel 6,815 10,739 10,114 14,578
------------ ------------ ------------ ------------
343,844 162,968 504,812 328,081
------------ ------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (343,844) (162,968) (504,812) (328,081)
------------ ------------ ------------ ------------
OTHER ITEMS
Write-off of receivable - - (20,000) -
Gain on sale of other assets - - 40,980 -
Interest and other income 6,074 617 9,898 7,455
Foreign exchange (5,844) 9,599 (7,568) (7,210)
------------ ------------ ------------ ------------
230 10,216 23,310 245
------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD (343,614) (152,752) (481,502) (327,836)
DEFICIT - BEGINNING OF PERIOD (71,138,016) (70,066,225) (71,000,128) (69,891,141)
------------ ------------ ------------ ------------
DEFICIT - END OF PERIOD (71,481,630) (70,218,977) (71,481,630) (70,218,977)
============ ============ ============ ============
BASIC AND DILUTED LOSS PER SHARE $(0.07) $(0.08) $(0.16) $(0.17)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,643,568 1,948,891 3,035,102 1,884,154
============ ============ ============ ============
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 NINE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------------- ----------------------------
2006 2005 2006 2005
$ $ $ $
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Net loss for the period (343,614) (152,752) (481,502) (327,836)
Adjustment for items not involving cash
Depreciation 357 835 1,071 2,505
Corporate finance fee 12,500 - 12,500 -
Stock-based compensation 175,000 70,963 236,420 135,663
Gain on sale of other assets - - (40,980) (5,880)
------------ ------------ ------------ ------------
(155,757) (80,954) (272,491) (195,548)
(Increase) decrease in amounts receivable (7,202) (9,219) 12,906 (52,606)
Increase in prepaid expenses and deposits (37,932) (4,076) (28,538) (4,456)
Increase in accounts payable and
accrued liabilities 23,606 52,139 10,397 65,207
------------ ------------ ------------ ------------
(177,285) (42,110) (277,726) (187,403)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares 2,500,000 310,000 2,516,800 317,500
Share issue costs (243,087) (2,500) (243,087) (2,500)
------------ ------------ ------------ ------------
2,256,913 307,500 2,273,713 315,000
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Mineral interests expenditures (194,965) (148,534) (194,965) (363,173)
Proceeds from sale of other assets - - 47,280 6,600
------------ ------------ ------------ ------------
(194,965) (148,534) (147,685) (356,573)
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS FOR THE PERIOD 1,884,663 116,856 1,848,302 (228,976)
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 191,228 182,208 227,589 528,040
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS
- END OF PERIOD 2,075,891 299,064 2,075,891 299,064
============ ============ ============ ============
CASH AND CASH EQUIVALENTS IS COMPRISED OF:
Cash 575,891 299,064 575,891 299,064
Short-term deposit 1,500,000 - 1,500,000 -
------------ ------------ ------------ ------------
2,075,891 299,064 2,075,891 299,064
============ ============ ============ ============
SUPPLEMENTARY CASH FLOW INFORMATION - Note 8
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 NINE MONTHS ENDED FEBRUARY 28, 2006
(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 an initial exploration program on the El Nayar Property in
Mexico. No further work was recommended and, accordingly, the
acquisition costs and exploration expenditures relating to the El Nayar
Property were 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.
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 February 28, 2006, the Company had working capital of $2,098,783.
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.
3. MINERAL INTERESTS
On January 8, 2006, the Company entered into an option agreement with a
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 an initial option payment of US $110,000 (paid) 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
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
3. MINERAL INTERESTS (continued)
iii) a further 11% interest on payment of US $900,000, at the
minimum rate of US $75,000 per month, commencing September 1,
2006, with each payment vesting at 0.9166% interest.
During the nine months ended February 28, 2006, the Company received
regulatory approval and has advanced US $61,000 for exploration costs.
Subsequent to February 28, 2006, the Company issued 250,000 common
shares.
4. SHARE CAPITAL
Authorized: Unlimited common shares without par value
Issued: FEBRUARY 28, 2006 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 5,000,000 2,500,000 355,000 355,000
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 corporate finance fee 25,000 12,500
For unproven mineral interests - - 10,000 10,000
Finder's fee - - 9,000 9,000
------------ ------------ ------------ ------------
5,037,000 2,529,300 377,000 388,100
Less: share issue costs - (243,087) - (11,500)
------------ ------------ ------------ ------------
5,037,000 2,286,213 377,000 376,600
------------ ------------ ------------ ------------
Balance, end of period 7,267,735 73,256,526 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) During the nine months ended February 28, 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 for a
corporate finance fee and granted 150,000 agent's warrants
exercisable on the same basis as the warrants. The Company
also incurred approximately $71,087 of costs relating to the
private placements.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
4. SHARE CAPITAL (continued)
Subsequent to February 28, 2006, the Company gave notice to
the warrantholders that the forced conversion provision came
into effect on the close of business on April 5, 2006. The
warrantholders will have until the close of business on May 7,
2006 to exercise their warrants otherwise the warrants will
expire and the warrant certificates will be void and of no
effect.
(c) A summary of the number of common shares reserved pursuant to
the Company's outstanding warrants at February 28, 2006, and
the changes for the nine months ended February 28, 2006, is as
follows:
NUMBER
Balance, beginning period 688,500
Issued 2,650,000
Exercised (12,000)
Expired (352,000)
------------
Balance, end of period 2,974,500
============
The following table summarizes information about the warrants
outstanding and exercisable at February 28, 2006:
EXERCISE
PRICE NUMBER EXPIRY DATE
$
3.10 142,500 March 4, 2006
2.00 182,000 February 7, 2007
0.65 2,650,000 January 16, 2008
------------
2,974,500
============
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 nine months ended February 28, 2006, the Company granted
570,000 stock options to directors and consultants and recorded
compensation expense of $236,420.
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
5. STOCK OPTIONS AND STOCK-BASED COMPENSATION (continued)
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% - 3.72%
Estimated volatility 125% - 136%
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 $0.41 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 February 28, 2006 and the
changes for the nine months ended February 28, 2006 is presented below:
WEIGHTED
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
$
Balance, beginning of period 217,500 1.30
Granted 720,000 0.62
Cancelled (217,500) 1.30
------------
Balance, end of period 720,000 0.62
============
The following table summarizes information about the stock options
outstanding and exercisable at February 28, 2006:
NUMBER NUMBER EXERCISE
OUTSTANDING EXERCISABLE PRICE EXPIRY DATE
$
220,000 220,000 0.50 November 10, 2008
350,000 350,000 0.62 January 17, 2009
150,000 - 0.80 August 21, 2007
----------- -----------
720,000 570,000
=========== ===========
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
6. CONTRIBUTED SURPLUS
The Company's contributed surplus is comprised of the following:
FEBRUARY 28,
2006
$
Balance, beginning of period 286,125
Stock-based compensation (Note 5) 236,420
------------
Balance, end of period 522,545
============
7. RELATED PARTY TRANSACTIONS
During the nine months ended February 28, 2006, the Company incurred
$141,857 for accounting, management, professional and consulting
services provided by current and former directors and officers of the
Company. As at February 28, 2006, $9,892 remained outstanding to the
President of the Company on account of unpaid professional fees and has
been included in accounts payable and accrued liabilities.
8. SUPPLEMENTARY CASH FLOW INFORMATION
Non-cash activities were conducted by the Company during the nine
months ended February 28, 2006 and February 28, 2005 as follows:
2006 2005
$ $
Financing activities
Issuance of common shares for
finder's fees - 9,000
Share issue costs - (9,000)
Issuance of common shares on
exercise of options - 6,600
Contributed surplus - (6,600)
Issuance of common shares for a
corporate finance fee 12,500 -
------------ ------------
12,500 -
============ ============
Operating activity
Corporate finance fee (12,500) -
============ ============
Other supplementary cash flow information:
2006 2005
$ $
Interest paid in cash - -
============ ============
Income taxes paid in cash - -
============ ============
ROCHESTER RESOURCES LTD.
(FORMERLY HILTON RESOURCES LTD.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2006
BACKGROUND
This discussion and analysis of financial position and results of operation is
prepared as at April 26, 2006 and should be read in conjunction with the interim
consolidated financial statements and the accompanying notes for the nine months
ended February 28, 2006 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.
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 located near Tepic, Nayarit, Mexico. The Company paid an initial
option payment of US $110,000 and issued 250,000 common shares to the Optionor
entitling it to 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 September 2006, with each payment
vesting a 0.9166% interest.
-1-
2006 WORK PROGRAM
The Mina Real Property 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 has commenced Phase 1of 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.
- An initial drill program to test high grade vein outcroppings located
in the Tajos Cuates structure.
- Obtaining 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.
With the establishment of a conventional mill near the mine site, 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. This
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 believes 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.
THE MINA REAL PROPERTY
This is an advanced property on which the previous owners have carried out
substantial work, 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. Further Phase 1 drift development is
currently underway.
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 to the mine location is good, 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.
-2-
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
NUMBER 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 sampled
section 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.
Additional geological work is currently underway on this structure and extension
of the current road system to the area of proposed drilling targets is well
underway.
Mr. Victor Jaramillo, M.Sc.(A), P.Geo, is the Company's qualified person who has
completed the 43-101 report on the property and prepared the geological
technical disclosure indicated herein.
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
FISCAL 2006 FISCAL 2005 2004
------------------------------------ ------------------------------------------------- ---------
THREE MONTH PERIODS ENDING FEB. 28 NOV. 30 AUG. 31 MAY 31 FEB. 28 NOV. 30 AUG. 31 MAY 31
$ $ $ $ $ $ $ $
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
OPERATIONS:
Revenues - - - - - - - -
Expenses (343,844) (118,492) (42,476) (62,813) (162,968) (129,420) (35,976) (83,586)
Other items 230 (17,003) 40,083 (718,338) 10,216 (20,034) 10,346 151,580
Net income (loss) (343,614) (135,495) (2,393) (781,151) (152,752) (149,454) (25,630) 67,994
Basic and diluted
income (loss) per share(1) (0.07) (0.06) (0.00) (0.40) (0.08) (0.09) (0.01) (0.10)
Dividends per share - - - - - - - -
BALANCE SHEET:
Working capital 2,098,783 192,592 249,510 245,246 313,811 235,799 390,778 550,932
Total assets 2,338,844 214,439 274,800 287,316 1,060,962 783,112 860,506 872,928
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.
-3-
RESULTS OF OPERATIONS
During the nine months ended February 28, 2006, the Company recorded a loss of
$481,502 ($0.16 per share) compared to a loss of $327,836 ($0.17 per share) for
the nine months ended February 28, 2005. The increase in loss in the nine months
ended February 28, 2006 compared to the nine months ended February 28, 2005 is
primarily attributed to the non-cash stock-based compensation of $236,420 and
offset by the gain on sale of other assets in the nine months ended February 28,
2006. During the nine months ended February 28, 2006, the Company sold its
remaining 70,000 common shares of Halo Resources Ltd. for $47,280, resulting in
a gain of $40,980.
Expenses of $504,812 were reported in the nine months ended February 28, 2006,
an increase of $176,731, from $328,081 in the nine months ended February 28,
2005. Specific expenses of note during the nine months ended February 28, 2006
and 2005 are as follows:
i) during the nine months ended February 28, 2006, the Company
incurred accounting, management and administrative fees of
$48,720 (2005 - $62,088) 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. During the nine
months ended February 28, 2006, management fees of $20,500
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 $67,637, which includes a signing
bonus of $50,000, were paid to Mr. Good ;
iii) during the nine months ended February 28, 2006, 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 pursuing collection;
iv) during the nine months ended February 28, 2006, the Company
incurred professional fees of $30,812. The Company paid
$17,562 for services rendered on the review of the results of
the El Nayar Project and potential mineral properties
interests in Mexico. The Company also paid $7,500 to Canaccord
Capital Corporation for administrative services and $5,000 to
certain directors as directors' fees;
v) regulatory fees, shareholder costs and transfer agent fees
increased by $15,277, from $19,120 in the nine months ended
February 28, 2005 to $34,397 in the nine months ended February
28, 2006,mainly due to the Company's share consolidation and
name change conducted in the nine months ended February 28,
2006;
vi) during the nine months ended February 28, 2006, the Company
issued 25,000 common shares, at a fair value of $12,500, to
Canaccord Capital Corporation for corporate advisory services;
and
vii) recorded general exploration costs of $7,639 for completion of
exploration and related costs on the El Nayar Project in
Mexico which were written off at the end of the 2005 fiscal
year.
During the nine months ended February 28, 2006, the Company completed private
placements for 5 million units at $0.50 per unit for gross proceeds of $2.5
million.
FINANCIAL CONDITION / CAPITAL RESOURCES
As of February 28, 2006, the Company had a working capital of $2,098,783. 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.
In April 2006, the Company gave notice to the warrantholders of the January 2006
private placement that it was exercising its forced conversion provision. If
fully exercised, the Company will receive $1,722,500.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
-4-
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 nine months ended February 28, 2006, the Company incurred $141,857
for accounting, management, professional and consulting services provided by
current and former directors and officers of the Company. As at February 28,
2006, $9,892 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.
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 nine month period ended February 28, 2006, the
Company paid $3,000 (the nine months ended February 28, 2005 - $27,000) to Eland
Jennings.
Effective February 28, 2006, the Company entered into a six month agreement with
Accent Marketing Limited ("Accent") to provide market awareness and investor
relation activities in Europe. Accent will be paid a monthly fee of EUR $4,500.
The Company has also agreed to grant 150,000 stock options at a price of $0.80
per common share to expire on August 21, 2007. The options will vest quarterly
over an eighteen month period.
OUTSTANDING SHARE DATA
The Company's authorized share capital is unlimited common shares without par
value. As at April 26, 2006 , there were 7,517,735 issued and outstanding common
shares. In addition there were 720,000 stock options outstanding and exercisable
at exercise price ranging from $0.50 to $0.80 per share and 2,974,500 warrants
outstanding, with exercise prices ranging from $0.65 to $3.10 per share.
-5-
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 February 28, 2006;
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: April 27, 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 February 28, 2006;
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: April 27, 2006
/s/ DOUGLAS GOOD
- ----------------------------------
Douglas Good,
Director & Chief Executive Officer