Golden River Resources Corporation
A Delaware Corporation
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Level 8, 580 St Kilda Road, Melbourne
Victoria 3004, Australia
PO Box 6315, St Kilda Road Central
Melbourne, Victoria 8008, Australia
Telephone: +61 3 8532 2860
Facsimile: +61 3 8532 2805
Email: investor@goldenriverresources.com
May 10, 2007
VIA EDGAR
Securities and Exchange Commission
100F Street, N.E.
Washington, D.C. 20549
Attn: Jill Davis, Esq.
Mail Stop 7010
Re: Golden River Resources Corporation
Form 10-KSB for the Fiscal Year Ended June 30, 2006
Filed September 28, 2006
File No. 00-16097
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Ladies and Gentlemen:
On behalf of Golden River Resources Corporation, a Delaware corporation ("GRR"
or the "Company"), we have set forth below the Company's proposed responses to
the Staff's comment letter dated April 10, 2007 with respect to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2006 and its
Quarterly Report on Form 10-KSB for the fiscal quarter ended December 31, 2006.
The Staff's comments have been reproduced (in bold) below and are immediately
followed by the Company's responses thereto.
Form 10-KSB for the Fiscal Year Ended June 30, 2006
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters, page 35
1. Within the table that sets forth information regarding beneficial
ownership of your common shares, you present the shares owned by Joseph
and Stera Gutnick and RAP Special Situation Fund Limited as 41,200,224
and 31,670,000 respectively as of June 30, 2006. However, per review of
the consolidated Statements of Stockholders' Equity on page F-5, there
were only 26,714,000 common shares outstanding as of June 30, 2006.
Please revise your table if necessary, or tell us, and revise your
disclosure to explain how these beneficial owners held more shares than
were outstanding.
In accordance with Instruction 1 to Item 403 of Regulation SB and Rule
13d-3, the number of shares beneficially owned by Mr. and Mrs. Gutnick
includes 20,700,224 issued and outstanding shares and 20,500,000 shares
that are issuable upon exercise of presently exercisable options and
warrants. See footnotes 6 and 7 to the table.
Notes to Consolidated Financial Statements, page F-7
Note 6 Affiliate Transactions, page F-11
2. You explain that in May 2006 you issued shares of common stock and
options to Wilzed Pty Ltd. as repayment of outstanding loans. Please
tell us how the per share price of the common shares and options was
determined, and if different, what the per share market trading price
of the shares was at the time of the share issuance. If applicable,
tell us why you valued the shares and options issued at a price
different than the current market trading price.
The Company had a debt of A$2,000,000 owing to Wilzed Pty Ltd and in
order to continue to raise funds for its operations, it needed to
negotiate a repayment of the debt. Wilzed was prepared to accept an
issue of shares of common stock and warrants as repayment. The agreed
issue price of the shares of common stock and exercise price of the
warrants of A$0.20 and A$0.20 respectively was determined by
negotiation with Wilzed. During the month of May 2006, the opening
price for the month was US$0.30 and the low price was US$0.30, on a
turnover of 35,000 shares, according to stockwatch.com. The price of
A$0.20 is further supported as the Company was able to raise further
funds of US$1,542,000 (A$2,000,000) for the Company's operations in
early June 2006 from an unrelated party at a price of US$0.1542
(A$0.20).
GRR had been talking to brokers in Canada about a capital raising for
12-18 months prior to May 2006 and nothing had eventuated. Several
brokers had indicated that if a capital raising was to eventuate, it
would be on the basis that the loans to the Company be converted to
equity. On May 3, 2006 GRR received advice that Pacific International
who had previously advised they could raise CDN$4 million were too busy
to undertake a capital raising.
At the time Golden River Resources Corporation ("GRR") had assets of
$198,000 and liabilities of $2,391,000 per the Company's Form 10-QSB
report at March 31, 2006.
The lack of volume in trading and negative net assets suggested that
the share price was not a true reflection of the fair price of GRR.
The Company believed that the terms of the debt conversion was
in the best interest of and entirely fair to all shareholders for the
following reasons:
o volume of trading in the Company's shares indicated that the
share price was not a reflection of the worth of the Company;
o the Company had negative net assets;
o the Company had not been able to raise finance over the last
12-18 months. Any discussions of financing have had the
conversion of debt to equity as a pre-requisite;
o the debt of the Company needs to be dealt with as part of a
proposed listing on the Toronto Stock Exchange ; and
o if Wilzed's debt was not dealt with and further funds raised, the
Company might have been required to sell its only asset being the
Committee Bay project to raise funds to meet its liabilities
which would have left the Company with no ongoing business.
3. On a related note, please also tell us why you have not recorded a gain
or loss related to the settlement of the loans with Wilzed Pty Ltd.
Please include any applicable accounting literature you relied upon in
arriving at your conclusions.
For the reasons set out in response to question 2, the Company believes
the fair value of the shares and warrants issued to Wilzed equaled the
fair value of the debt converted. Accordingly, the transaction resulted
in no gain or loss on the settlement of the loans.
4. You explain that in March 2004 Kerisridge Pty Ltd. agreed to convert
all of the debt owed to them into shares of your common stock and
warrants. Please tell us how the number of shares and warrants issued
for settlement of the debt was determined.
At the time of the issue of common shares and warrants to Kerisridge
Pty Ltd, the Company had been negotiating a private placement with RAB
Special Situations LP ("RAB"), an unrelated party. The private
placement was at an issue price of US$1.00 per share, with one
attaching warrant for each share issued, at an exercise price of
US$1.30 per warrant and a latest exercise date of 2 years from the date
of issue.
A pre-condition to the private placement was that RAB required all
debts owing to companies associated with Mr. J. I. Gutnick, the
Company's chairman and chief executive officer, be converted into
common stock and RAB agreed that it would be on the same terms and
conditions as agreed in respect to the private placement with RAB.
Note 9 Stockholders Equity, page F-13
5. It is unclear from your disclosures whether your warrants issued during
2004 to 2006 were issued and exercisable in US$ or A$. For all
disclosures regarding the issuance of warrants in Notes 6 and 9, please
confirm whether such warrants were issued and exercisable in US$ or A$.
In respect to the warrants, all 2004 warrant exercise prices are in US$
and for the 2006 warrant exercise prices, the RAB warrants are
expressed in US$ and the Fast Knight Nominees Pty Ltd warrants are
expressed in A$.
6. For each warrant indenture, please tell us the functional currency of
the legal entity that has issued the warrants.
GRR's functional currency is US$.
7. You explain that in June 2006 you commenced a private placement in
which you issued 20,000,000 normal warrants and 10,000,000 special
warrants; and the special warrants may be exercised at any time without
any consideration. Paragraph 10 of SFAS 128 explains that shares
issuable for little or no cash consideration shall be considered
outstanding and included within the computation of basic earnings per
share. Please tell us if the special warrants were included in the
computation of basic earnings per share. If not, please revise your
financial statements and related disclosures to comply with the
guidance in SFAS 128, or tell us why such revisions are not necessary.
No, the special warrants were not included in the computation of basic
earnings per share. The Company will revise the financial statements
and related disclosures as requested. The Company notes that there is a
restriction in the subscription agreement with RAB that states that the
Company cannot process a warrant exercise notice if RAB (and its
associates) would hold more than 9.99%. Accordingly the Company would
only include that number of special warrants in the calculation of
basic earnings per share to take RAB's overall holding to 9.99%.
Note 10 Issue of Options Under Stock Option Plan, page F-14
8. You explain that you utilized the Black Scholes valuation method for
determining the fair value of options issued in 2004, and the
volatility used in such calculations was 20%. Please tell us how you
determined the volatility rate used in this calculation.
The Company determined the volatility by calculating a natural
logarithm of the opening/closing prices for the three months prior to
the date stockholders approved the Plan. This resulted in a volatility
rate of 23.50% which the Directors then considered and determined a
volatility rate of 20% was reasonable.
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
9. In a March 4, 2005 Staff Alert entitled Annual Report Reminders, the
staff of the Division of Corporation Finance reminded issuers that the
certifications required under Exchange Act Rules 13a-14(a) and
l5d-14(a) must be in the exact form set forth in Item 601(b)(31) of
Regulation S-B. We note that the identification of the certifying
individual at the beginning of the certification required by Exchange
Act Rule 13a-14(a) also includes the title of the certifying
individual. In future filings, the identification of the certifying
individual at the beginning of the certification should be revised so
as not to include the individual's title.
We also note that you have replaced the word "report" with "annual
report" or "quarterly report" in paragraphs 2, 3, and 4 of the
certifications in your Form 10-KSB and 10-QSB. Please revise all future
certifications to be in the exact form set forth in Item 601 of
Regulation S-B.
The Company will comply with the Staff's comments in future filings.
Form 10-QSB for the Quarter Ended December 31, 2006
Notes to Consolidated Financial Statements, page 8
Note 6 Issue of Options Under Stock Option Plan, page 9
10. You explain that you calculated the fair value of the 4,650,000 options
issued in October 2006 using the binomial option pricing model. Please
tell us why you have discontinued the use of the Black Scholes pricing
model as used in valuing previous options issued. Please refer to
paragraph A23 of SFAS 123(R). If applicable, please also revise to
provide the disclosures required by paragraph 22 of SFAS 154 regarding
a change in accounting estimate.
Management utilized the services of an external consultant to calculate
the fair value of the options issued in October 2006.
The external consultant recommended the use of the binomial option
pricing model instead of the Black Scholes pricing model.
It was the consultant's and the management's view that given the
options had three vesting periods, the binomial option pricing model
was a more accurate measure of the fair value rather than the Black
Scholes option pricing model.
Black-Scholes ("BS")
BS is generally used to value European options i.e., only capable of
exercise on the date of expiration, and generally used for non-dividend
paying stocks. The BS cannot be used to accurately price American
Options i.e., exercisable anytime before or on expiration. Further BS
generally does not account for performance hurdles in fair value
calculations and BS only prices option at one point in time, and does
not consider the possibility of early exercise.
Binomial
The binomial methodology breaks down the time to expiration into a
number of steps or intervals and can therefore be used to value
American style options, taking into account the possibility of early
exercise and reflect changing inputs over time. This is the preferred
methodology as it is able to capture the valuation impact of any
market-based performance hurdles, for example target share price, that
may not be captured by BS.
11. You also explain that the fair value share price used in the
calculation of fair value for the 4,650,000 options was US$.166. Please
tell us how you determined this fair value share price.
In respect to the fair value share price, the US$0.166 was the same as
the issue price of shares of common stock to Fast Knight Nominees Pty
Ltd and the special warrants issued to RAB.
For the month of October 2006, according to stockwatch.com, the opening
price for the Company was US$0.288, the low price was US$0.288, the
closing price was US$0.288 and the volume was 5,000 shares. This
clearly shows that the market price was not a true reflection of the
fair value share price.
The fair market value is a product of the price a willing buyer will
pay for a share and a willing seller will sell a share.
Given RAB were prepared to pay US$0.166 per share in a private
placement in June 2006, it was management's view that US$0.166
represented a fair value share price.
12. You further explain that the total value of the 4,650,000 options
issued in October 2006 is A$696,976, and that amortization for the six
months ended December 31, 2006 was A$35,814. However, you state that
the remaining unamortized deferred compensation related to these
options is A$494,628. Please reconcile these disclosures for us. Revise
your disclosures if applicable.
The Company will amend this disclosure. The A$696,976 is the A$
conversion of the total USD value of the options at issue date. The
A$35,814 is actually a USD number and should have been A$47,059 and the
remaining unamortized deferred compensation should be A$661,162
(US$489,636).
Management's Discussion and Analysis or Plan of Operation, page 11
Results of Operations, page 11
13. For the three and six month ended December 31, 2006 compared to
December 31, 2005, you explain that revenue increased as a result of
interest earned on monies owed to the company by Axis, and from monies
held in bank accounts. Given the definition of revenues in paragraph 78
of CON 6, and as it does not appear you are in the business of lending
money, please tell us why you believe it is appropriate to present the
amount of interest earned as revenue, and included in the determination
of loss from operations.
The Company will include a further line item between "Revenue" and
"Interest" called "Other Income" to ensure readers of the financial
statements are aware that interest is not from normal operations.
Engineering Comments
Form 10 - KSB for the Fiscal Year Ended June 30, 2006
General
14. To minimize the likelihood that we will reissue comments, please make
corresponding changes where applicable throughout your document. For
example, we might comment on one section or example, but our silence on
similar or related disclosure elsewhere does not relieve you of the
need to make appropriate revisions elsewhere as appropriate.
The Company notes the Staff's comment.
15. If your web site contains disclosure about adjacent or other properties
on which the company has no right to explore or mine, it would be
helpful for you to include the following cautionary language along with
such information:
"This web site contains information about adjacent properties
on which we have no right to explore or mine. We advise U.S.
investors that the SEC's mining guidelines strictly prohibit
information of this type in documents filed with the SEC. U.S.
investors are cautioned that mineral deposits on adjacent
properties are not indicative of mineral deposits on our
properties."
The Company has included such a narrative on its website.
Slave Craton Properties, page 5
16. Disclose the following information for each of your properties:
o The nature of the company's ownership or interest in the property
or concessions.
In respect to the Slave Properties, this is disclosed on page
5 and 6 under the heading "Slave Craton Properties" in
paragraphs 1, 6 - 9.
In respect to the Committee Bay Properties, the Company will
add the following wording to the end of the first sentence on
page 11 under the heading "Committee Bay Belt"
"We own 100% of the mineral title to the Committee
Bay Area properties. All claims are on federally owned ground
and mineral title is administered by the federal government."
o A description of all interests in the properties, including the
terms of an underlying agreements. Explain briefly how Tahera
controls the land position, who ultimately owns the mineral
lights, and any requirements for access, development, and
reclamation on the concessions.
In respect to the Slave Properties, this is disclosed on page
5 and 6 under the heading "Slave Craton Properties" in
paragraphs 1, 6 - 9.
The Company will include a narrative in relation to Tahera's
rights to the land as follows:
"Exploration work undertaken by GRR is subject to the Mining
Land Use Regulations of the Indian and Northern Affairs
Canada Mining Act. This Act requires GRR to obtain permits
prior to performing significant exploration programs and
sets standards that must be met for development and
reclamation.
On April 1, 1999, the Nunavut Land Claims Agreement, dated
May 28, 1993, between the Inuit of Canada's eastern arctic
region and Her Majesty the Queen in right of Canada, came
into force. Under this agreement, the Inuit were granted
ownership of approximately 360,000 square kilometres of land
in an area referred to as the Nunavut Settlement Area,
including ownership of subsurface rights in approximately
37,500 square kilometres of those lands. Third party
interests in lands in the Nunavut Settlement Area created on
or after April 1, 1999 are granted, in the case of surface
rights, by the appropriate regional Inuit association and,
in the case of subsurface rights, by Nunavut Tungavik
Incorporated ("NTI") which will hold subsurface title to
Inuit owned lands and will be additionally responsible, in
consultation with the appropriate regional Inuit
associations, for the administration and management of those
subsurface rights. The Tahera Inuit Owned Lands property
CO-20-00-03R is administered by the NTI. All non-IOL
properties are administered by the Federal Government.
Tahera has the rights under license from the NTI to conduct
exploration on the Slave Craton properties"
o An indication of whether the mining claims are State or Federal
claims.
The Company will amend the disclosure accordingly.
o Certain identifying information, such as the property names,
claim numbers, grant numbers, and dates of recording and
expiration; sufficient to enable the claims to be distinguished
from other claims that may exist in the area.
This information is disclosed in Appendix B to the Form
10-KSB.
o The conditions that must be met to retain your claims, leases,
options or concessions, including quantification and timing of
all necessary payments.
In respect to the Slave Properties, this is disclosed on page
6 in paragraph 4 and in respect to the Committee Bay
properties, on page 11 in the last paragraph. Furthermore,
pages 15 and 16 contain a narrative of Regulation - Mining in
Canada.
o Expiration dates for these agreements, claims or leases.
This is disclosed in Appendix B to the Form 10-KSB and in the
narrative on the Slave Craton Properties in respect to the
Tahera agreement.
o The area of the claims, either in hectares or acres.
This information is disclosed in Appendix B to the Form 10-KSB
in respect to the Slave Craton Properties and on page 11 in
paragraph 4 under the heading Committee Bay Belt in respect to
the Committee Bay Properties. There is also a list of the
landholdings in Appendix B to the Form 10-KSB in respect to
the Committee Bay Properties however it does not specify the
area of the claims. We will update this list to disclose the
area of the claims.
Please ensure that you fully discuss the material terms of the land or
mineral rights securing agreements, as required under paragraph (b)(2)
of Industry Guide 7.
17. We note your disclosure in this section, referring to mines and other
mineral properties that exist in the area of your property. Such
disclosure may cause investors to infer that your property also has
commercial mineralization, because of its proximity to these mines and
properties. Accordingly, we believe that you should remove information
about any mines, prospects, or companies operating in or near to the
property; and instead focus the disclosure solely on your company's
property.
The Company will amend the disclosure in line with the examiners
comments.
Location, page 6
18. Insert a small-scale map showing the location and access to each
property, as required by Item 102 of Regulation S-K. Note that SEC's
EDGAR program now accepts Adobe PDF files and digital maps, so please
include these maps in any 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 figures and
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 additional assistance is required, please call Filer Support at
202-551-8900. We believe the guidance in Instruction 1(a) to Item 4.D
Rule 102 of Regulation S-K would generally require maps and drawings
with the following features:
o A legend or explanation showing, by means of pattern or
symbol, every pattern or symbol used on the map or drawing.
o A graphical bar scale should be included. Additional
representations of scale such as "one inch equals one mile"
may be utilized provided the original scale of the map has
not been altered.
o A north arrow.
o An index map showing where the property is situated in
relationship to the state or province, etc., in which it was
located.
o A title of the map or drawing, and the date on which it was
drawn.
o In the event interpretive data is submitted in conjunction
with any map, the identity of the geologist or engineer that
prepared such data.
Any drawing should be simple enough or of sufficiently large scale to
clearly show all features on the drawing.
The Company will amend the disclosure in line with the examiners
comments.
19. Please disclose the information required under paragraph (b) of
Industry Guide 7 for all material properties listed under this heading.
For any properties identified which are not material, include a
statement to that effect, clarifying your intentions. For each material
property, include the following information:
The location and means of access to the property, including
the mode of transportation utilized to and from the property.
In respect to the Slave Properties, this is disclosed on page
6 under the heading Access, Infrastructure, Local Resources
and in respect to the Committee Bay properties, on page 12
under the heading Access, Infrastructure, Local Resources.
Any conditions that must be met in order to obtain or retain
title to the property.
In respect to the Slave Properties, this is disclosed on page
6 in paragraph 4 and in respect to the Committee Bay
properties, on page 11 in the last paragraph. Furthermore,
pages 15 and 16 contain a narrative of Regulation - Mining in
Canada.
A brief description of the rock formations and mineralization
of existing or potential economic significance on the
property.
In respect to the Slave Properties, this is disclosed on page
7 under the heading Geological Setting and in respect to the
Committee Bay properties, on page 14 under the heading
Geological Setting.
A description of any work completed on the property and its
present condition.
In respect to the Slave Properties, this is disclosed on page
7 under the heading History and on pages 9 through 11 under
the heading Work Programs, Further Exploration and Recent
Exploration and in respect to the Committee Bay properties, on
pages 14 and 15 under the heading Work Program and Geophysical
Survey.
o The details as to modernization and physical condition of the
plant and equipment, including subsurface improvements and
equipment.
There is no plant and equipment.
o A description of equipment, infrastructure, and other facilities.
There is no significant equipment that has been used for
exploration.
o The current state of exploration of the property.
In respect to the Slave Properties, this is disclosed on page
7 under the heading History and on pages 9 through 11 under
the heading Work Programs, Further Exploration and Recent
Exploration and in respect to the Committee Bay properties, on
pages 14 and 15 under the heading Work Program and Geophysical
Survey.
o The total costs incurred to date and all planned future costs.
In respect to the Slave Properties, the Company will amend the
disclosure and in respect to the Committee Bay properties, it
is disclosed on page 14 under the heading Work Program.
The source of power and water that can be utilized at the
property.
Power is provided through hired generators and water is
available through the third party camp sites the Company is
able to use. The Company will amend the disclosure to make
this clearer.
o If applicable, provide a clear statement that the property is
without known reserves and the proposed program is exploratory in
nature.
This is disclosed on page 5 in the second paragraph under the
heading, Introduction, on page 8 in the second paragraph. The
Company also notes that there is a risk factor (number two) on
page 17.
You may refer to Industry Guide 7, paragraphs (b)(1) through (5), for
specific guidance pertaining to the foregoing, available on our website
at the following address:
20. In the fourth paragraph of this section you refer to a grade range of
anomalous to 24 gpt gold values. As a general checklist, when reporting
the results of sampling and chemical analyses, the following points may
assist you in preparing meaningful disclosure about mineralization of
existing or potential economic significance on your property:
o Disclose only weighed-average sample analyses associated with a
measured length or a substantial volume.
o Eliminate all analyses from "grab" or "dump" samples, unless the
sample is of a substantial and disclosed weight.
o Eliminate all disclosure of the highest values or grades of
sample sets.
o Eliminate grades disclosed as "up to" or "as high as" or "ranging
from."
o Eliminate statements containing grade and/or sample-width ranges.
o Aggregated sample values from related locations should be
aggregated based on a weighted average of lengths of the samples.
o Generally, use tables to improve readability of sample and
drilling data.
o Soil samples may be disclosed as a weighted average value over an
area.
o Refrain from reporting single soil sample values.
o Convert all ppb quantities to ppm quantities for disclosure.
o Please revise all your disclosures to comply with this guidance.
The Company will amend the disclosures as requested.
21. We recommend that a brief description of the QA/QC protocols be
provided to inform readers regarding sample preparation, controls,
custody, assay precision and accuracy. This would apply to exploration
and operational analytical procedures.
The Company will amend the disclosures as requested.
Property History, page 13
22. The forth paragraph on this page describes a resource estimate
disclosed by Committee Bay Resources (CBR). The provisions in Industry
Guide 7 preclude the use of any terms other than proven or probable
reserves for disclosure in SEC documents. Please remove all resource
estimates from the filing.
The Company will amend the disclosures as requested.
23. You describe ore grade gold values in the seventh paragraph on this
page. Please define the ore grade values and provide additional
information to support your assertion that this cutoff grade would be
economic and include the parameters used to develop this estimate.
These parameters must also realistically reflect the location, deposit
scale, continuity, assumed mining method, metallurgical processes,
costs, and reasonable metal prices.
The Company will amend the disclosures as requested.
We have attached a copy of the proposed amendments to the disclosure of
the general section of the Form 10-KSB for your review.
On behalf of the Company we hereby acknowledge the following:
o the Company is responsible for the adequacy and accuracy of
the disclosure in the filing;
o 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
o 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.
If you have any questions concerning the responses, please do not
hesitate to call me at 011-61-3-8532-2866.
Yours faithfully
/s/Peter Lee
PETER LEE
Director, CFO & Secretary
Description of Business
Introduction
We are an exploration stage company engaged in the identification,
acquisition, exploration and development of mining prospects believed to have
gold mineralization. The main objective is to explore, identify, and develop
commercially viable prospects over which we have rights that could produce
revenues. These types of prospects may also contain mineralization of metals
often found with gold, such as platinum and silver and other `base metals'
(copper, nickel, lead, zinc) which also may be worth processing. Exploration and
development for commercially viable mineralization of any metal includes a high
degree of risk which careful evaluation, experience and factual knowledge may
not eliminate, and therefore, we may never produce any revenues.
We hold properties in Nunavut, Canada. Golden River Resources holds
interests in the Slave Craton area within Nunavut and our currently owned 100%
subsidiary; Golden Bull Resources holds various prospects in the Committee Bay
Greenstone Belt in Nunavut. We are in the initial stages of exploration programs
and have not yet identified any ore reserves.
Please note that the Glossary in Appendix A to the Annual Report
contains definitions for the geological and other specialized terms used in this
section.
Slave Craton Properties
During 2002, we reached an agreement with the Canadian company, Tahera
Diamond Corporation, to explore for gold on Tahera's extensive properties on the
Slave Craton in Nunavut, Canada. At that time, Tahera's Slave land package
included 177 properties and 11 Inuit Owned Land ("IOL") Concessions covering
approximately 471,000 acres. Tahera is a diamond mining company conducting
diamond exploration in the northern Slave Craton and brought its Jericho diamond
pipe into production in 2006.
Tahera has an extensive database of data to which we have access,
including geophysical surveys, overburden and bedrock mapping, overburden
sampling and drilling data. We have agreed to pay them a two percent net smelter
return royalty on any production from gold and base metals we discover having
used Tahera's extensive database.
We believe there are some exceptional gold targets on Tahera's ground;
principally in the High Lake Volcanic Belt, and in the Contwoyto Formation.
Within the High Lake Volcanic Belt, the target is a silicified
shear-hosted gold deposit. The exploration target on the Contwoyto properties is
a banded iron formation hosted gold deposit. There has been no commercial viable
gold, silver or base metal mineralization identified on the properties to date.
We have included a list of the mining properties that are covered under
our agreement with Tahera in Appendix B to this Annual Report.
The agreement with Tahera dated March 7, 2002 gives us rights of access
to exploration data of Tahera covering gold, silver and base metal potential on
properties 100% held by Tahera or properties which are adjacent to or in the
area of the Tahera properties. If during our exploration for gold, silver or
base metals on the 100% Tahera held mineral properties, we discover diamonds,
Tahera retains the rights to the diamonds. Under the agreement, if we wish to
conduct exploration on the properties, we need to seek access to the properties
and enter into an access agreement with Tahera, suitable to Tahera, which sets
out the terms of our access. Our access cannot interfere with Tahera's
operations on the properties. Tahera has the sole and unfettered discretion to
sell, transfer, assign, encumber, mortgage, pledge, hypothecate, allow to lapse,
forfeit, surrender or in any way dispose of its interest in the properties.
Should Tahera sell, transfer, assign the properties, we would then need to
negotiate access with the new holder of the properties. We undertake exploration
at our sole risk. Subject to Tahera's rights, we have the right to exploit
opportunities for gold, silver or base metals on the properties. In return, GRR
has granted Tahera a 2% net smelter return royalty on any mineral deposit
discoveries that GRR may identify.
We entered into access agreements with Tahera for the 2004 and 2006
exploration programs.
Each of the properties has minimum exploration expenditure commitments
on an annual basis to retain the rights for the property. The minimum
commitments can be met by actual exploration expenditure or by making a cash
payment in lieu of exploration expenditure. Expenditures by both Tahera and GRR
are counted towards the commitment. In 2004 and 2005, the commitments were met
by a mixture of exploration expenditure and cash payments by both Tahera and
GRR. As a result, the properties are available for exploration in 2006 and
subject to the commitments being met in 2006, will be available for exploration
in 2007.
Exploration work undertaken by GRR is subject to the Mining Land Use
Regulations of the Indian and Northern Affairs Canada Mining Act. This Act
requires GRR to obtain permits prior to performing significant exploration
programs and sets standards that must be met for development and reclamation.
On April 1, 1999, the Nunavut Land Claims Agreement, dated May 28,
1993, between the Inuit of Canada's eastern arctic region and Her Majesty the
Queen in right of Canada, came into force. Under this agreement, the Inuit were
granted ownership of approximately 360,000 square kilometers of land in an area
referred to as the Nunavut Settlement Area, including ownership of subsurface
rights in approximately 37,500 square kilometers of those lands. Third party
interests in lands in the Nunavut Settlement Area created on or after April 1,
1999 are granted, in the case of surface rights, by the appropriate regional
Inuit association and, in the case of subsurface rights, by Nunavut Tungavik
Incorporated ("NTI") which will hold subsurface title to Inuit owned lands and
will be additionally responsible, in consultation with the appropriate regional
Inuit associations, for the administration and management of those subsurface
rights. The Tahera Inuit Owned Lands property CO-20-00-03R is administered by
the NTI. All non-IOL properties are administered by the Federal Government.
A list of the mining properties that are covered under the Tahera/GRR
agreement appears as Appendix B to this Annual Report. Exploration interest is
currently focused on the CO-20-00-03R IOL concession.
The claims are maintained in good standing by applying an annual work
commitment or a payment in lieu of work. Fees and exploration expenditures
associated with the maintenance of Tahera Corporation's ground covered under the
Slave Craton Agreement with Golden River Resources are the responsibility of
Tahera.
Location
Hood River Ground
The Hood River mineral properties and Inuit Owned Land Concessions are in the
High Lake Volcanic Belt located in the northwest section of the Slave Structural
Province in the Mackenzie District of Nunavut. The land holdings include 4
mining properties totalling 10,330 acres, and the Hood River CO-20-00-03R IOL
concession which encompasses 15,454 acres. Only the IOL concession is within the
greenstone component of the High Lake Volcanic Belt and therefore of exploration
interest to us. The approximate center of the Inuit Concessions is about 45
kilometers north of the Arctic Circle, and 530 kilometers north-northeast of
Yellowknife. The IOL Concessions are held 50:50 by Benachee Resources Inc. and
Snowpipe Resources Ltd. (both wholly owned by Tahera). There are no known
encumbrances on the concessions.
See supplemental PDF for graphic
FIGURE 1. Location of the Project Area within Nunavut and the Slave Structural
Province.
See supplemental PDF for graphic
FIGURE 2.- Location of the Properties Covered By the Tahera / Golden River
Resources Agreement. Lakes and rivers are shown in blue; the
Contwoyto IOL concession blocks are indicated by the green filled
polygons. The Hood IOL concession is indicated as black filled
polygons and labeled as the "Hood Group" (modified: January 18, 2007)
Contwoyto Lake Ground
The CO-08 IOL Concession is underlain by the Contwoyto Formation on the
east side of Contwoyto Lake. The original C0-08 Concession Agreement totalled
65,250 acres and is located in the Mackenzie District of Nunavut. The
approximate center of the C0-08 Concession is about 100 kilometers south of the
Arctic Circle, 100 kilometers north-northwest of Lac de Gras, and 380 kilometers
north-northeast of Yellowknife. The C0-08 Concession Agreement is held 50:50 by
Benachee Resources Inc. and Snowpipe Resources Ltd. (both wholly owned by
Tahera). There are no known encumbrances on the concessions.
Access, Infrastructure, Local Resources
Access to all the areas in the Slave Craton is by aircraft. In summer
months, float equipped aircraft may land on local lakes of appropriate size
including Contwoyto Lake, Napatulik Lake, Penthouse Lake (unofficial name), and
Carat Lake. In addition, airstrips are available for fixed wing aircraft
equipped with tundra tires at the Lupin mine site, the Ulu mine site, and
Tahera's Carat Camp (Jericho). Helicopter support is needed to mobilize
personnel from camp sites to the property areas. The winter road which links
Yellowknife to the Lupin mine site on Contwoyto Lake has historically been used
for economical transportation of supplies in winter months. This road has since
been extended to Tahera's Carat Camp.
Tahera's properties are located in the treeless Arctic within the zone
of permafrost. The weather in the property areas is typical of the continental
barren lands which experience cool summers and extremely cold winters. Winter
temperatures can reach -45 degrees. Summer temperatures are generally in the 5
to 10 degree Celsius range but can reach the high 20's degrees Celsius. Average
annual snowfall rarely exceeds 1 meter, most of which falls during autumn and
spring storms. Small lakes are clear of ice usually by the third week in June
and start freezing over again in late September.
The topography of the area consists of low rolling hills with areas of
low-lying swampy muskeg. Local relief is low, rarely exceeding 150 meters.
The closest community with regularly scheduled air service is Kugluktuk
(formerly Coppermine) which is 145 kilometers northwest of the
Anuri/Rockinghorse concessions and 200 kilometers northwest of the Hood River
concessions. First Air has scheduled flights everyday from Yellowknife to
Kugluktuk. The main centre for transportation to the properties is through
Yellowknife, 530 kilometers southwest of the Hood River concessions, and 410
kilometers southwest of the Contwoyto concessions. Fixed wing and helicopter
charter services are available in Yellowknife, as are all supplies (groceries,
lumber, fuel, etc.) and expediting services. Additional existing infrastructure
to help service the land holdings includes Tahera's Jericho minesite and
Woldens' Lupin and Ulu minesites. There is currently no infrastructure on the
Contwoyto IOL concessions.
Exploration History
There are currently no known gold, silver or base metal mineral
reserves identified on the Hood or Contwoyto IOL concessions. All work
undertaken in the past has been strictly exploratory in nature.
All previous work reported by companies is quoted from open file
government assessment reports. For the Slave Craton land holdings non
diamond-related exploration activities are emphasized as these relate to our
interest and exploration agreement with Tahera. Specifically, previous
exploration work on the Hood River/High Lake and Contwoyto Lake land holdings
are detailed as these are deemed to be most prospective for gold.
Hood River/ High Lake Belt
Exploration around and directly within the Hood River properties began
in 1965 and over the years has included sampling, mapping, trenching, and
drilling, as well as ground and airborne geophysical surveys.
In 1989 the Ulu gold deposit was discovered. Previous efforts directly
on our Hood properties have outlined several key areas of anomalous gold
mineralization which include the Penthouse, Blackridge, Crown and the North Fold
Nose areas.
In 1999 the Nunavut Land Claims Agreement came into effect and granted
surface ownership of about 360,000 square kilometers of land to the Inuit, of
which they have the subsurface rights for approximately 37,500 square
kilometers. Nunavut Tungavik Incorporation (NTI) is the entity through which
these subsurface rights are administered. The areas around Ulu that in the Hood
River (CROWN, DEN, FIDO and ULU) were ultimately incorporated into NTI lands,
with the exception of the original ULU claim.
In March, 2003, Strongbow Resources Inc. and Nunavut Tungavik
Incorporated announced an agreement whereby Strongbow could explore a large
parcel of land which covers all the south half of the High Lake Greenstone Belt
and borders Tahera's IOL concession on the east, south, and west.
Contwoyto Formation
Following the discovery of the Lupin Mine on the western shore of
Contwoyto Lake in 1960, exploration for additional Lupin-style banded iron
formation hosted gold deposits commenced throughout the Contwoyto Formation.
This resulted in the discovery of a number of prospects many of which occur on
Tahera's Contwoyto properties.
Significant results that substantiate the gold prospectivity of the
region have been reported on several key areas which include the R43-R45, the
R44-R47, the 5-5, and the Ox prospects.
Diamond exploration began in the area in 1993. Discovery of several
kimberlite bodies prompted a helicopter-borne EM and magnetic survey over 110
square kilometers in the Contwoyto Lake area. A part of the Tahera data set this
survey has delineated a number of prospective iron formations.
Geological Setting
The Slave Structural Province encompasses an elliptical area 500
kilometers wide by 750 kilometers long and is located between Great Slave Lake
to the south and Coronation Gulf to the north.
The Yellowknife Supergroup, important for ore deposits, occurs as
twenty-six linear volcanic belts surrounded by granitic batholiths. These belts
are typically isoclinally folded and largely range in age from 2715-2671 million
years. The belts have been divided in the literature into mafic
volcanic-dominated (Yellowknife-type) and felsic volcanic-dominated (Hackett
River-type). Yellowknife-type volcanic belts are dominated by massive to
pillowed basalt flows with lesser amounts of felsic volcanic and volcaniclastic
rocks, clastic sedimentary rocks and occasionally synvolcanic conglomerate and
carbonate units. The Hackett River-type belts are defined by the abundance of
calc-alkaline felsic and intermediate volcanic rocks intercalated with
turbidite.
At least five episodes of Proterozoic diabase dyke "swarms" (2400
million years - 600 million years) have been recorded in the Slave Structural
Province. These dyke sets form local positive relief where they intrude easily
eroded lithologies such as the metaturbidites and negative relief in areas where
they are juxtaposed with granites and gneisses.
No known gold, silver or base metal mineral reserves are known on our
land. All previous programs have been exploratory in nature.
Prospects
Hood River Ground
High grade gold prospects are found within a 9 by 7 kilometer block in
the west-central portion of the High Lake belt. Four main mineralized areas
occur; the North Fold Nose, Penthouse, Crown and Blackridge. The mineral
prospects on the properties occur in rocks of the same age and nature as at the
Ulu gold deposit where gold occurs in brecciated basaltic wallrock clasts which
are replaced by acicular arsenopyrite + quartz + K-feldspar.
There is a spatial relationship between the gold bearing zones of the
Ulu deposit with the axial trace of the ULU anticline. The properties cover the
northern most two kilometers of this important fold axis. Several gold bearing
zones have been previously identified in this area. In one area along the axis,
a one meter wide quartz vein, outcrops for over 40 meters and contains
arsenopyrite, pyrite, pyrrhotite, chalcopyrite, and native copper. Highly
anomalous silver and bismuth were also returned from these samples.
Further mineralized zones were discovered in the central fold of the
North Fold Nose. A highly anomalous gold value was produced within the prospect
area from narrow quartz-pyrite vein rubble.
Previous exploration has outlined five zones of gold mineralization on
the Crown prospect (now largely within the properties). At the "Main Zone",
several highly anomalous gold values were returned from an 800 meter long
silicified basalt/biotite schist contact. Seven trenches were dug in the Main
Zone area. Silicified zones up to 6 meters wide with arsenopyrite were noted.
The "B" zone is parallel to and 80 meters east of the Main Zone. The structural
setting and mineralogy here is similar to the Main Zone. Elevated gold values
have been identified over a distance of 450 meters and the zone is reported open
to the north. Elevated gold values were also reported from grab samples of
silicified basalt and sediments with arsenopyrite in the "Western Zone" and in
the folded stratigraphy of the "Eastern" and "Fold" zones.
To the northwest of the Crown prospects are the Penthouse prospects.
The original sampling on the South Penthouse grid returned anomalous gold
values. The highest grade sample was from a silicified north-trending shear zone
which was traceable for 200 meters. A northeast trending shear, traceable for
250 meters on the North Penthouse area returned significant gold result from
narrow arsenopyrite bearing veins. Additional highly prospective zones of
mineralization have been identified in the Penthouse area.
Polymetallic quartz veins in the area contain highly elevated silver
values along with anomalous zinc, lead, cadmium, and antimony values. This style
of mineralization is very similar to the auriferous polymetallic quartz vein at
the Northern Fold Nose on the historic ULU 2 claim.
Five principal styles of mineralization were identified by BHP on the
Penthouse grid, namely i) Auriferous silicified zones with arsenopyrite in
sediments; ii) Auriferous arsenopyrite-bearing quartz veins at mafic
volcanic-sediment contacts; iii) Auriferous polymetallic quartz veins
transecting the mafic volcanic stratigraphy; iv) Stratabound massive sulphide
mineralization at the mafic volcanic-sediment contact; and v) Auriferous
polymetallic quartz veins hosted by sediments adjacent to the same mafic
volcanic-sediment contact.
Massive sulphide mineralization is present as discontinuous pods up to
1.5 meters thick along the western basalt-sediment contact on the south
Penthouse grid. Historically, anomalous values of gold, silver, copper lead and
zinc were returned from surface grab sampling. No drilling was carried out on
this prospect.
South of the Crown prospects, across the southeastern edge of a
granitic intrusion is the Blackridge prospect last worked by Aber Resources Ltd.
The mineralization here consists of an altered and locally brecciated
gabbro-hosted silicified zone. The principal mineralized zone has been traced
for at least 700 meters northeast and is 2.5 - 3.5 meters wide. Anomalous gold
values have been identified along this structure
Contwoyto Property
More than 100 iron formation-hosted gold occurrences occur in the Point
Lake - Contwoyto Lake meta-sediment sequence. The most notable gold-bearing iron
formation in the vicinity is the Lupin gold mine. Mineralization specific to the
properties includes a number of significant iron formation hosted gold prospects
including the R43-R45, the R44-R47, the 4-2 grid, the Ox, and the 5-5 grid
prospects.
The R43-R45 prospect is hosted by a Z-shaped folded iron formation up
to 10 meters wide and traceable for over 1.3 kilometers. The area is mainly
unsampled. The geology, mineralization, alteration and structure are extremely
similar to the Lupin gold mine (located just 28 kilometers to the west) where
gold mineralization is in a "Z" folded iron formation with pyrrhotite and
arsenopyrite. The R43-R45 "Z" fold is of the same magnitude as Lupin. No
drilling has ever been reported here.
The R44-R47 prospect is hosted by an iron formation up to 5 meters wide
and traceable on surface for 1.9 kilometers. Significant gold values have been
returned from surface sampling; however, no drilling has been reported.
On the 4-2 prospect, previous explorers have traced a sulphide-rich
iron formation, in boulders up to 2 meters in size, on surface for 200 meters.
Significant gold assays have been returned; however, no follow-up drilling
appears to have been done.
Within the Ox prospect, sampling of the iron formation returned gold
values from a pyrrhotite-rich boulder. One drill hole was conducted at the
prospect and intersected two separate iron formation horizons, 8.2 meters apart.
Both the upper and lower iron formation returned gold from assays.
On the 5-5 prospect, several east-west trending, 300 to 2,700 meters
long EM conductors have been outlined. A total of six iron formations have been
identified, four of which are coincident with the EM conductors. Sulphide rich
boulders of iron formation at the southwest section of Grid 5-5 yielded gold
values. The "Fox A" prospect is also within the 5-5 Grid area and the iron
formation is 33 meters wide and 220 meters long and has returned gold values.
Drilling in 1987, on the 5-5 prospect, included 8 holes totaling 942 meters. All
eight holes intersected iron formation and returned gold from a section
containing pyrite, arsenopyrite and pyrrhotite. Four short drill holes on the
5-5 grid in 1988 tested a folded iron formation as outlined by an IP survey. DDH
88-4, drilled 225 meters west of an earlier high grade intercept, intercepted a
further significant gold intersection in pyrite-rich siliceous iron formation. A
further high grade surface prospect in arsenopyrite and quartz- rich iron
formation boulders was apparently not drilled. The other drill holes intersected
siliceous +/- sulphidic iron formation ranging from 5.7 to 15.0 meters thick.
Work Programs
The first phase of the Company's planned exploration programs over the
Hood River and Contwoyto IOL claim groups was carried out in August 2004 and
consisted of exploration mapping, sampling and prospecting. This initial program
was designed to follow up and assess geophysical and geological anomalies
reported by previous workers with a focus on targeting and expanding areas for
phase two work.
Hood River Ground
Golden River Resources spent $104,446 on exploration on the Hood River
IOL Concessions. Four key areas warrant further investigation.
Northern Fold Nose - This zone is located approximately 3 kilometers
north of the ULU deposit and is thought to be part of the major fold structure
which hosts the ULU deposit. Additional mineralized zones were discovered within
the Northern Fold Nose area than previously described. Acicular arsenopyite was
noted in narrow shears within silicified basalt just south of the Northern Fold
Nose. Chip sampling of the exposed veins during the 2004 field season yielded
several samples carrying anomalous gold values.
Penthouse - The Penthouse prospects are underlain by a geologically and
structurally complex package of mafic volcanic and metasediments. The
metasediments are thought to form the conduit for mineralizing fluids. Gabbroic
sills occur within the mafic volcanics and sediments and form marker horizons
outlining the structural complexity of the area.
A total of 65 samples were taken in the North Penthouse area; 36 per
cent of the samples taken from this area yielded anomalous gold assays.
A total of 53 samples were taken from the South Penthouse area with 15
per cent returning anomalous gold values. In both of the Penthouse areas, the
samples exhibited a strong, positive arsenic-gold relationship.
Analysis of airborne geophysical data suggests that the South and North
Penthouse areas are actually one zone that is over 2 kilometers in strike
length.
Crown - The 2004 field work consisted largely of examining and sampling
of the trenches in this area. A total of 60, 1.0 meter to 1.5 meter chip samples
were taken from these trenches and 32 per cent of these samples returned with
anomalous gold values.
Blackridge area - The main prospect occurs along a gabbro-sediment
contact. The previously described linear mineralized contact zone was extended
to slightly over 750 meters.
Anomalous results were returned from siliceous metavolcanics and
metasediments with the highest gold values being returned from trenches cut into
the gabrro - metavolcanic/metasediment contact zone. A total of 39 samples were
taken from this area. Elevated gold and copper values were noted. A total of 40
per cent of the samples taken returned anomalous gold values. Overall, our 2004
results were an improvement over the reported historical results.
Contwoyto IOL Concessions
We spent CDN$109,057 on exploration on the Contwoyto IOL Concessions.
Some key areas that warrant further investigation include:
Grid 5-5 Area - Field work revealed the area to be underlain by a
package of amphibole-rich, silicate facies iron formation This area produced the
best gold results in the Contwoyto concessions. Geophysics indicated the zone
trends west, off shore, into the lake proximal to the Grid 5-5 zone.
Ox Prospect - The area is underlain by a sulphide-poor, silicate facies
iron formation, 100 meters wide which extends over 150 meters to the northeast.
Interbedded turbidite, biotite schist/greywacke and coarse to fine-grained,
heavily oxidized amphipobilite occur north of the claim block. Mineralization is
largely fine-grained pyrite and pyrrhotite with minor chalcopyrite and rare
malachite mineralization. The sampling program on the Ox grid fold zone yielded
consistent, anomalous gold values.
An airborne geophysical survey has outlined a number of strong magnetic
anomalies that have no surface expression. These areas require further
investigation.
Further Exploration
Subsequent to the completion of the 2004 exploration program, the IOL
concession area in the Contwoyto Lake was dramatically reduced from 65,250.8
acres to 21,533.1 acres. All prospective ground was retained. The area reduction
was done in conjunction with Tahera and it served to also greatly reduce the
amount of exploration assessment requirement for this area. A program of
approximately $63,300 would be required to maintain the ground into 2006. A
small portion of the Hood River IOL Concession area was also reduced with all
prospective ground retained for further exploration. Due to large exploration
expenditures by Tahera within these concessions prior to 2005, there was no
exploration assessment spending required during 2005 to maintain this ground.
As a result of the 2004 field season, several areas have emerged as
having a strong potential for hosting gold mineralization, based on geological,
mineralogical and structural criteria and as such require further examination. A
program of detailed structural mapping is planned in order to understand the
complex structural environment. Further work will include detailed sampling and
ground geophysics over key anomalous areas with a follow up drilling program.
The ULU deposit was discovered within two years through a similar approach.
The most immediate target area for drilling will be the Penthouse
prospect in the Hood River area. The two `north' and `south' zones have been
shown to be actually one zone by the airborne geophysical data. The prospect
contains anomalous gold values and is likely part of the same structure as hosts
the Ulu gold deposit to the west.
Recent Exploration
In late July 2006, Golden River mobilized equipment and personnel to further
prospect, assess and evaluate the Contwoyto Lake and Hood River areas. The work
program was to follow up Golden Rivers' highly successful 2004 examination with
a focus on highlighting key areas for drilling in the planned winter drill
program.
During this summer field program, 901 samples were taken and several areas were
targeted as key regions for future work based on current geological modelling,
the re-assessment of historical work and sample results from the 2004 program.
All samples were sent for preparation and analysis by Acme Analytical
Laboratories Ltd. Samples will be analysed with a 36 element geochemical
procedure and gold Fire Assays will be conducted where warranted. All 2006 assay
results are due by mid October 2006 due to the backlog in assay laboratories in
Canada.
The field program and sampling was under the direct supervision of Bruce Goad,
P. Geo., a Qualified Person under the applicable Canadian disclosure regulations
for mineral exploration companies.
Contwoyto Lake Area
Numerous new zones of banded iron formations were identified in this summers'
program. Principle areas within the property include thick sequences of banded
iron formation with strike lengths of over several kilometres. With the use of
recent airborne geophysical surveys and new structural data, Golden River has
outlined favourable gold-bearing deformation zones of the iron formation that
appear similar to the nearby Lupin Mine. Assay results are due by mid October
2006.
Hood River Area
Several areas within the High Lake area returned anomalous gold results
collected during our sampling program in 2004 and 2006.
Several prospective zones were re-examined; however, the Penthouse area became
the main focus of the 2006 Hood River assessment. Here, a large 3 kilometer zone
of sheared and brecciated siliceous basalts and sediments occurs that may be
analogous to the nearby Ulu deposit. Arsenopyrite mineralization is abundant and
appears structurally controlled. Assay results are due by mid October 2006.
Golden River is very encouraged by the 2006 exploration program which was
successful in finding new locations of strong mineralization this field season.
Following the field investigation program, the characteristics and prospectivity
of the Penthouse zone are better understood and the area presents an excellent
drill target. Our planned drill program is expected to take place during the
2006-2007 winter months.
Committee Bay Belt
In June 2002, we staked land in the highly prospective Committee Bay
Greenstone Belt. GRR owns 100% of the Committee Bay Area properties. All claims
are on federally owned ground and mineral title is administered by the federal
government.
The Committee Bay Greenstone Belt is located approximately 240
kilometers northeast of Baker Lake in Nunavut, Canada and is believed to
represent the largest under-explored greenstone belt in North America, with
potential to host world-class gold deposits.
The geology is highly prospective for banded iron formation hosted gold
mineralization (as in the 3 million ounce Meadowbank and the 4.6 million ounce
Meliadine gold deposits located to the south of the properties, north the
hamlets of Baker Lake and Rankin Inlet, respectively). Our properties protect
several auriferous iron formations. In addition to the banded iron formation
hosted gold targets, this belt has potential for shear-hosted lode gold,
Witswaterstrand style gold, komatiite hosted stratiform nickel-copper (Kambalda
analogy), and platinum group elements ("PGE's") in layered igneous complexes
(Laughland Lake Anorthosite Suite).
Originally 29 properties were staked comprising a land area of 71,694
acres in the Committee Bay Greenstone Belt in central Nunavut, Canada. These
properties were recorded on October 16, 2002. From the original area we retained
a total of 49,439.48 acres on 21 properties. To keep the properties in good
standing, we needed to spend a total of CDN$197,798 of assessment work by
October 16, 2004. A total of CDN$98,879 (CDN$2 per acre) is required in each
subsequent year up to 2012 (at which point a decision to bring the properties to
lease must be made). During the 2004 field season, we spent CDN$1.567 million on
exploration and all amounts in excess of the commitment can be offset against
future commitments. As a result of the amount we spent during 2004, we have
already met the expenditure commitment until 2012. We have included a list of
our mining properties in the Committee Bay Greenstone Belt in Appendix B to this
Annual Report.
Location
The Committee Bay Claims are located 245 to 365 kilometers northeast of
the town of Baker Lake (Qamani'tuaq), Nunavut, Canada, or 210 to 320 kilometers
west to southwest of the town of Repulse Bay (Ngoldjat). The community of
Kagaaruk (formerly Pelly Bay) is 190 to 305 kilometers northeast of the claim
groups. Our land holdings in the Committee Bay Greenstone Belt include 21
properties in 10 claim blocks. These properties total approximately 49,439.48
acres and all were recorded on October 16, 2002.
See supplemental PDF for graphic
Figure 3.- Location of Committee Bay Area Properties
Access, Infrastructure, Local Resources
Access to the properties is by fixed wing aircraft. Alternatively,
float equipped planes have the option of landing at some of the larger lakes
(Laughland Lake for example) or on sections of the Hayes River. Helicopter
support is required to mobilize personnel from camp to the property areas.
The Committee Bay Greenstone Belt lies within the zone of permafrost.
The mean annual temperature of -20oC reflects its Arctic location (the Arctic
Circle transects the property area). The climate is typical of the Eastern
Arctic with average temperatures in the winter months of -30oC to -35oC, and
+10oC to +12oC in the summer. The ground remains snow covered for more than 250
days a year (generally September to June). Rivers break up in June and lakes are
ice bound until mid July.
The project area is on the northern section of the Wager Plateau, a
shield area that has been significantly modified by glacial processes.
Elevations range from 122 meters above sea level in the southwest to 560 meters
above sea level in the northeast.
The closest community with regularly scheduled air service is Baker
Lake, about 350 kilometers to the southwest. Canadian North and First Air
flights arrive from Yellowknife and Iqaluit. Calm Air flies from Winnipeg to
Rankin Inlet (Kangiqliniq) and then on to Baker Lake daily except Sundays.
Kivalliq Air flies from Cambridge Bay (Qaluktuuttiaq) to Baker Lake enroute to
Rankin Inlet. Fuel and expediting services are available in Baker Lake. There is
little infrastructure in the claim area apart from the Committee Bay Resources
Hayes River camp which has a winter airstrip and fairly regular supply flights.
Property History
All previous work reported by companies is quoted from open file
government assessment reports.
Following the release of Heywood's original geology map of the area in
1961, several exploration companies performed work in the Committee Bay
Greenstone Belt. The nickel-copper potential of ultramafic rocks was the primary
target of this first exploration wave. In 1969 to 1970, explorers mapped,
sampled and conducted limited geophysical surveys on areas now covered by our A
and E properties. This program outlined several electromagnetic conductors
coincident with surface mineralization. The best trenched nickel value occurred
on the "EE" properties within a 1.46 kilometer long conductor.
Further exploration was undertaken during the general nickel-copper
reconnaissance in 1970 and 1974 and more detailed work in 1975 and 1976.
Geologic mapping, ground magnetic and EM surveys were conducted in the Hayes
River area. Although prospective rock units with nickel and copper values were
found, no further follow up was recommended.
In 1986, reconnaissance rock samples were taken within the current
Pickle properties area.
Southwest of the central tonalite, in the area of our Pickle
properties, several permits were granted to the Committee Bay Joint Venture
(CBJV) in 1993. Sampling by CBJV returned gold values in sheared banded iron
formation with pyrite + arsenopyrite. Although CBJV's Pickle 1 claim was staked
in 1995, no follow-up work was reported. The iron formation at this site is
70-100 meters thick and traceable for 1.5 kilometers.
In 1992, reconnaissance sampling in the Committee Bay area was
undertaken on behalf of the CBJV. Several highly anomalous gold values were
returned from rock samples taken. Follow-up work was performed in 1993. High
gold values corresponded with banded iron formation with quartz veining and/or
silicification and pyrite + pyrrhotite +/- arsenopyrite. In 1995, further rock
samples were taken, and eight drill holes totaling 811.41 meters completed. This
work exclusively focused on the Bluff properties in Hayes River area and the
Inuk area further to the northeast. In 1996, the CBJV flew a 13,262 line
kilometer detailed geophysical survey (magnetics and VLF), collected additional
rock samples and drilled 6 holes at Three Bluffs. Approximately CDN$5.4 million
was collectively spent on the Committee Bay Greenstone Belt between 1992 and
2001 by explorers. This exploration focused on three areas: Laughland Lake,
Hayes River and Curtis River.
Numerous gold occurrences were discovered by the CBJV between 1992 and
2001. Of particular note are the Pickle, Four Hills, Cop, Ghost Coyote, Ridge,
Bluff group and West Plains prospects.
Our five Wrench properties were previously within prospecting permits
granted to the CBJV in 1994. Reconnaissance sampling by the CBJV returned a
series of gold anomalies over approximately three kilometers in sheared, oxide
banded, iron formation in their northern part of their BLUFF claim block.
The Committee Bay Greenstone Belt was the subject of two separate 3
year (2000-2003) government targeted Geoscience initiatives ("TGI"). These TGIs
were a collaboration between the Geological Survey of Canada, Canada-Nunavut
Geoscience Office and university partners. The stated objective of the TGI was
to increase the level and cost-effectiveness of private sector exploration for
mineral resources. Government work in the Committee Bay Greenstone Belt included
1:100,000 scale geologic mapping, prospecting, surficial mapping, drift
prospecting, and airborne geophysics. Airborne magnetic surveys (400 meter
flight line spacing) were carried out and released as total field maps in 2002.
Quaternary research involved multimedia sampling for gold and base metals and
this drift prospecting/sampling was carried out between 2001 and 2003.
Committee Bay Resources Limited ("CBR") is the largest landholder in
our claim area. At Three Bluffs, CBR's drilling defined gold mineralization for
at least one kilometer along strike and to a depth of 320 meters from surface. A
current summary of their results can be found on the CBR website.
The government aeromagnetic survey shows a continuation of the Three
Bluffs iron formation for at least three kilometers onto our Wrench properties.
Government sampling in 2001 on this trend returned gold intersections from
sulphide bearing (pyrite + pyrrhotite), quartz-veined intervals of oxide banded
iron formation on the GRR Wrench Property.
Numerous other prospective gold targets (West Plains, Four Hills,
Coyote, etc) are the subject of ongoing investigation by CBR. Our properties
border or are along strike of CBR's prospects.
Geologic Setting
The Prince Albert Group ("PAG") incorporates a series of Archean-aged
greenstone belts that stretch approximately 600 kilometers northeast from the
Aylmer Shear Zone in the south to the eastern tip of Melville Peninsula in the
north. A 300 kilometers long section southwest of Committee Bay is referred to
as the Committee Bay Greenstone Belt.
The stratigraphy of the Committee Bay Greenstone Belt includes banded
iron formation up to 50 meters thick, komatiite volcanic flows, basalts,
intermediate to felsic tuffs, and quartz-cobble conglomerates. Deformation is
recorded by major shear zones, second order faults, complex folding, and felsic
intrusions. Numerous gold prospects are spread out over a 260 x 40 kilometer
area including the Inuk zone in northeast Committee Bay and the Three Bluffs
zone in the Hayes River area.
The approximate age of the Committee Bay Greenstone Belt ranges from
2.718 billion years to 2.732 billion year old.
Younger plutonic intrusions include the 1830 Million year old Hudson
monzo-granites. Laterally continuous, northeast trending, quartz-feldspar
porphyry dykes, 0.5 meter to 10 meter wide, are traceable for hundreds of meters
in the Three Bluffs area. Age dates for these porphyry dykes are not currently
available.
Prospects
The Committee Bay Greenstone Belt is prospective for a number of
mineral deposit types including banded iron formation hosted gold, shear-hosted
lode gold, komatiite hosted, stratiform, nickel-copper (Kambalda analogy)
mineralization, and platinum group elements in layered igneous complexes.
Examples of iron formation hosted gold mineralization include GRR's
Wrench properties where government sampling in 2001 returned gold intersections
from sulphide bearing (pyrite + pyrrhotite), quartz-veined intervals of oxide
banded iron formation. This section of iron formation is over 6.5 kilometers
long. Additional kilometer-scale segments of iron formation with anomalous gold
are present further to the east within the Wrench claim block.
Other iron formation hosted gold examples include mineralization on our
Pickle properties. The iron formation here is 70-100 meters thick and traceable
for 1.5 kilometers. The gold values are found in sulphide-rich sections
(arsenopyrite and pyrite) of the sheared, oxide + silicate banded, iron
formation over a distance of 1.35 kilometers. In addition, gold values in iron
formation are also found on our NN1 and NN2 properties.
An example of shear-hosted, gold mineralization in the Committee Bay
Greenstone Belt is CBR's Coyote prospect where high-grade gold values were
returned from an intensely sheared gabbro with quartz veins, pyrite + pyrrhotite
+ chalcopyrite + visible gold. The hosting structure is a splay off the
east-west Walker Lake Shear Zone and is a classic setting for shear-hosted gold.
GRR holds title to a claim on either side of the Coyote claim prospect.
Komatiite hosted (Kabalda-style) nickel potential exists on our three
EE properties (EE 1-3). These properties cover anomalous nickel values spread
over 930 meters along a contact between a thick ultramafic body and sediments.
Elevated copper values were also reported. A second ultramafic/sediment contact
on the western edge of the western E claim also has anomalous nickel over a
similar strike length. The folded stratigraphy in the centre of the EE claim
block is also prospective for gold.
The Laughland Lake Anorthosite Suite ("LLAS") has good PGE potential.
Rusty zones defined by sulphide gossans of up to 100 meters wide and 500 meters
long have been reported in this area. Moderately anomalous platinum, palladium
nickel and copper values have been reported from sampling of these zones.
Work Program
A total of CDN$1.567 million was spent on our Committee Bay Greenstone
Belt 2004 program. A large portion of the expense went to establishing a
re-usable base-camp into this fairly remote location. All field, office, and
camp supplies, as well as fuel, were flown in. All field activities were
helicopter supported.
Between June 2004 and early September 2004, a regional, grassroots-type
prospecting/mapping program was undertaken to explore all of our mineral
properties in the Committee Bay Greenstone Belt. Each of our 21 properties holds
significant promise of a mineral deposit. In some localities outcrop was not
abundant or even observed; however, many of the claim sites were selected to
cover key magnetic anomalies identified from the government regional airborne
survey.
A total of 1,476 rock samples were removed and analyzed from the 21
properties. In addition, a small soil grid was established on the Wrench
property and 658 soil samples were collected. Anomalous to ore grade gold was
returned from sampling on several of the claim areas. Of particular note were
the results from the Wrench property which cover an area adjacent to the CBR's
Three Bluffs deposit and were found to hold identical structures and
lithologies. Sampling along exposed banded iron formation produced high gold
values within the 1.5 kilometer strike length of the targeted iron formation
horizon.
Our exploration program began in late May 2004 with a geophysical
program on the Wrench property. This is covered in the "Geophysical Surveys"
section.
Geophysical Surveys
Wrench Property
An eighty six line grid was established over the Wrench Claims by
Aurora Geosciences Ltd. of Yellowknife, NWT. Grid point control was accomplished
using GPS technology. Lines were spaced every one hundred meters and in total
the grid was comprised of 176.46 line kilometers. Subsequently, two geophysical
surveys were undertaken. Total field magnetic surveying was carried out with
readings obtained at 6.25 meter stations. Horizontal loop electromagnetic (HLEM)
surveying was also undertaken. Readings for this survey were spaced at twenty
five meter intervals.
The Wrench claim group comprises five contiguous properties covering
approximately 4,900 hectares. A government aeromagnetic survey confirms that the
Wrench iron formation is directly connected with and along strike from CBR's
Three Bluffs iron formation hosted gold deposit.
The geophysical program served a number of purposes. The magnetics
accurately traced the iron formation and delineated important structural
information such as faulting and folding. The HLEM component highlighted where
the conductive pyrrhotite-rich sections of the iron formation are located and,
in conjunction with the magnetics, may define trenching and drill targets.
The magnetic survey outlined a strong, six kilometer long,
northeast-trending, magnetic anomaly along the western half of the grid. In the
southeastern portion of the grid, two additional strong, parallel, magnetic
anomalies were recorded. The HLEM survey outlined 17 distinct conductive
trends/anomalies, most of which are coincident with, or flank, very strong
magnetic features.
Field verification of the magnetic anomalies indicated that the
magnetic anomalies are a result of the presence of continuous banded iron
formation units that underlie the grid area.
Proposed Work
With the large assessment credit excess from the 2004 program, we have
already met our expenditure commitments until 2012 for most properties (see
Appendix B). However due to the gold potential and interest in the Committee Bay
Greenstone Belt, further work is being planned.
Future exploration programs will involve further geophysical surveys,
mapping, prospecting, sampling, and drilling. Identifying and defining drill
targets will be the primary objective.
Three areas present themselves as likely drill targets, the Wrench
prospect which is along strike of CBR's Three Bluffs deposit; the Pickle claim
iron formation which has the thickest intervals of sheared banded iron formation
and the West claim which has the same geophysical anomalies as CBR's West Plains
drill area.
Regulation
Mining in Canada
The mining industry in Canada operates under both federal and
provincial or territorial legislation governing the exploration, development,
production and decommissioning of mines. Such legislation relates to the method
of acquisition and ownership of mining rights, labour, health and safety
standards, royalties, mining and income taxes, exports, reclamation and
rehabilitation of mines, and other matters. The mining industry in Canada is
also subject to legislation at both the federal and provincial or territorial
levels concerning the protection of the environment. Legislation imposes high
standards on the mining industry to reduce or eliminate the effects of waste
generated by extraction and processing operations and subsequently deposited on
the ground or emitted into the air or water. The design of mines and mills, and
the conduct of extraction and processing operations, are subject to the
regulatory restrictions. The exploration, construction, development and
operation of a mine, mill or refinery require compliance with environmental
legislation and regulatory reviews, and the obtaining of land use and other
permits, water licenses and similar authorizations from various governmental
agencies. Legislation is in place for lands under federal jurisdiction or
located in certain provinces and territories that provide for the preparation of
costly environmental impact assessment reports prior to the commencement of any
mining operations. These reports require a detailed technical and scientific
assessment as well as a prediction of the impact on the environment of proposed
mine exploration and development.
Failure to comply with the requirements of environmental legislation
may result in regulatory or court orders being issued that could result in the
cessation, curtailment or modification of operations or that could require the
installation of additional facilities or equipment to protect the environment.
Violators may be required to compensate those suffering loss or damage by reason
of mining activities and the violators, including our officers and directors,
may be fined or, in some cases, imprisoned if convicted of an offence under such
legislation. Provincial and territorial mining legislation establishes
requirements for the decommissioning, reclamation and rehabilitation of mining
properties that are closed. Closure requirements relate to the protection and
restoration of the environment and the protection of public safety. Some former
mining properties must be managed for a long time following closure in order to
fulfill regulatory closure requirements. The cost of closure of existing and
former mining properties and, in particular, the cost of long-term management of
open or closed mining properties can be substantial.
Government Regulations
We are committed to complying and, to our knowledge, are in compliance
with all governmental and environmental regulations. Permits from a variety of
regulatory authorities are required for many aspects of mine operation and
reclamation. Our exploration work is subject to the Mining Land Use Regulations
of the Indian and Northern Affairs Canada Mining Act. This Act requires us to
obtain permits prior to performing significant exploration programs.
We cannot predict the extent to which future legislation and regulation
could cause additional expense, capital expenditures, restrictions, and delays
in the development of our Canadian properties, including those with respect to
mining properties. Our activities are not only subject to extensive federal,
provincial and local regulations controlling the mining of and exploration for
mineral properties, but also the possible effects of such activities upon the
environment. We will be obligated to take steps to ensure that such streams
draining the property do not become contaminated as a result of our activities
on the property. We are not aware of any environmental problems on the property
as of the date of this Annual Report.
The mining industry in Nunavut, where our exploration properties are
situated, operates under Canadian federal and territorial legislation governing
prospecting, development, production, environmental protection, exports, income
taxes, labour standards, mine safety and other matters. We believe our Canadian
operations are operating in substantial compliance with applicable law.
Our exploration works is subject to environmental regulation primarily
by the Federal Department of Indian Affairs and Northern Development and the
Nunavut Water Board. The Department of Fisheries & Oceans (Canada) and the
Department of the Environment (Canada) have an enforcement role in the event of
environmental incidents, but presently have no direct regulatory role in
relation to exploration activity.
On April 1, 1999, the Nunavut Land Claims Agreement, dated May 28,
1993, between the Inuit of Canada's eastern arctic region and Her Majesty the
Queen in right of Canada, came into force. Under this agreement, the Inuit were
granted ownership of approximately 360,000 square kilometers of land in an area
referred to as the Nunavut Settlement Area, including ownership of subsurface
rights in approximately 37,500 square kilometers of those lands. Third party
interests in lands in the Nunavut Settlement Area created prior to April 1, 1999
are protected under the Nunavut Land Claims Agreement. Where a third party was
granted a mining lease under the Canada Mining Regulations in lands comprising
the Nunavut Settlement Area, that interest continues in accordance with the
terms and conditions on which it was granted, including any rights granted under
the legislation that give rise to the interest. However, where any successor
legislation has the effect of diminishing the rights afforded to the federal
government, it will not bind the Inuit without its consent. The Inuit are
entitled to receive whatever compensation is payable by the interest holder for
the use of exploitation of mineral rights. The federal government continues to
administer the third party interest on behalf of the Inuit, unless the third
party and the Inuit enter into an agreement under which the third party agrees
to the administration of their interest by the Inuit. In the event such an
agreement is reached, the applicable legislation will cease to apply to the
third party interest. Subsurface interests in such lands continue to be
administered in accordance with applicable legislation relating to those
interests and are not affected by the Nunavut Land Claims Agreement.
Third party interests in lands in the Nunavut Settlement Area created
on or after April 1, 1999 are granted, in the case of surface rights, by the
appropriate regional Inuit association and, in the case of subsurface rights, by
Nunavut Tungavik Incorporated which will hold subsurface title to Inuit owned
lands and will be additionally responsible, in consultation with the appropriate
regional Inuit associations, for the administration and management of those
subsurface rights.
Government Requirements for Maintenance of Claims
Slave Craton
Fees and exploration expenditures associated with the maintenance of
Tahera Corporation's ground covered under the Slave Craton Agreement with Golden
River Resources is the responsibility of Tahera.
Committee Bay Greenstone Belt
The Nunavut Government has granted our interest in the 21 mineral
properties in the Committee Bay Greenstone Belt described in this Report.
To keep the 21 properties in good standing, we were required to spend a
total of CDN$197,798 of qualifying assessment work by October 16, 2004.
Assessment work must be filed with the Mining Recorder within 30 days of the
claim's anniversary date or within 60 days of the lapsing notice date.
A total of CDN$98,879 (CDN$2 per acre) is required in each subsequent
year up to 2012 (at which point a decision to bring the properties to lease must
be made).
In 2004 we spent a total of CDN$1,566,962 of on our properties. All
assessment work was filed and the excess of CDN$1,369,164 was used to offset the
expenditure requirement in following years. As a result we have already met our
commitment until 2012 for most properties (see Appendix B).