DYNAMIC GOLD CORP.
675 West Hastings Street, Suite 200
Vancouver, British Columbia
Canada V6B 1N2
December 9, 2004
U.S. Securities & Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549-05-11
Attention: Duc Dang, Division of Corporation Finance
Dear Sirs:
Re: Registration Statement on Form SB-2 -File Number 333-119823 -Amendment No.1
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We write in response to your letter dated November 17, 2004 regarding the
above-noted registration statement on Form SB-2. We have today filed an amended
Registration Statement via the EDGAR system. We enclose a copy of this amended
Form SB-2, as well as a copy that has been blacklined to show changes from the
previous filing.
We respond sequentially to your comments as follows:
General
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1. Please supplementally provide any artwork, photographs, or maps that
are to be inserted in your prospectus. We may have comment on its
contents. Please note that inside front cover graphics should be clear
illustrations of your product or business with concise language
describing the illustrations.
We have included a claims location map as an exhibit to our amended
registration statement.
2. We note that this registration statement covers 47.5% of the shares
outstanding and 100% of the outstanding shares not owned by your two
officers/directors. Supplementally, please explain why this is not an
offering that is "by or on behalf" of the registrant.
It is our understanding that the offering described in our registration
statement on Form SB-2 is not "by or on [our] behalf" because we are
not issuing any securities pursuant to the offering and we will not
receive any proceeds of the offering. We will not have any control over
the individual sale of any of the shares registered for resale pursuant
to our registration statement.
3. Insert a small-scale map showing the location and access to your
property. Note that SEC's EDGAR program now accepts digital maps; so
please include these in any future amendments that are filed on EDGAR.
It is relatively easy to include automatic links at the appropriate
locations within the document to GIF or JPEG files, which will allow
the figures and/or diagrams to appear in the right location when the
document is viewed on the Internet. For more information, please
consult the EDGAR manual, and if you need additional assistance, please
call Filer Support at 202-942-8900. Otherwise provide the map to the
staff for our review.
We have included a claims location map as an exhibit to our amended
registration statement.
4. Discuss the phased nature of the exploration process, and the place in
the process your current exploration activities occupy. Disclose that
you will make a decision whether to proceed with each successive phase
of the exploration program upon completion of the previous phase and
upon analysis of the results of that program.
Make it clear to investors that even if you complete your current
exploration program and it is successful in identifying a mineral
deposit, you will have to spend substantial funds on further drilling
and engineering studies before you will know if you have a commercially
viable mineral deposit, reserve.
We have added the following disclosure:
"Mineral property exploration is typically conducted in phases. Each
subsequent phase of exploration work is recommended by a geologist
based on the results from the most recent phase of exploration. The
initial two phases of an exploration program generally involve
geochemical and geophysical surveys of a property. Subsequent
exploration phases typically involve drilling.
Geochemical exploration involves gathering soil samples or pieces of
rock from the property areas with the most potential to host
economically significant mineralization based on past exploration
results. All samples gathered will be sent to a laboratory where they
are crushed and analysed for metal content. Geophysical surveying is
the search for mineral deposits by measuring the physical property of
near-surface rocks, and looking for unusual responses caused by the
presence of mineralization. Electrical, magnetic, gravitational,
seismic and radioactive properties are the ones most commonly measured.
Drilling involves extracting a long cylinder of rock from the ground to
determine amounts of metals at different depths. Pieces of the rock
obtained, known as drill core, are analysed for mineral content.
We have not yet commenced the initial phase of exploration on the
Sobeski Lake Gold property. Once we have completed each phase of
exploration, we will make a decision as to whether or not we proceed
with each successive phase based upon the analysis of the results of
that program. Our directors will make this decision based upon the
recommendations of the independent geologist who oversees the program
and records the results, as well as upon the recommendations of Brian
Game, our director who is a professional geologist.
Even if we complete the currently recommended exploration programs on
the Sobeski Lake Gold property and they are successful, we will need to
spend substantial additional funds on further drilling and engineering
studies before we will ever know if there is a commercially viable
mineral deposit (a reserve) on the property."
Registration Statement Cover Page
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5. Please include the IRS Employer Identification Number when received.
We will include our IRS Employer Identification Number when received.
Prospectus Cover Page
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6. The prospectus cover page should be limited to the information required
by 501 of Regulation S-B. Therefore, please remove the statement that
the offering price was based upon the last sale of common stock to
investors.
We have removed the noted disclosure.
Summary, page 5
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7. Please include the zip code in the address for your principal executive
office.
We have included our postal code for our principal executive office.
8. Please provide the definition of "exploration stage corporation"
as set forth in Guide 7(a)(4) of the Securities Act Industry guides.
Provide similar disclosure in the business section.
We have added the following disclosure in the "Summary" and
"Description of Business" sections.
"As an exploration stage corporation, we are engaged in the search for
mineral deposits (reserves). We are not a development stage company
involved in the preparation of an established commercially minable
deposit for its extraction or a production stage company engaged in the
exploitation of a mineral deposit."
9. We note that the word gold is in both the name of your company and your
property. If applicable, please clarify that you are in exploration for
other minerals in addition to gold. Clarify throughout the prospectus.
We are not involved in the exploration for minerals other than gold.
10. You state that you own "one property". It appears, however, that the
Crown owns the property and that the company's only right to the
property consists of mining claims that are held in trust by Dan Patrie
Exploration Ltd. Please revise to clarify this point throughout the
prospectus.
We have clarified that the right to explore for and extract minerals
from the claims comprising the Sobeski Lake Gold property is held in
trust for us by Dan Patrie Exploration Ltd. and that we do not own any
real property interest in the land covered by the claims.
11. If true, please revise this section to clarify that you have achieved
loses since inception, have no operations, have been issued a going
concern opinion and rely upon the sale of your securities or loans from
management to fund operations. Provide similar disclosures under the
subheading "General" in the Business section.
We have added the suggested disclosure to the "Summary" section.
Risk Factors, page 6
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12. Please revise your first paragraph to indicate that you discuss all
material risk in this section.
We have indicated that all material risks are discussed in the section.
13. The statement in the second risk factor that "the likelihood of success
must be considered in light of the problems, expenses, difficulties,
complications and delays encountered in connection with the exploration
of the mineral properties that we plan to undertake" is a generic risk.
Please remove.
We have removed the noted disclosure.
14. Risk factor 5 appears to be a risk that is included in risk factor 1.
Please consider combining risk factor 1 and 5 or revising the fifth
risk factor to focus on the risk noted in the subheading.
We have combined the first and fifth risk factor.
15. Please revise the sixth risk factor subheading to specifically refer to
the going concern raised by the independent auditor's report.
We have revised the risk factor subheading to specifically refer to the
going concern opinion.
16. The tenth risk factor, discussing penny stocks, is a generic risk
factor. Please remove.
We have removed the noted risk factor.
17. Please provide a risk factor to discuss the fact that the claims are
held in trust for the company rather than directly by the company and
the resultant risk.
We have added the following risk factor:
"BECAUSE THE CLAIMS COMPRISING THE SOBESKI LAKE GOLD PROPERTY ARE NOT
REGISTERED IN OUR NAME, WE MAY INCUR SIGNIFICANT EXPENSES IN RESOLVING
ANY TITLE DISPUTES.
The claims comprising the Sobeski Lake Gold are registered in the name
of Dan Patrie Exploration Ltd., the company that sold the claims to us.
This company holds these claims in trust for us. If the company becomes
bankrupt or transfers the claims to a third party, we may incur
significant legal expenses in enforcing our interest in the claims in
Ontario courts."
18. Add a risk factor that addresses that fact that the probability of an
individual prospect ever having "reserves" that meet the requirements
of Industry Guide 7 is extremely remote, in all probability your
properties do not contain any reserves, and any funds spent on
exploration will probably be lost.
We have added the following risk factor:
"THE PROBABILITY OF AN INDIVIDUAL MINERAL EXPLORATION PROSPECT, SUCH AS
THE SOBESKI LAKE GOLD PROPERTY, CONTAINING RESERVES IS EXTREMELY
REMOTE. AS A RESULT, YOU COULD LOSE YOUR ENTIRE INVESTMENT.
Very few exploration stage mineral properties, such as the Sobeski Lake
Gold property contain sufficient quantities of mineralization to
constitute a reserve. A "reserve" is that part of a mineral deposit
which could be economically and legally extracted or produced.
In all probability, the Sobeski Lake Gold property does not contain any
reserves and all funds that we intend to spend on its exploration will
be ultimately lost."
Selling Shareholders, page 10
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19. Please disclose if any of your selling shareholders are affiliates of
brokers-dealers. If applicable, please include a representation, that
each affiliate:
- Purchased your securities in the ordinary course of business, and
- At the time of purchase of the shares to be resold, the seller had no
agreements or understandings, directly or indirectly, with any
purchaser to distribute shares.
If you cannot provide this representation, please advise
supplementally.
We have disclosed that none of our shareholders are broker-dealers or
affiliates of broker-dealers.
Plan of Distribution, page 14
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20. We note your statement that you are "bearing all cost relating to the
registration of the common stock". (Emphasis ours) Please disclose, as
indicated in Note 1 on page F-6, that "costs of this offering will be
paid for from proceeds from advances from shareholders and an
anticipated equity financing." Also, please disclose whether any
shareholders have agreed to provide such advances. We may have further
comment.
We have disclosed that the costs of the offering will be paid for from
cash on hand, advances from our directors and principal shareholders
(Tim Coupland and Brian Game) and from future equity financings. We do
not have any arrangements for any shareholder loans or equity
financings.
Directors, Executive Officers, Promoters and Control Persons
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21. We note your statement on page 17 and in risk factor 8 that Tim
Coupland will devote 25% of his time to your company. We refer to the
Form 20-F for Alberta Star Development Corp. ("Alberta Star") filed on
June 1, 2004 for the period ended November 30, 2003. Item 4.4 of the
referenced filing states Mr. Coupland devotes 90% of his time to
Alberta Star at a salary of $5,000 a month. Please advise regarding
this discrepancy or reconcile the noted statements.
At the time of filing, the disclosure that Tim Coupland devoted 90% of
his business time to the affairs of Alberta Star Development Corp. was
accurate. Upon commencement of our business operations, Mr. Coupland
will devote 25% of his business time to our affairs and the remainder
of his business time to Alberta Star Development Corp.'s affairs.
22. For all mining entities that your management had prior or present
involvement, please revise to disclose the efforts made to date to
explore, develop and/or produce or refine any minerals.
We have disclosed details regarding Tim Coupland's involvement with
Alberta Star Development Corp. Our directors have not been involved in
the management of any other mining entities.
23. Please revise to indicate the approximate number of hours per week your
management will devote to company business.
We have disclosed that Tim Coupland and Brian Game will devote
approximately 12 and 10 hours per week respectively to our affairs.
24. We note your mention of CKD Ventures Ltd. Please revise to describe CKD
Ventures' line of business.
We have disclosed that CKD Ventures Ltd. is involved in mineral
property exploration.
25. Considering that your management, particularly Mr. Coupland, could
encounter business opportunities that benefit other companies they are
associated with, it appears that a conflict of interest may arise.
Please discuss and consider including a risk factor addressing any
potential conflicts of interest.
We have added the following section in our amended registration
statement regarding conflicts of interest:
"Conflict of Interest
Both of our directors are involved in non-company business ventures
that involve mineral properties and exploration. As our present
business plan is focused entirely on the Sobeski Lake Gold property,
there is no expectation of any conflict between our business interests
and those of our directors. However, possible conflicts may arise in
the future if we seek to acquire interests in additional mineral
properties.
Our bylaws provide that each officer who holds another office or
possesses property whereby, whether directly or indirectly, duties or
interests might be created in conflict with his duties or interests as
our officer shall, in writing, disclose to the president the fact and
the nature, character and extent of the conflict and abstain from
voting with respect to any resolution in which the officer has a
personal interest."
Because our bylaws include a mechanism to address conflicts that arise,
we have not included a risk factor.
Security Ownership of Certain Beneficial Owners and Management, page 20
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26. Please revise to include persons and group of persons that beneficially
own more than five percent of your shares. Please refer to Item 403 of
Regulation S-B and accompanying instruction.
We have included all shareholders who beneficially own over 5% of our
issued capital in the table.
Description of Business, page 20
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27. Disclose:
- The nature of your ownership or interest in the property.
In the sections entitled "Sobeski Lake Gold Property Purchase
Agreement" and Title to the Sobeski Lake Gold Property", we have
disclosed that we own a 100% interest in the claims comprising the
property, which are held in trust for us by Dan Patrie Exploration Ltd.
We have also disclosed that our interest solely relates to exploration
rights respecting the claims and that we do not have any real property
interest in the land covered by the claims.
- Any other underlying agreements or interests in the property.
We have disclosed that there are no underlying agreements or interests
in the property.
- In a table, provide names, claim or grant number, date of recording
and expiration date, so your claims can be distinguished from other
claims in the area.
We have added a table in the section entitled "Title to the Sobeski
Lake Gold Property" that includes claims details.
- Disclose the conditions you must meet to keep these claims.
We have disclosed the following:
"In order to keep the claims comprising the Sobeski Lake Gold property
in good standing, we must incur at least $6.00 per hectare in
exploration work on the claims prior to the dates of expiry noted
above. The expiry date is thereby extended for an additional two years.
As the total area of the claims is 386 hectares, we must spend $2,316
on exploration in order to meet this requirement."
- Disclose the area of your claims, either in hectares or acres. Revise
to fully discuss the material terms of your land or mineral right
securing agreements. Refer to paragraph (b)(2) of Industry Guide 7.
We have disclosed that the area of the claims is 386 hectares. We have
disclosed the material terms of our mineral right securing agreement in
the section entitled "Sobeski Lake Gold Property Purchase Agreement".
28. For your property, provide the disclosures required by Industry Guide 7
(b). In particular, provide:
- A map(s) showing the location of your properties.
We have filed a claim location map as an exhibit to our amended
registration statement.
- Any conditions that you must meet in order to obtain or retain title
to the property.
We have disclosed the following conditions we must meet in order to
retain title to the property:
"In order to keep the claims comprising the Sobeski Lake Gold property
in good standing, we must incur at least $6.00 per hectare in
exploration work on the claims prior to the dates of expiry noted
above. The expiry date is thereby extended for an additional two years.
As the total area of the claims is 386 hectares, we must spend $2,316
on exploration in order to meet this requirement."
- A brief description of the rock formation and mineralization of
existing or potential economic significance on the property.
We have added the following disclosure regarding rock formation and
mineralization:
"The Sobeski Lake Gold property is located in an area of altered
volcanic rocks that have the potential to host economic gold
mineralization. Property sites favorable for mineralization commonly
are in proximity to relatively thin beds of sedimentary rock,
particularly tuff beds (layers of volcanic ash). Canadian Shield rocks,
like those found on the property, are commonly profoundly altered from
their original characteristics."
- A description of the present condition of the property.
We have disclosed that the property is free of any mineral workings as
no exploration has been previously conducted on the claims.
- A description of any work completed on the property.
In the section entitled "Exploration History", we have disclosed that
there is no known history of previous work having been completed on the
actual Sobeski Lake Area property but that the entire district has been
actively explored by prospectors, airborne surveys, and by detailed
geological mapping by government agencies.
- A description of equipment and other infrastructure facilities.
We have disclosed that there is no equipment on the claims.
- The current state of exploration of the property.
We have disclosed that the area of the property provides most services
and supplies required in support of mining and exploration work, as
well as a ready supply of experienced exploration personnel.
- The total cost of your property incurred to date and planned future
costs.
We have disclosed that we have no spent any funds on exploration of
the claims to date. We have also provided a description of planned
future costs in the section entitled "Geological Report: Sobeski Lake
Gold Property"
- The source of power that can be utilized at the property.
We have disclosed that there is no power source located on the claims.
We will need to use portable generators if we require a power source
for exploration of the property.
- If applicable, provide a clear statement that the property is without
known reserves and the proposed program is exploratory in nature.
We have added the following statement:
"To date, we have not incurred any exploration expenditures on the
Sobeski Lake Gold property. The property is without known reserves and
our proposed exploration is exploratory in nature."
29. Please clarify state, if true, that you are not a blank check company
subject to Rule 419 and that you have no intention to merge with or
acquire another company in the foreseeable future.
We have added the following disclosure:
"We are not a blank check company subject to Rule 419. We have no
intention to merge with or acquire another company in the foreseeable
future."
30. Please define the terms "legal feasibility" and "logging road."
Economic and legal feasibility refers to a formal evaluation completed
by an engineer or geologist which confirms that the property can be
successfully operated as a mine.
A logging road is a dirt road created by forestry companies for the
purpose of removing timber from an area. Such roads are often difficult
to traverse in wet or winter weather conditions.
31. According to the state of Nevada website, you are delinquent in state
reporting requirements.
We have filed an initial list of directors, officers and resident agent
with the Nevada Secretary of State in order to bring our state filings
up to date.
32. Please revise to explain how you would "exploit" mineral deposits.
We would exploit mineral deposits by processing rock from the property
in order to remove and sell gold contained in the rock.
33. We refer to the last sentence on page 20. Please consider revising the
sentence to enhance comprehension. For instance, please elaborate on
the "expenditure requirements under the property agreement."
Additionally, please clarify your reference to "development of
property." If there is an additional property agreement, other that
exhibit 10.1, please file as a material agreement.
We have revised the noted disclosure to clarify our plan of operation
with respect to the Sobeski Lake Gold property as follows:
"Our plan of operation is to determine whether this Sobeski Lake Gold
property contains reserves that are economically recoverable. The
recoverability of amounts from the property will be dependent upon
discovering economically recoverable reserves and obtaining the
necessary financing to prove gold content on the property sufficient
enough to justify operating the property as a mine by processing rock
in order to remove and sell the gold found in the rock."
There are no other property agreements relating to these claims.
34. We note that claims were recorded in Mr. Patrie's name and that he
holds the mineral claims in trust. Please clarify whether this resulted
in the company acquiring the mineral claim. We note disclosure in the
summary and this section that you have acquired one mineral claim and
disclose in note 3 to the financial statements that you have acquired a
mineral property. Please revise or advise.
We have acquired a 100% interest in the four mineral claims comprising
the Sobeski Lake Gold property by virtue of our agreement with Dan
Patrie Exploration Ltd. However, we have not registered title in our
name.
35. Please define the terms "economic mineralization." If applicable,
please refer to Guide (b)(6) of the Securities Act Industry guides
and revise accordingly.
"Economic mineralization" means that we have discovered sufficient gold
content in the rocks on the property so that operating a mine to
extract the gold from the surrounding rock would likely produce a
profit.
36. Please revise to disclose the business purpose of having the title of
Sobeski Lake held in trust.
The business purpose of us having the title to the Sobeski Lake Gold
property held in trust is to avoid expenses we would incur in
registering the claims in our corporate name.
37. On page 21, we note your statement that "Red Lake provides most
services and supplies...as well as a ready supply of experienced
exploration personnel." Please disclose whether you have entered into
any agreements or negotiations, preliminary or otherwise, with any
personnel or geologists to help you with the exploration of the mineral
claim.
We have not entered into any agreement or negotiations, preliminary or
otherwise, with any personnel or geologists to help us with the
exploration of the Sobeski Lake Gold property.
38. Your disclosure only encompasses the exploration for economic mineral
deposits. In the event that deposits are discovered, it appears that
you do not have the capabilities to remove and refine those minerals.
Please revise to discuss if you intend to interest other entities in
the development, removal, and/or refinement of any minerals you may
discover during your exploration.
We have added the following disclosure:
"Because we are an exploration stage company, in the event that we
discover mineral deposits on the Sobeski Lake Gold property, we will
not have the capability to remove and refine those minerals. When
exploration stage companies discover mineral deposits, which are a rare
occurrence, they typically sell their interest in the property to
larger development or production stage mining companies, or they enter
into a joint venture arrangement. The larger companies are then
responsible for operating the property as a mine. If we discover a
mineral deposit on the Sobeski Lake Gold property, we anticipate
entering into a similar arrangement with a more advanced mining
company."
39. Please provide the basis for the statement that "total gold production
from the district exceeds 20 million ounces and current reserves likely
comprise a similar volume" or else delete.
The disclosure is taken from Mr. Erik A. Ostensoe's geological report
on the Sobeski Lake Gold property.
Geological Report: Sobeski Lake Gold Property
40. You note that Mr. Ostensoe has provided a geologic report on the
Sobeski Lake property. Supplementally provide a copy of the report, and
a written consent from any experts whose name you cite, and/or whose
work you incorporate into your document. These consents should concur
with the summary of the information in the report disclosed, and agree
to being named as an expert in the registration statement. Please refer
to Rule 436 of Regulation C.
We enclose a copy of Mr. Ostensoe's geological report and have filed
his consent as an exhibit to our amended registration statement.
41. Please provide the basis for the statement that "we anticipate that the
northern part of the Red Lake camp will become the focus of increased
exploration activity and enhance the value of our claims" or else
remove.
We have removed the noted disclosure.
42. Please provide greater details regarding your proposed exploration
plan. Also, include the anticipated time frame for commencing and
completing each phase. Lastly, discuss the anticipated sources of
funding.
We have revised our discussion of our exploration plan so that it now
contains the following:
"The first stage of exploration that Mr. Ostensoe recommends consists
of data acquisition, grid preparation and surveys and can be broken
down into two phases:
Phase 1
Mr. Ostensoe recommends engaging a technically trained person to
thoroughly search the geological data base in order to assemble the
available historical information relevant to the Sobeski Lake area.
This would involve reviewing data filed with the Geological Survey of
Canada, the Ontario Department of Mines and the Ministry of Natural
Resources.
He then recommends that based upon this review, we should pursue an
exploration program of prospecting. This would involve determining the
extent, distribution and geology of outcrops. Outcrops are exposed rock
on the surface of the property that is not covered by soil. These
outcrops are analysed to determine whether they potentially containing
gold mineralization based on the rock types.
This preliminary Phase I reconnaissance work requires approximately one
week of field work by a two person crew. The whole phase, including the
initial compilation and the later presentation to management, is
estimated to cost $5,000. Our current cash on hand will cover the cost
of this program. We anticipate commencing this phase of exploration in
the spring of 2005, when weather conditions permit. The entire phase,
including the interpretation of data, should take a total of one to two
months.
Phase 2
Upon completion of Phase I, Mr Ostensoe recommends pursuing a field
program of prospecting, as well as geochemical and geophysical
surveying to determine the extent and distribution of mineralization
which may indicate the potential presence of a gold reserve.
Geochemical surveys involve a consulting geologist gathering samples of
soil and rock from property areas with the most potential to host
economically significant mineralization. All samples gathered will be
sent to a laboratory where they are crushed and analysed for metal
content.
Geophysical surveying is the search for mineral deposits by measuring
the physical property of near-surface rocks, and looking for unusual
responses caused by the presence of mineralization. Electrical,
magnetic, gravitational, seismic and radioactive properties are the
ones most commonly measured. Geophysical surveys are applied in
situations where there is insufficient information obtainable from the
property surface to allow informed opinions concerning the merit of
properties.
Mr. Ostensoe's report recommends that a budget of $10,000 for phase
two. He recommends that the geochemical portion of the program be
completed in the summer, when rock exposure is maximized due to melting
of all snow on the property. He recommends that the geophysical portion
of the exploration be conducted in the winter when the property surface
is frozen so that it can be easily tranversed.
Current cash on hand will cover the cost of this program. We anticipate
commencing this phase in the late spring or early summer of 2005. The
entire phase, including the interpretation of data, will take until the
winter of 2005, when the geophysical portion is completed.
Stage 2
Results from the Stage 1 exploration programs will allow us to choose
specific property areas that are more likely to host a mineral deposit.
Such areas will then be tested by meaning of drilling techniques which
provide subsurface information concerning the underlying rock
formations.
Drilling involves extracting a long cylinder of rock from the ground to
determine amounts of metals at different depths. Pieces of the rock
obtained, known as drill core, are analysed for mineral content.
Drilling programs commonly include about five to eight initial drill
holes, with a follow up stage, if warranted, of a further six to eight
holes.
The cost of the Stage 2 drilling work will be based entirely upon the
results of the programs from Stage 1 and cannot be accurately forecast.
However, we expect that such a program will cost a minimum of $200,000.
A follow up drill program would likely cost an additional $300,000. We
will not determine the exact number and location of drill holes until
we have completed Stage 1.
The drilling program will likely be commenced in spring or summer of
2006 and will take approximately two months to complete.
We do not have an agreement with Mr. Ostensoe, or any other geologist,
to provide geological services for planned exploration work on the
Sobeski Lake Gold property."
Compliance with Government Regulation
43. Please disclose any fees or exploration costs that must be incurred to
maintain the mineral claims and disclose whether they will be paid by
your company or by Mr. Patrie.
We have disclosed the following:
"In order to keep the four mineral claims comprising the Sobeski Lake
Gold property in good standing, we must incur at least $6.00 per
hectare in exploration work on the claims prior to November 14, 2005
with respect to three of the claims, and prior to February 16, 2006
with respect to one of the claims. The expiry date is thereby extended
for an additional two years. As the total area of the claims is 386
hectares, we must spend $2,316 on exploration in order to meet this
requirement."
44. We refer to your statements concerning work permits. Since the permits
are free, please disclose any efforts made to acquire a permit or
reasons for not pursuing one. Disclose the anticipated time frame for
obtaining the work permits.
We have not applied for a work permit for the drilling phase of our
proposed exploration program, as the application requires that we
disclose details of the planned exploration. We will not be able to
determine this until we have the results from Stage 1 of our
exploration program. We anticipate that we can obtain a work permit
within one month from filing an application.
45. We note your statement that you do not know the cost associated with
regulatory compliance. We also note your statements that you have
"budgeted for regulatory compliance cost." Please expand your
discussion regarding the budgeted compliance cost. Also, explain the
source of your budgeted compliance costs in light of the current
limited cash resources of the company.
We have revised our disclosure so that is states the following:
"The cost of remediation work will vary according to the degree of
physical disturbance. However, for the drilling programs that we have
planned, we do not expect remediation costs to exceed $10,000. We have
budgeted for regulatory compliance costs in our proposed exploration
program. We will need to raise additional funds in order to proceed
with any drilling and to cover the costs of remediation."
Research and Development Expenditures
46. We note your statement that you "have not incurred any other research
or development expenditures." Please revise to include the cost
associated with the geologist report mentioned on page 22. Please refer
to Item 101(b)(10) of Regulation S-B.
We have disclosed that we incurred a total of $375 in connection with
Mr. Ostensoe's preparation of a geological report concerning the
Sobeski Lake Gold property.
47. Please disclose the competitive business conditions and the small
business issuer's competitive position in the industry, as required by
Item 101(b)(4) of Regulation SB.
We have inserted the following "Competition" section:
"Competition"
While the mineral property exploration business is competitive, we do
not anticipate having any difficulties retaining qualified personnel to
conduct exploration on the Sobeski Lake Gold property.
Despite competition amongst gold producers, there is a strong market
for any gold that is removed from the Sobeski Lake Gold property. While
it is unlikely that we will discover a mineral deposit on the property,
if we do, the value of the property will be influenced by the market
price for gold. This price, to some degree, is influenced by the amount
of gold sold by advanced gold production companies."
Plan of Operation, page 24
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48. Please add a section discussing liquidity and capital resources. The
discussion and analysis should highlight know trends, demands,
commitments, events and uncertainties, and specific guidance on
disclosures about liquidity, capital resources and critical accounting
estimates.
We have added the following section:
"Liquidity and Capital Resources
As of November 25, 2004 we had cash on hand of $24,265. We will utilize
$15,000 of these funds to cover anticipated costs involved with the
Phase I and II exploration programs that are proposed for the Sobeski
Lake Gold property.
We will require additional funding in order to cover anticipated
administration costs and to proceed with the stage two drilling program
on the property, estimated to cost $200,000. We anticipate that
additional funding will be required in the form of equity financing
from the sale of our common stock. However, we cannot be assured that
we will be able to raise sufficient funding from the sale of our common
stock to fund these costs. We do not have any arrangements in place for
any future equity financing.
In addition, our management is prepared to provide us with short-term
loans, although no such arrangement has been made. There are no
financial limitations on the amount of money that management may lend
to us.
At this time, we cannot provide investors with any assurance that we
will be able to raise sufficient funding from the sale of our common
stock or through a loan from our directors to meet our obligations over
the next twelve months. We do not have any arrangements in place for
any future equity financing."
49. Please disclose the current cash balance as of the most recent
practicable date and disclose how long you can currently satisfy your
cash requirements, as required by Item 303(a)(1)(i) of Regulation S-B.
We have disclosed the current cash balance as at November 25, 2004.
50. In risk factor 1, we note that as of October 14, 2004, you had zero
cash holdings and that you "do not currently have sufficient funds to
conduct initial exploration." We note on page 24 that you "have enough
funds on hand to complete these phases, which have a combined estimated
cost of $15,000." Please revise to reconcile these statements.
The cash on hand figure was missing in the first risk factor. We have
revised the risk factor accordingly.
51. In risk factor 1, we note that "[t]he most likely source of future
funds...is through the sale of equity capital," and the "only other
anticipated alternative...would be a sale of a partial interest in
"your property." (Emphasis ours) Please reconcile that with your
statement on page 24 that your "management is prepared to provide [you]
with short-term loans..."
We have disclosed in the first risk factor that director loans are
another possible source of future funding.
52. Please elaborate on phase two of your exploration programs. Revise to
disclose the number of people needed, the time it will take to complete
phase two, and the necessity of employing a qualified geologist to
oversee your programs.
We have added additional disclosure regarding the Phase I and II
exploration programs, including the number of people needed, the time
it will take to complete each phase and the necessity of employing a
qualified geologist.
53. Please revise to disclose any expected hiring due to the commencement
of your plan of operation. Pleases refer to Item 303(a)(iv) of
Regulation S-B.
We have disclosed the following:
"We do not have any arrangement with a qualified geologist to oversee
these programs. However, subject to availability, we intend to retain
Mr. Ostensoe. He wil l be responsible for hiring any additional
personnel needed for the exploration programs."
54. Please revise to provide more detail relating to your anticipated
sourced of financing for the next 12 months. Please provide a timeline
illustrating the points in time you will pursue each financing option.
Also, discuss the order of preferences for financing options.
We have disclosed the following:
"We expect that we will need to raise additional funds for operations
commencing in the spring of 2005 and continuing on an ongoing basis
thereafter. We expect that we will need to raise an additional $10,000
by the summer of 2005 in order to cover ongoing administrative
expenses. We will also need to raise an additional $15,000 to cover
administrative expenses prior to the end of 2005."
We have also disclosed our preference for raising funds through the
sale of equity rather than via director loans.
55. We note the possible loans from management. Please disclose whether
management has agreed to provide such funding and if they are legally
obligated to provide such funding. If not, please clearly state and
also disclose that there is no guarantee management will provide any
funding.
We have disclosed that management has not agreed to provide such
funding and are not under a legal obligation to do so.
56. We note your statement that "[w]e do not have any arrangements in place
for any future equity financing." We also note in Note 1 on page F-6
that you have "an anticipated equity financing." Please elaborate on
this anticipated equity financing. In addition, you repeat the first
noted sentence twice on page 24. Please revise to eliminate one of
them.
We have removed the disclosure from our financial statements that
indicates that we have anticipated equity financing. We have also
removed the repeat disclosure.
Description of Property, page 25
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57. We note in the previous section that you incurred "office and
miscellaneous cost of $156." In this section you state that you do not
own or lease any other property. Please revise to explain you office
arrangement.
We have disclosed that our president, Mr. Tim Coupland, provides office
space to us free of charge.
Financial Statements, page 28
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Note 3, Mineral Property
58. The disclosure that "the Registrant acquired a 100% undivided right,
title and interest in and to four mineral claims, know as the Sobeski
Lake Gold Property" may not be totally accurate. You disclose on
page 21, under the caption "Title to the Sobeski Lake Gold Property"
that the claims will be held in trust by Dan Patrie of Dan Patrie
Exploration Ltd., of Ontario, Canada. You also disclose that if the
Trustee becomes bankrupt or transfer the Claims to a third party,
you may incur significant legal expenses in enforcing your interest
in the Claims in Ontario courts. Tell us more about this risk and
revise Note 3 to disclose if the registrant can ever possess legal
mining claims for Land in British Columbia. Note 3 make reference to
24 claim units, whereas throughout the document reference is to four
mineral claims. Please correct this apparent inconsistency.
We have revised our disclosure in our registration statement and our
financial statements to indicate that our ownership interest in the
Sobeski Lake Gold property is beneficial ownership. We have also
included a risk factor in our disclosure that provides additional
detail regarding the risks associated with having the claims held in
trust for us.
We have also revised the disclosure in Note 3 to indicate that the
Sobeski Lake Gold property consists of four mineral claims, as well as
the process for registering the claims in our name.
Updated Financial Statements and Consent
59. Provide a current consent in any amendment and ensure that the
financial statements are updated as required by Item 310(g) of
Regulation S-B.
We have provided updated interim financial statements and an updated
consent in the amendment to our registration statement.
Available Information, page 29
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60. Please provide the disclosure required by Item 101(c)(1) and (2) of
Regulation SB.
We have added the following disclosure:
"Although we are not required to deliver an annual report to security
holders, we will voluntarily send an annual report, including audited
financial statements, to any security holder requesting one.
Upon the effectiveness of our registration statement, we will file
reports with the Securities and Exchange Commission, including annual
reports on Form 10-KSB, interim reports on Form 10-QSB and current
reports on Form 8-K."
Part II
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Recent Sales of Unregistered Securities
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61. Please disclose the exemption relied upon in the May 2004 issuance
of common stock to Messrs. Coupland and Game and the facts supporting
reliance upon the exemption.
We have disclosed that the offering was completed pursuant to
Regulation S of the Securities Act. The section entitled "Regulation S
Compliance" provides information regarding the facts supporting
reliance upon the exemption.
Exhibits
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62. Please file any instruments defining the rights of security holders, as
required by Item 601(b)(4) of Regulation S-B.
There are no instruments defining the rights of shareholders other than
our bylaws that were previously filed as an exhibit.
We have
Yours truly,
DYNAMIC GOLD CORP.
PER: /s/ Tim Coupland
TIM COUPLAND
President