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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: December 31, 2009
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from: _____________ to _____________
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GOLDEN RIVER RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 0-16097 98-0079697
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Level 8, 580 St Kilda Road Melbourne, Victoria, 3004, Australia
(Address of Principal Executive Office) (Zip Code)
011 (613) 8532 2866
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer., or a smaller reporting company.
[ ] Large accelerated filer Accelerated filer [ ]
[ ] Non-accelerated filer Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). [ ] Yes [x] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. There were 177,280,840
outstanding shares of Common Stock as of February 15, 2010.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
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Table Of Contents
PAGE NO
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements 2
Item 2 Management's Discussion and Analysis or Plan of Operations 20
Item 3 Quantitative and Qualitative Disclosure about Market Risk 25
Item 4 Controls and Procedures 25
PART II OTHER INFORMATION
Item 1 Legal Proceedings 27
Item 1A Risk Factors 27
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 3 Defaults Upon Senior Securities 27
Item 4 Submission of Matters to a Vote of Security Holders 27
Item 5 Other Information 27
Item 6 Exhibits 27
SIGNATURES 28
EXHIBIT INDEX 29
Exh. 3.1 Amendment to Certificate of Incorporation 30
Exh. 31.1 Certification 31
Exh. 31.2 Certification 33
Exh. 32.1 Certification 35
Exh. 32.2 Certification 36
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Introduction to Interim Consolidated Financial Statements.
The interim consolidated financial statements included herein have been
prepared by Golden River Resources Corporation ("Golden River Resources" or the
"Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Certain information and
footnote disclosure normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These interim consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended June 30, 2009.
In the opinion of management, all adjustments, consisting of normal
recurring adjustments and consolidating entries, necessary to present fairly the
consolidated financial position of the Company and subsidiaries as of December
31, 2009, the results of its consolidated operations for the three and six month
periods ended December 31, 2009 and December 31, 2008, and the changes in its
consolidated cash flows for the six month periods ended December 31, 2009 and
December 31, 2008, have been included. The results of consolidated operations
for the interim periods are not necessarily indicative of the results for the
full year.
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.
Foreign Currency Translation
Prior to July 1, 2009, the Company's functional and reporting currency was
the Australian dollar and its subsidiary, Golden Bull Resources Corporation's
functional currency was the Canadian dollar. However, as a result of the
purchase of the controlling interest in Acadian Mining Corporation in Canada in
July 2009, the Company's fiscal 2010 revenue and expenses will be primarily
denominated in Canadian dollars (CDN$). ASC Topic 830 "Foreign Currency Matters"
states that the functional currency of an entity is the currency of the primary
economic environment in which the entity operates. Accordingly the Company
determined that from July 1, 2009 the functional and reporting currency of the
Company is the Canadian dollar. Assets, liabilities and portions of equity were
translated at the rate of exchange at July 1, 2009 and portions of equity were
translated at historical exchange rates. Revenue and expenses were translated
at actual rates. Translation gains and losses were included as part of
accumulated other comprehensive loss.
Restatement of comparative numbers was made for the change in functional
and reporting currency. The change was adopted prospectively beginning July 1,
2009 in accordance with ASC Topic 830.
UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN
CANADIAN DOLLARS.
2
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Balance Sheet
December 31, June 30,
2009 2009
CDN$000's CDN$000's
(Unaudited)
ASSETS
Current Assets
Cash 432 19
Receivables 91 7
Prepaid expenses and deposits 168 -
------------------------------
Total Current Assets 691 26
------------------------------
Non Current Assets
Cash held for site remediation (note 11) 925 -
Property, plant and equipment (note 12) 7,331 -
Investment in non consolidated entity (note 13) 711 745
Mineral rights (note 10) 86,798 -
------------------------------
Total Non Current Assets 95,765 745
------------------------------
Total Assets 96,456 771
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses 2,432 116
Lease liability 2,527 -
Advances from affiliates (note 3) 5,432 1,138
------------------------------
Total Current Liabilities 10,391 1,254
------------------------------
Non Current Liabilities
Accrued site remediation (note 14) 2,400 -
Deferred tax liability (note 15) 13,486 -
------------------------------
Total Non Current Liabilities 15,886 -
------------------------------
Total Liabilities 26,277 1,254
------------------------------
Commitments (Note 9)
Stockholders' Equity (Deficit):
Common Stock: $.0001 par value
400,000,000 shares authorized (200,000,000 at June 30, 2009)
177,280,840 and 126,714,130 issued and outstanding 22 16
Additional paid-in-capital 50,177 35,951
Less treasury stock at cost, 2,500 shares (19) (19)
Accumulated other comprehensive loss (356) (394)
Retained profit(deficit) during exploration stage 14,402 (11,289)
Retained (deficit) prior to exploration stage (24,748) (24,748)
------------------------------
Golden River Resources Stockholder's Equity (Deficit) 39,478 (483)
Non Controlling Interests (note 10) 30,701 -
------------------------------
Total Stockholders' Equity (Deficit) 70,179 (483)
------------------------------
Total Liabilities and Stockholders' Equity 96,456 771
==============================
See Notes to Consolidated Financial Statements
3
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Operations
Three and Six Months Ended December 31, 2009 and 2008 and for the cumulative
period
July 1, 2002 (inception of exploration activities) to December 31, 2009
(Unaudited)
Three Months Three Six Months Six Months July 1, 2002
Ended Months Ended Ended to
December 31, Ended December December December 31,
2009 December 31, 2009 31, 2008 2009
CDN$000's 31, 2008 CDN$000's CDN$000's CDN$000's
CDN$000's
Revenues $ - $ - $ - $ - $ -
----------------------------------------------------------
Costs and Expenses:
Stock Based Compensation 6 37 39 117 2,760
Exploration Expenditure 741 33 1,001 72 4,312
Depreciation and Amortisation 269 - 732 - 732
Loss/(Profit) on Disposal of Equipment (125) - 259 - 259
Interest Expense, net 40 - 139 - 536
Legal, Accounting and Professional 186 22 294 59 1,363
Administrative 481 44 655 69 4,042
----------------------------------------------------------
(1,598) (136) (3,119) (317) (14,004)
----------------------------------------------------------
(Loss) from Operations (1,598) (136) (3,119) (317) (14,004)
Foreign Currency Exchange Gain (Loss) 10 (15) 5 (22) (154)
Adjustment to fair value on stepped
acquisition (note 10) - - 16,098 - 16,098
Gain on bargain purchase (note 10) - - 24,626 - 24,626
Other Income:
Interest - net, related entity - - - - 5
- other 1 5 1 5 11
----------------------------------------------------------
Profit/(Loss) before Income Tax and Equity in
Profits/(Losses) of Non-Consolidated
Entities (1,587) (146) 37,611 (334) 26,582
Provision for Deferred Income Tax
(note 15) (852) - (13,486) - (13,486)
----------------------------------------------------------
Profit/(Loss) before Profits/(Losses) of
Non-Consolidated Entities (2,439) (146) 24,125 (334) 13,096
Equity in Profits/(Losses) of Non-
Consolidated Entities (70) - 326 - 66
----------------------------------------------------------
Net Profit/(Loss) (2,509) (146) 24,451 (334) 13,162
Net Loss attributable to Non-Controlling
Interests 559 - 1,240 - 1,240
----------------------------------------------------------
Net Profit/(Loss) attributable to Golden
River Resources
Stockholders (1,950) (146) 25,691 (334) 14,402
----------------------------------------------------------
Basic Net Profit/(Loss) Per Common
Equivalent Shares $ (0.01)$ (0.01)$ 0.16 $ (0.01)$ 0.41
----------------------------------------------------------
Diluted Net Profit/(Loss) Per Common
Equivalent Shares $ (0.01)$ (0.01)$ 0.16 $ (0.01)$ 0.41
----------------------------------------------------------
Basic Weighted Number of Common
Equivalent Shares Outstanding (000's) 177,281 36,714 158,329 36,714 35,504
----------------------------------------------------------
Diluted Weighted Number of Common
Equivalent Shares Outstanding (000's) 177,281 36,714 158,329 36,714 35,504
----------------------------------------------------------
See Notes to Consolidated Financial Statements
4
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
Six Months Ended December 31, 2009 and 2008 and for the cumulative period
July 1, 2002 (inception of exploration activities) to December 31, 2009
(Unaudited)
July 1, 2002
2009 2008 to Dec 31, 2009
CDN$000's CDN$000's CDN$000's
----------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit/(Loss) attributable to Golden River
Resources Stockholders 25,691 (334) 14,402
Adjustments to reconcile net profit (loss) to net
cash provided by(used) in Operating Activities
attributable to Golden River Resources Stockholders
Foreign currency exchange (gain)/ loss (5) 22 134
Depreciation /amortization of plant and equipment 732 - 758
Loss on disposal of equipment 259 - 259
Stock based compensation 39 117 2,760
Provision for deferred income tax 13,486 - 13,486
Equity in profits of non-consolidated entities (326) - (66)
Net loss attributable to non controlling interests (1,240) - (1,240)
Adjustment to fair value on stepped acquisition (16,098) - (16,098)
Bargain purchase of controlled entities (24,626) - (24,626)
Accrued interest added to principal 139 - 312
Net Change net of acquisition in:
Receivables (2) 11 (8)
Staking deposit - - 22
Prepaid expenses and deposits (97) - (97)
Accounts payable and accrued expenses 3,784 144 3,903
----------------------------------------------
Net Cash Provided by(Used) in Operating Activities 1,736 (40) (6,099)
----------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of majority owned subsidiary net of cash
acquired (7,585) - (8,585)
Purchase of plant and equipment - - (25)
----------------------------------------------
Net Cash (Used) in Investing Activities (7,585) - (8,610)
----------------------------------------------
CASH FLOW PROVIDED BY FINANCING ACTIVITIES
Borrowings from affiliates 4,578 - 5,544
Repayments to affiliates (3,166) - (3,166)
Proceeds from issuance of stock 5,568 - 5,568
Repayment of borrowings (139) - (139)
Sale of warrants (net) - 637 4,749
Re-purchase of warrants (579) - (579)
Proceeds from loan payable - - 3,261
----------------------------------------------
Net Cash Provided by Financing Activities 6,262 637 15,238
----------------------------------------------
Effects of Exchange Rate on Cash - (13) (97)
----------------------------------------------
Net Increase in Cash 413 584 432
Cash at Beginning of Period 19 7 -
----------------------------------------------
Cash at End of Period 432 591 432
----------------------------------------------
Supplemental Disclosures
Interest Paid 139 - 479
NON CASH FINANCING ACTIVITY
Debt repaid through issuance of shares - - 5,771
Stock options recorded as deferred compensation - - 1,258
Extinguishment of related party debt
Acquisition of subsidiary (note 10) - - 593
See Notes to Consolidated Financial Statements
5
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 2009
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2009
(Unaudited)
Retained Retained Accumulated
Profit/(Deficit) (Deficit) Other
Common Treasury Additional (during the (prior to Deferred Compre- Non-
Stock Stock, at Paid-in Exploration Exploration Compen- hensive Controlling
Shares Amount Cost Capital stage) stage) sation Loss Interests Total
---------------------------------------------------------------------------------------------------------------
000'sCDN$000's CDN$000's CDN$000's CDN$000's CDN$000's CDN$000's CDN$000's CDN$000's CDN$000's
Balance June 30, 2002 6,347 $1 $ (19) $24,060 - $ (24,748) - $ (461) - $ (1,167)
Net loss - - - - $ (639) - - - - (639)
---------------------------------------------------------------------------------------------------------------
Balance June 30, 2003 6,347 $1 $ (19) $24,060 $ (639) $ (24,748) - $ (461) - $ (1,806)
Issuance of 1,753,984
shares and warrants
in lieu of debt
repayment 1,754 - - $ 2,331 - - - - - $ 2,331
Sale of 1,670,000
shares and warrants 1,670 - - $ 2,221 - - - - - $ 2,221
Issuance of 6,943,057
shares on cashless
exercise of options 6,943 $1 - $ (1) - - - - - $ 0
Net unrealized loss
on foreign exchange - - - - - - - $ (317) - $ (317)
Net (loss) - - - - $ (1,616) - - - - $ (1,616)
---------------------------------------------------------------------------------------------------------------
Balance June 30, 2004 16,714 $2 $ (19) $28,611 $ (2,255) $ (24,748) - $ (778) - $ 813
Issuance of 1,400,000
options under 2004
stock option plan - - - $ 1,646 - - $ (1,646) - - $ 0
Amortization of
1,400,000 options
under 2004 stock
option plan - - - - - - $ 1,095 - - $ 1,095
Net unrealized gain
on foreign exchange - - - - - - - $ (17) - $ (17)
Net/(loss) - - - - $ (3,156) - - - - $ (3,156)
---------------------------------------------------------------------------------------------------------------
Balance June 30, 2005 16,714 $2 $ (19) $30,257 $ (5,411) $ (24,748) $ (551) $ (795) - $ (1,265)
See Notes to Consolidated Financial Statements
6
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 2009
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2009
(Unaudited) Continued
Retained Retained Accumulated
Profit/(Deficit) (Deficit) Other
Common Treasury Additional (during the (prior to Deferred Compre- Non-
Stock Stock, at Paid-in Exploration Exploration Compen- hensive Controlling
Shares Amount Cost Capital stage) stage) sation Loss Interests Total
--------------------------------------------------------------------------------------------------------------
000'sCDN$000's CDN$000's CDN$000's CDN$000's CDN$000'sCDN$000's CDN$000's CDN$000's CDN$000's
To eliminate deferred
compensation against
Additional Paid-In
Capital - - - $ (551) - - $551 - - $ 0
Issuance of
10,000,000 shares
and 20,000,000
options in lieu of
debt repayment 10,000 $1 - $ 3,320 - - - - - $ 3,321
Capital gain on
shares and options
issued in lieu of
debt repayment - - - $ (1,610) - - - - - $ (1,610)
Sale of 20,000,000
normal warrants - - - $ 827 - - - - - $ 827
Sale of 10,000,000
special warrants - - - $ 887 - - - - - $ 887
Amortization of
1,400,000 options
under 2004 stock
option plan - - - 532 - - - - - 532
Net unrealized loss
on foreign exchange - - - - - - - $ 369 - $ (369)
Net (loss) - - - - $ (1,588) - - - - $ (1,588)
--------------------------------------------------------------------------------------------------------------
Balance June 30, 2006 26,714 $3 $ (19) $ 33,662 $ (6,999) $ (24,748) $ - $ (426) - $ 1,473
Costs associated with
sale of normal and
special warrants - - - $ (3) - - - - - $ (3)
Amortization of
1,400,000 options
under 2004 stock
option plan - - - $ 19 - - - - - $ 19
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $ 510 - - - - - $ 510
Net unrealized gain
on foreign exchange - - - - - - - $ 48 - $ 48
Net (loss) - - - - $ (1,965) - - - - $ (1,965)
--------------------------------------------------------------------------------------------------------------
Balance June 30, 2007 26,714 $3 $ (19) $ 34,188 $ (8,964) $ (24,748) $ - $ (378) - $ 82
See Notes to Consolidated Financial Statements
7
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 2009
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2009
(Unaudited) Continued
Retained Retained Accumulated
Profit/(Deficit) (Deficit) Other
Common Treasury Additional (during the (prior to Deferred Compre- Non-
Stock Stock, at Paid-in Exploration Exploration Compen- hensive Controlling
Shares Amount Cost Capital stage) stage) sation Loss Interests Total
---------------------------------------------------------------------------------------------------------------
000'sCDN$000's CDN$000's CDN$000's CDN$000's CDN$000'sCDN$000's CDN$000's CDN$000's CDN$000's
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $ 333 - - - - - 333
Net unrealized gain
on foreign exchange - - - - - - - $ 27 - $ 27
Net (loss) - - - - $ (1,073) - - - - $(1,073)
---------------------------------------------------------------------------------------------------------------
Balance June 30, 2008 26,714 $ 3 $ (19) $34,521 $ (10,037) $ (24,748) $- $ (351) - $ (631)
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $ 173 - - - - - 173
Sale of 100,000,000
shares 100,000 $13 - $ 669 - - - - - 682
Net unrealised loss
on foreign exchange - - - - - - - $ (43) - $ (43)
Forgiveness of
advances from
affiliate (Note 5) - - - $ 588 - - - - - 588
Net (loss) - - - - $ (1,252) - - - - $(1,252)
---------------------------------------------------------------------------------------------------------------
Balance June 30, 2009126,714 $16 $ (19) $35,951 $ (11,289) $ (24,748) $- $ (394) - $ (483)
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $ 39 - - - - $ 39
Sale of 50,566,710
shares 50,567 $ 6 - $ 5,562 - - - - - $ 5,568
Re-Purchase of
warrants - - - $ (579) - - - - - $ (579)
Net unrealised gain
on foreign exchange - - - - - - - 38 - 38
Net profit - - - - $ 24,451 - - - - $24,451
Adjustment for
additional
investment in
consolidated
subsidiary - - - $ 9,204 - - - - - $ 9,204
Fair value of non-
controlling interest - - - - - - - - $ 31,941 $31,941
Net loss attributable
to non-controlling
interests - - - - $ 1,240 - - - $ (1,240) $ (0)
---------------------------------------------------------------------------------------------------------------
Balance December 31,
2009 177,281 $22 $ (19) $50,177 $ 14,402 $ (24,748) - $ (356) $ 30,701 $70,179
---------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
8
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2009
(1) Organisation
------------
Golden River Resources Corporation ("Golden River Resources"), formerly Bay
Resources Ltd, is incorporated in the State of Delaware. The principal
shareholders of Golden River Resources are companies associated with Mr JI
Gutnick and Mrs S Gutnick. These companies owned 96.7% of Golden River
Resources as of December 31, 2009.
During fiscal 1998, Golden River Resources incorporated a further
subsidiary, Baynex.com Pty Ltd, under the laws of Australia. Baynex.com Pty Ltd
has not traded since incorporation. On August 21, 2000, Golden River Resources
incorporated a new wholly owned subsidiary, Bay Resources (Asia) Pty Ltd, a
corporation incorporated under the laws of Australia. In May 2002, the Company
incorporated a new wholly owned subsidiary, Golden Bull Resources Corporation
(formerly 4075251 Canada Inc), a corporation incorporated under the laws of
Canada. Golden Bull Resources Corporation is undertaking exploration activities
for gold in Canada. On March 8, 2006, shareholders approved the change of the
Company's name to Golden River Resources.
Golden River Resources as part of its business strategy is increasing its
gold and base metal exploration activity in Canada and is continually sourcing
new ground in Canada which is one of the most prospective areas for new gold
discoveries. On March 17, 2009, the Company announced that it had reached
agreement with Acadian Mining Corporation (TSX: ADA) ("Acadian") to subscribe in
a private placement transaction for up to 338,111,334 common shares ("Offering")
in Acadian for aggregate gross investment of up to CDN$10 million. The Offering
was contemplated to close in two or more tranches giving Golden River a 68.76%
holding of Acadian.
The closing of the first tranche, for an aggregate of CDN$1.0 million
(38,111,334 shares) was subject to receipt of the required regulatory approvals,
including the approval of the Toronto Stock Exchange which occurred in early
June 2009. Upon completion of closing of the initial tranche, the Company was
entitled to nominate one member to the board of directors of Acadian and
nominated Mr Menachem Vorchheimer. The Company held a 19.9% interest in Acadian
at June 30, 2009.
The balance of the subscription by Golden River Resources into Acadian of
CDN$9 million (300,000,000 shares at CDN$0.03 per share) was expected to be
completed in one or more tranches upon the receipt of all necessary regulatory
approvals, approval of the shareholders of Acadian and the satisfaction of
certain other conditions precedent, including completion of due diligence by the
Company. Acadian obtained approval from its shareholders at its annual meeting
in June 2009.
Throughout July 2009, Golden River Resources subscribed for further shares
to a value of CDN$4 million and at July 31, 2009, the Company held a 52.764%
interest in Acadian. As a result, Golden River Resources has since that time
consolidated the results of Acadian. On September 30, 2009, a further closing
for an aggregate of CDN$1 million occurred increasing the Company interest in
Acadian to 57.145% and during October 2009, Golden River Resources completed its
subscription in Acadian by subscribing for shares to the value of CDN$4 million
which increased its interest in Acadian to 68.76%.
The financial statements presented herein have been prepared on a
consolidated basis to include the accounts of Golden River Resources, Acadian
and its other subsidiaries (collectively "the Company"). All intercompany
balances and transactions have been eliminated in consolidation.
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business.
9
(2) Summaryof Significant Accounting Policies
--------------------------------------------
(i) Functional and Reporting Currency
Prior to July 1, 2009, the Company's functional and reporting currency was
the Australian dollar and its subsidiary, Golden Bull Resources Corporation's
functional currency was the Canadian dollar. However, as a result of the
purchase of the controlling interest in Acadian Mining Corporation in Canada in
July 2009, the Company's fiscal 2010 revenue and expenses will be primarily
denominated in Canadian dollars (CDN$). ASC Topic 830 "Foreign Currency Matters"
states that the functional currency of an entity is the currency of the primary
economic environment in which the entity operates. Accordingly the Company
determined that from July 1, 2009 the functional and reporting currency of the
Company is the Canadian dollar. Assets, liabilities and portions of equity were
translated at the rate of exchange at July 1, 2009 and portions of equity were
translated at historical exchange rates. Revenue and expenses were translated
at actual rates. Translation gains and losses were included as part of
accumulated other comprehensive loss.
Restatement of comparative numbers was made for the change in functional
and reporting currency. The change was adopted prospectively beginning July 1,
2009 in accordance with ASC Topic 830.
(ii) Property, plant and equipment
Property, plant and equipment are recorded at cost. Depreciation is
provided for on office assets using the declining balance method at the
following annual rates (in the year of acquisition one-half of the calculated
depreciation is recognized):
Vehicles 30%
Building 5%
Office fixtures and computer equipment 20%
Mine site assets are depreciated on a straight line balance method over the
expected life of the mine at thirteen and one half years; assets under capital
lease are depreciated on a straight line basis over the four year term of the
lease.
All other assets are depreciated over a period covering their estimated
useful lives.
(iii) Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash, receivables,
payables, advances from and payables to affiliates due to the short term
maturities of these instruments. The Company believes that the fair values of
the Company's financial instruments approximate the carrying values, unless
otherwise stated since the current interest rates approximate market rates.
(iv) Lease Liability
Leases meeting certain criteria are accounted for as a capital lease.
Imputed interest is charged against income. The capitalised value of the assets
is depreciated over the term of the lease. The Company has entered into leasing
agreements of four year terms for mining equipment. Obligations under capital
lease are reduced by the rental payments net of imputed interest. All other
leases are treated as operating leases.
(v) Net Profit/Loss per Share
The Company follows the FASB ASC Topic 260 "Earnings per Share" provisions
which require the reporting of both basic and diluted profit/(loss) per share.
Basic profit/(loss) per share is computed by dividing net profit/(loss)
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted net profit/(loss) per share reflect the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. Anti-dilutive
effects on net profit/(loss) per share are excluded.
10
(vi) Impairment of Long-Lived Assets
In accordance with FASB ASC Topic 360, "Impairment or Disposal of
Long-Lived Assets," the Company assesses potential impairments to its long-lived
assets including property, plant and equipment and mineral rights when there is
evidence that events or changes in circumstances indicate that the carrying
value may not be recoverable. If such an indication exists, the recoverable
amount of the asset, being the sum of the undiscounted cash flows expected to
result from the use and eventual disposition of the asset compared to the
asset's carrying value. If the asset's carrying value exceeds the recoverable
amount, any excess of the asset's carrying value over its fair value is expensed
to the consolidated statement of operations. In assessing fair value, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate.
(3) Affiliate Transactions
-----------------------
Golden River Resources advances to and receives advances from various
affiliates. All advances between consolidated affiliates are eliminated on
consolidation.
During the six months ended December 31, 2009 and 2008, AXIS advanced the
Company CDN$251,091 and CDN$105,862 respectively and provided services in
accordance with the service agreement of CDN$74,515 and CDN$65,032 respectively.
The amounts owed to AXIS at December 31, 2009 and 2008 was CDN$853,252 and
CDN$704,467 respectively and are reflected in current liabilities - advances
from affiliates and accounts payable and accruals. During the six months ended
December 31, 2009 and 2008 AXIS did not charge interest. AXIS is affiliated
through common management and ownership.
In order to settle the first tranche of the acquisition of Acadian, Wilzed
Pty Ltd, a company associated with Mr Joseph I Gutnick, President and Chief
Executive Officer of the Company advanced C$582,790 (A$650,000) to the Company.
The Company repaid the advance on July 24, 2009. Wilzed did not charge interest
on the advance.
During the six months ended December 31, 2009, the Company entered into a
subscription agreement with Northern Capital Resources Corp ("NCRC") whereby
NCRC would subscribe, by March 31, 2010, for 85 million shares at an issue price
of US$0.10 per share to raise US$8.5 million. During September 2009 pursuant to
the subscription agreement, the Company has closed in private placement
transactions with NCRC, the sale of 50,566,710 shares of common stock at an
issue price of US$0.10 per share raising CDN$5,567,587. The proceeds have been
utilized to fund the closing of several further tranches of the acquisition of
shares in Acadian and for working capital purposes Mr. Joseph Gutnick is the
Chairman and Chief Executive Officer of NCRC and certain companies with which
Mr. Gutnick is associated own approximately 51.05% of the outstanding common
stock of NCRC. The amount owed to NCRC at December 31, 2009 under current
liabilities - advances from affiliates was CDN$4,578,600, It is the intention of
NCRC and the Company to convert approximately CDN$4 million into shares of
common stock in the Company. NCRC currently holds approximately 90.73% of the
outstanding common stock of the Company.
Acadian shares office facilities with Royal Roads Corp and Buchans River
Ltd (non-consolidated entities of Acadian). During the period ended December
31, 2009 Acadian charged CDN$124,844 in common costs to these companies. The
amount charged is estimated to be the fair value of the costs.
On November 24, 2009, CDN$2,583,459 was repaid to Royal Roads Corp by
Acadian on behalf of ScoZinc Ltd, a 100% owned subsidiary of Acadian. Royal
Roads Corp charged interest at 10% per annum, payable quarterly. Acadian
guaranteed the full amount of the debt and, as security, granted security over
all of its assets, including the shares of Royal Roads Corp. that Acadian owns.
During the period ended December 31,2009, Acadian paid CDN$103,085 in interest
to Royal Roads Corp on behalf of ScoZinc.
During the six months ended December 31, 2009 Acadian paid CDN$12,000 in
consulting fees to a director of Acadian.
Acadian acquired the remaining 50% of the 15 Mile Stream mineral claims for
a cash payment of CDN$70,000 and a non-interest bearing note for CDN$1.0 million
due one year from the date of acquisition and 1% Net Smelter Royalty payable to
Mr. Will Felderhof, President and CEO of Acadian, and members of his family.
Amounts due are included in accounts payable and accrued liabilities at December
31, 2009. Acadian also paid an amount due to Mr. Felderhof of CDN$9,610.
11
(4) Recent Accounting Pronouncements
----------------------------------
In June 2009, the Financial Accounting Standards Board ("FASB") issued the
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, also known as FASB Accounting Standards Codification
("ASC") 105-10, Generally Accepted Accounting Principles, ("ASC 105-10"). ASC
105-10 establishes the FASB Accounting Standards Codification ("Codification")
as the single source of authoritative US GAAP recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission ("SEC") under authority of federal securities
laws are also sources of authoritative US GAAP for SEC registrants. The
subsequent issuances of new standards will be in the form of Accounting
Standards Updates ("ASU") that will be included in the Codification. Generally,
the Codification is not expected to change US GAAP. All other accounting
literature excluded from the Codification will be considered non-authoritative.
This ASC is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. The Company adopted this ASC for its
quarter ended September 30, 2009. The adoption did not have any effect on our
financial condition or results of operations. All accounting references have
been updated, and therefore SFAS references have been replaced with ASC
references.
In December 2007, the FASB issued amended ASC Topic 805, Business
Combinations. ASC 805 establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements the
identifiable assets acquired and the liabilities assumed. The provisions of ASC
805 are effective for the Company's fiscal year beginning July 1, 2009 which
applies prospectively to all business combinations entered into on or after such
date. Golden River's acquisition of Acadian (see note 10) was and any other
future acquisitions will be impacted by application of this statement.
In April 2008, the FASB issued amended ASC Topic 350, Intangibles -
Goodwill and Other ("ASC 350"). ASC 350 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under former SFAS No. 142, Goodwill
and Other Intangible Assets. This new guidance applies prospectively to
intangible assets that are acquired individually or with a group of other assets
in business combinations and asset acquisitions. ASC 350 is effective for
financial statements issued for fiscal years and interim periods beginning after
December 15, 2008. The adoption of ASC 350 has had no impact on the Company's
financial position, results of operations, or cash flows.
The Company adopted the "Financial Instruments Topic", ASC 825 on April 1,
2009. This standard requires disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements.
In April 2009, the FASB issued ASC Topic 320-10-65, "Recognition and
Presentation of Other-Than-Temporary Impairments" ("ASC 320-10-65"). ASC
320-10-65 amends the other-than-temporary impairment guidance for debt
securities to make the guidance more operational and to improve the presentation
and disclosure of other-than-temporary impairments on debt and equity securities
in the financial statements. ASC 320-10-65 does not amend existing recognition
and measurement guidance related to other-than-temporary impairments of equity
securities. ASC 320-10-65 is effective for interim and annual reporting periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009. ASC 320-10-65 does not require disclosures for earlier
periods presented for comparative purposes at initial adoption. In periods after
initial adoption, ASC 320-10-65 requires comparative disclosures only for
periods ending after initial adoption. The adoption of ASC 320-10-65 has had no
impact on the Company's financial position, results of operations or cash flows.
Effective July 1, 2009, the Company adopted the provisions of ASC Topic
820, Fair Value Measurements and Disclosures. This topic defines fair value,
establishes a hierarchal disclosure framework for measuring fair value, and
requires expanded disclosures about fair value measurements. The provisions of
this topic apply to all financial instruments that are being measured and
reported on a fair value basis. The adoption of ASC 820 has had no material
impact on the Company's financial position or results of operations.
In May 2009, the FASB issued ASC Topic 855, Subsequent Events. This topic
requires management to evaluate subsequent events through the date the financial
statements are either issued, or available to be issued. Companies will be
required to disclose the date through which subsequent events have been
evaluated. The Company adopted the provisions of ASC 855 effective for the
quarter ended June 30, 2009. The adoption of this topic did not have a material
effect on our financial position or results of operations.
12
In August 2009, the FASB issued Accounting Standards Update No. ("ASU")
2009-05, "Measuring Liabilities at Fair Value." ASU 2009-05 supplements and
amends the existing definition of fair value while reintroducing the concept of
entry value (amount an entity would receive to enter into an identical
liability) into the definition. Additionally, ASU 2009-05 clarifies that
restrictions preventing the transfer of a liability should not be considered as
a separate input or adjustment in the measurement of its fair value. ASU 2009-05
is effective for the first reporting period, including interim periods,
beginning after August 2009. The provisions of ASU 2009-05 do not have a
material impact on our consolidated financial statements.
In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810):
Accounting and Reporting for Decreases in Ownership of a Subsidiary. This
amendment to Topic 810 clarifies, but does not change, the scope of GAAP. It
clarifies the decrease in ownership provisions of Subtopic 810-10. For
thoseentities that have already adopted FAS No. 160 the amendments are effective
at the beginning of the first interim or annual reporting period ending on or
after December 15, 2009. The amendments should be applied retrospectively to the
first period that an entity adopted FAS160. The provisions of ASU 2010-02 did
not have a material effect on the financial position, results of operations, or
cash flows of the Company.
(5) ComprehensiveProfit (Loss)
---------------------------
The Company follows ASC Topic 220 "Comprehensive Income" ("ASC 220"). ASC
220 requires a company to report comprehensive profit/(loss) and its components
in a full set of financial statements. Comprehensive profit/(loss) is the change
in equity during a period from transactions and other events and circumstances
from non-owner sources, such as unrealized gains (losses) on foreign currency
translation adjustments. There are no material differences between net
profit/(loss) and other comprehensive profit/(loss) for the periods presented.
(6) Going Concern
--------------
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company is in the exploration stage, has sustained recurring losses which raises
substantial doubts as to its ability to continue as a going concern.
In addition the Company has historically relied on loans and advances from
corporations affiliated with the President of the Company. Based on discussions
with these affiliate companies, the Company believes this source of funding will
continue to be available. Other than the arrangements noted above, the Company
has not confirmed any other arrangement for ongoing funding. As a result the
Company may be required to raise funds by additional debt or equity offerings in
order to meet its cash flow requirements during the forthcoming year. The
accumulated deficit of the Company from inception through December 31, 2009
amounted to CDN$10,346,000 of which CDN$14,402,000 is retained profits from July
2002, the date the Company entered the Exploration Stage, through December 31,
2009.
(7) Issue of Options under Stock Option Plan
----------------------------------------------
The Company follows the provisions of ASC Topic 718 Compensation-Stock
Compensation ( "ASC 718"), which addresses the accounting for share-based
payment transactions in which a company receives employee services in exchange
for (a) equity instruments of that company or (b) liabilities that are based on
the fair value of the company's equity instruments or that may be settled by the
issuance of such equity instruments.
The Company has accounted for all options issued based upon their fair
market value using either the Black Scholes or Binomial option pricing method.
Prior to 2006, the Company used the Black Scholes option pricing method to
determine the fair market value of options issued. In 2006, the Company changed
from using the Black Scholes option pricing method to the Binomial option
pricing model. The Binomial option pricing model 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. The options issued in 2006 have
three vesting periods and therefore, the Company believed the Binomial option
pricing model is a more accurate measure of the fair value of the options.
13
In October 2004, the Board of Directors and Remuneration Committee of the
Company adopted a Stock Option Plan and agreed to issue 1,400,000 options to
acquire shares of common stock in the Company, at an exercise price of US$1.00
per option, subject to shareholder approval which was subsequently received on
January 27, 2005. All such options were vested by July 2006. The exercise price
of US$1.00 was derived from the issue price of common stock from the placement
of shares on September 30, 2004 and is considered by the Company's Directors to
be the fair value of the common stock. The options expire on October 15, 2014.
The Company calculated the fair value of the 1,400,000 options using the
Black Scholes valuation method using a fair value share price of US$1.00, strike
price of US$1.00, maturity period of 5 years 7 months, risk free interest rate
of 5.15% and volatility of 20%. This equates to a value of US31.85 cents per
option. The total value of the options equates to CDN$1,645,780 (US$1,352,820)
and such amount was amortized over the vesting period. At December 31, 2009, the
options were fully vested.
Consistent with the provisions of ASC 718, the Company recorded the fair
value of stock option grants in stockholders equity. Under ASC 718 an equity
instrument is not considered to be issued until the instrument vests.
Accordingly, as provided in ASC 718 effective July 1, 2005, the Company has
reversed CDN$551,000 (US$445,900) being the unamortized restricted stock
compensation at June 30, 2005 included in stockholders equity for the unvested
portions of stock option grants awarded prior to the effective date of ASC 718.
Since the issue of the options, 600,000 options have lapsed following the
termination of participants to the issue.
A summary of the options outstanding and exercisable at December 31, 2009
are as follows:
Outstanding Exercisable
Number of options 800,000 800,000
Exercise price US$1.00 US$1.00
Expiration date October 15, 2014 October 15, 2014
On October 19, 2006, the Directors of the Company agreed to offer a further
4,650,000 options under the Stock Option Plan. The options have no issue price,
an exercise price of US30.84 cents, and a latest exercise date of October 19,
2016. The options vest 1/3 on October 19, 2007 ("T1"), 1/3 on October 19, 2008
("T2") and 1/3 on October 19, 2009 ("T3"). The Company obtained an external
valuation on the options from an unrelated third party.
The Company, through an unrelated third party consultant, has calculated
the fair value of the 4,650,000 options using the binomial option pricing model
using a fair value share price of US$0.30, exercise price of US30.84 cents,
expected life T1 - 5 years 6 months, T2 - 6 years, T3 - 6 years 6 months,
risk-free interest rate of 4.75% and volatility of 90%. The total value of the
options equates to CDN$1,207,860 (US$1,060,200) and such amount was amortised
over the vesting period. For the six months ended December 31, 2009, the
amortization amounted to CDN$39,421 and no options were forfeited. At December
31, 2009, the options were fully vested.
Since the issue of the options, 600,000 options have lapsed following the
termination of participants to the issue.
14
A summary of the options outstanding and exercisable at December 31, 2009
are as follows:
Outstanding Exercisable
Number of options 4,050,000 4,050,000
Exercise price US$0.308 US$0.308
Expiration date October 19, 2016 October 19, 2016
(8) Profit(Loss) per share
----------------------
Basic profit/(loss) per share is computed based on the weighted average
number of common shares outstanding during the period. In prior periods the
Company had on issue 10,000,000 special warrants which are exercisable at any
time until expiration and for no consideration. On July 1, 2009 the Company
re-purchased the warrants and immediately cancelled the options.
Profit/(Loss) per share
The Company calculates profit/(loss) per share in accordance with ASC Topic
260, "Earnings per Share".
The following table reconciles the weighted average shares outstanding used
for the computation:
Six months ended
December 31
Weighted average shares 2009 2008
'000s '000s
Outstanding - basic 158,329 26,714
- Warrants - 10,000
---------------------
Weighted average shares outstanding 158,329 36,714
=====================
The following table reconciles the diluted weighted average shares
outstanding used for the computation:
Three months ended
December 31
Diluted weighted average shares 2009 2008
'000 '000
Basic 177,281 36,714
Effect of employee stock based awards - -
---------------------
Diluted weighted average shares outstanding 177,281 36,714
=====================
Options to acquire 4,850,000 shares of common stock were not included in
the diluted weighted average shares outstanding as such effects would be
anti-dilutive.
(9) Commitments
-----------
In June 2008, the Company agreed on terms with Tahera Diamond Corporation
to obtain full control of the mining properties that are listed in the
Tahera/GRR agreement through the issuance of 3,000,000 shares of common stock
and the payment of CDN$86,000. The CDN$86,000 was paid prior to June 30, 2008.
The issuance of 3,000,000 shares of common stock has not been brought to account
in the financial statements as the final agreements have not yet been executed.
(10) Acquisitions
------------
Golden River Resources as part of its business strategy is increasing its
gold and base metal exploration activity in Canada and is continually sourcing
new ground in Canada which is one of the most prospective areas for new gold
discoveries. On March 17, 2009, the Company announced that it had reached
agreement with Acadian Mining Corporation (TSX: ADA) ("Acadian") to subscribe in
a private placement transaction for up to 338,111,334 common shares ("Offering")
in Acadian for aggregate gross investment of up to CDN$10 million. The Offering
was contemplated to close in two or more tranches giving Golden River a 68.76%
holding of Acadian.
15
The closing of the first tranche, for an aggregate of CDN$1.0 million
(38,111,334 shares) was subject to receipt of the required regulatory approvals,
including the approval of the Toronto Stock Exchange which occurred in early
June 2009. Upon completion of closing of the initial tranche, the Company was
entitled to nominate one member to the board of directors of Acadian and
nominated Mr Menachem Vorchheimer. The Company held a 19.9% interest in Acadian
at June 30, 2009.
The balance of the subscription by Golden River Resources into Acadian of
CDN$9 million (300,000,000 shares at CDN$0.03 per share) was expected to be
completed in one or more tranches upon the receipt of all necessary regulatory
approvals, approval of the shareholders of Acadian and the satisfaction of
certain other conditions precedent, including completion of due diligence by the
Company. Acadian obtained approval from its shareholders at its annual meeting
in June 2009.
Throughout July 2009, Golden River Resources subscribed for further shares
to a value of CDN$4 million and at July 31, 2009, the Company held a 52.764%
interest in Acadian. As a result, Golden River Resources has since that time
consolidated the results of Acadian. On September 30, 2009, a further closing
for an aggregate of CDN$1 million occurred increasing the Company interest in
Acadian to 57.145% and during October 2009, Golden River Resources completed its
subscription in Acadian by subscribing for shares to the value of CDN$4 million
which increased its interest in Acadian to 68.765%.
The transaction was accounted for using the acquisition method required by
ASC Topic 805, Business Combinations. The Company has prepared an interim
estimate of the fair value of the net assets of Acadian at December 31, 2009. On
the acquisition date of July 31, 2009, the fair value of the non-controlling
interest was CDN$41,130,198. The fair value of non-controlling interest was
based on an estimate of the fair value of Acadian's net assets. The assignment
of the total consideration including the fair value of the net assets of the
non-controlling interest as of acquisition date is as follows:
CDN$000's
Cash and cash equivalents 1,413
Receivables 44
Property, plant & equipment (net) 10,033
Prepayments 71
Investment in Royal Roads Corp 855
Cash held for remediation 925
Mineral rights 86,798
Accounts payable & accruals (3,807)
Lease liability (4,723)
Equipment loans payable (371)
Advance from Royal Roads Corp (2,654)
Accrued site remediation (1,400)
-----------------
Total fair value 87,184
Less fair value of non-controlling interest
Less gain recognised on acquisition (41,130)
-----------------
Total consideration 21,428
-----------------
Fair valuation methods used for identifiable net assets acquired in the
acquisition make use of (i) the draft re-start study for the ScoZinc mine which
has been adjusted using a net present value discount rate of 10%; and (ii) the
valuation of 1,711,000 ounces of gold in the categories of mineralized material
using a yardstick valuation of CDN$30.42 supplied by an external third party.
Accordingly, the Company has attributed a fair value of CDN$86,798,238 to
Mineral Rights.
16
Management believes that the carrying value of receivables of CDN$44,464
which is the gross contractual amount represents fair value at acquisition date
and does not have any evidence that the amount will not be collectable.
Management has also reviewed the property, plant & equipment and other
assets and believes the fair values of those assets at acquisition date equate
to the realisable values of such assets through disposal or usage.
The acquisition of Acadian was achieved in stages. The acquisition date
fair value of the equity interest in Acadian immediately before the acquisition
date was CDN$17,319,353 and the amount of the gain recognized as a result of
remeasuring to fair value the equity interest in Acadian before the business
combination amounted to CDN$16,097,557 and has been recognized in the
consolidated statement of operations as "Adjustment to fair value on stepped
acquisition".
The Company has recorded a gain on bargain purchase of CDN$24,626,130 which
is disclosed separately on the consolidated statement of operations. The gain
represents the excess of the fair value of the net assets acquired over (i) fair
value of the non controlling interest; (ii) fair value of the equity investment
held prior to acquisition; and, (iii) the cash consideration paid. Subsequent to
acquiring a majority interest in Acadian, the Company acquired an additional
4.81% interest for CDN$1 million which resulted in the Company's ownership
interest in Acadian being increased from 52.764% to 57.145%. As a result of this
additional investment, the Company recorded a credit to Additional Paid-In
Capital of CDN$2,914,126. In October 2009 the Company acquired a further
interest of 11.62% for CDN$4 million which resulted in the Company's ownership
interest in Acadian being increased from 57.145% to 68.765%. As a result of this
further additional investment the Company recorded a credit to Additional
Paid-In Capital of CDN$6,289,706. The Company entered into the a fixed price
agreement with Acadian in early 2009 to subscribe CDN$10 million for a 68.765%
interest in Acadian, at a time when the world stock markets were at a low point
given the world economic crisis at that time. The transaction contemplated
several closings and was subject to several pre-conditions including approval by
TSX and due diligence. Between the time of entering into the agreement and the
acquisition date, world economic conditions have improved, metal prices have
increased significantly and world stock markets have rallied. This resulted in
significantly higher fair values for the assets of Acadian compared to the
values at the time the agreement was entered into. Furthermore, Acadian was in a
distressed state at the time the agreement was entered into.
The gain on the identifiable net assets of Acadian caused a difference in
the carrying value of the Company's Acadian investment between financial
reporting and income taxes and resulted in a deferred tax liability (see note
15).
The amount of revenue of Acadian since the acquisition date included in the
consolidated statement of operations for the reporting period is CDN$nil and the
amount of loss from operations is CDN$2,889,052.
The consolidated statement of operations includes the operations since July
31, 2009, which is the acquisition date. The following unaudited pro-forma
information presents the results of operations for the six months ended December
31, 2009 and 2008, as if the acquisition of Acadian had occurred on July 1,
2008.
2009 2008
CDN$000's CDN$000's
Revenue - -
Net profit(loss) (991) (19,992)
Basic and diluted profit(loss) per share (0.00) (0.54)
During the quarter ended December 31, 2008 Acadian recorded impairment
charge write off of CDN$19,791,000 based at that time on the review by
management of the carrying value of mining assets and investments.
During July, 2009 Acadian recorded a gain on settlement of liabilities
under Companies' Creditors Arrangement Act of CDN$3,104,170 and as at December
31, 2009 Acadian recorded a loss on disposal of leased assets of CDN$311,096.
17
(1) Cash held for Site Remediation
----------------------------------
Acadian has agreed with the relevant authorities in Canada to remediate
exploration and mine sites to an agreed status at the end of exploration and /or
mining operations at the sites. Currently the Company has CDN$925,000 on deposit
with the relevant authorities in Canada to cover the cost of this remediation
work.
(2) Property, Plant and Equipment
--------------------------------
Accumulated
Cost Depreciation Net
CDN$ CDN$ CDN$
Office
Building 130,840 15,588 115,252
Automotive equipment 122,748 69,281 53,467
Equipment 165,000 165,000 -
Office fixtures and computer
equipment 527,423 121,062 406,361
-------------------------------------------
946,011 370,931 575,080
-------------------------------------------
Mine Site
Land 566,950 - 566,950
Building 2,370,491 436,972 1,933,519
Automotive equipment 392,547 156,232 236,315
Mobile equipment under capital lease 1,467,845 1,238,845 229,000
Equipment 5,789,255 1,999,439 3,789,906
-------------------------------------------
10,587,088 3,831,400 6,755,688
-------------------------------------------
Other 6,589 6,589 -
-------------------------------------------
Balance December 31, 2009 11,533,099 4,202,331 7,330,768
-------------------------------------------
(13) Investment in Non-Consolidated Entity
---------------------------------------
At December 31, 2009, Acadian owned approximately 32.7 million shares of
Royal Roads Corp. representing 29.18% of the issued and outstanding shares of
Royal Roads Corp. The investment is accounted for using the equity method of
accounting and is recorded on the accompanying balance sheet at CDN$711,000. The
TSX Venture Exchange quoted market value of the investment at December 31, 2009
was CDN$3,271,396.
(14) Accrued Site Remediation
--------------------------
Acadian has agreed with the relevant authorities in Canada to remediate
exploration and mine sites to an agreed status at the end of exploration and /or
mining operations at the sites. The estimated cost of this remediation work is
CDN$2,400,000
(15) Income Taxes
-------------
The Company recognises deferred tax assets or liabilities for the expected
future consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using the enacted tax
rates in effect for the year in which those temporary differences are expected
to be recovered or settled.
18
The Company's net deferred tax liability at December 31, 2009 is summarized
as follows:
CDN$000s
Deferred tax asset
Net operating loss carry forward and tax credits 11,135
Deferred tax liability
Investment in subsidiary (24,621)
-----------------
Net deferred tax liability non-current (13,486)
-----------------
The Company has available net operating losses carry forward aggregating
approximately CDN$29 million as of June 30, 2009 which should expire in 2029.
Such losses are comprised of net operating loss carry forwards in Canada and in
the United States.
(16) Subsequent Events
------------------
The Company has evaluated subsequent events through February 15, 2010 and
has determined that there were no subsequent events or transactions which would
require recognition or disclosure in the consolidated financial statements,
other than noted herein.
19
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
FUND COSTS CONVERSION
The consolidated statements of operations and other financial and operating
data contained elsewhere here in and the consolidated balance sheets and
financial results have been reflected in Canadian dollars unless otherwise
stated.
The following table shows the average rate of exchange of the Canadian
dollar as compared to the US dollar and Australian dollar during the periods
indicated:
6 months ended December 31, 2008 CDN$1.00 = US$.8183
6 months ended December 31, 2009 CDN$1.00 = US$.9532
6 months ended December 31, 2008 CDN$1.00 = A$1.1855
6 months ended December 31, 2009 CDN$1.00 = A$1.0675
Prior to July 1, 2009, the Company's functional and reporting currency was
the Australian dollar and its subsidiary, Golden Bull Resources Corporation's
functional currency was the Canadian dollar. However, as a result of the
purchase of the controlling interest in Acadian Mining Corporation in Canada in
July 2009, the Company's fiscal 2010 revenue and expenses will be primarily
denominated in Canadian dollars (CDN$). ASC Topic 830 "Foreign Currency Matters"
states that the functional currency of an entity is the currency of the primary
economic environment in which the entity operates. Accordingly the Company
determined that from July 1, 2009 the functional and reporting currency of the
Company is the Canadian dollar. Assets, liabilities and portions of equity were
translated at the rate of exchange at July 1, 2009 and portions of equity were
translated at historical exchange rates. Revenue and expenses were translated
at actual rates. Translation gains and losses were included as part of
accumulated other comprehensive loss.
Restatement of comparative numbers was made for the change in functional
and reporting currency. The change was adopted prospectively beginning July 1,
2009 in accordance with ASC Topic 830.
The Company's financial statements are prepared in Canadian dollars (CDN$).
A number of the costs and expenses of the Company are incurred in US and
Australian dollars and the conversion of these costs to CDN$ means that the
comparison of the six months ended December 31, 2009 to the six months ended
December 31, 2008 does not always present a true comparison.
RESULTS OF OPERATION
Three Months Ended December 31, 2009 vs.Three Months Ended December 31, 2008.
Golden River Resources as part of its business strategy is increasing its
gold and base metal exploration activity in Canada and is continually sourcing
new ground in Canada which is one of the most prospective areas in for new gold
discoveries. On March 17, 2009, the Company announced that it had reached
agreement with Acadian Mining Corporation (TSX: ADA) ("Acadian") to subscribe in
a private placement transaction for up to 338,111,334 common shares ("Offering")
in Acadian for aggregate gross investment of up to CDN$10 million. The Offering
was contemplated to close in two or more tranches. Golden River holds 68.765%
of Acadian.
The closing of the first tranche, for an aggregate of CDN$1.0 million
(38,111,334 shares) was subject to receipt of the required regulatory approvals,
including the approval of the Toronto Stock Exchange which occurred in early
June 2009. Upon completion of closing of the initial tranche, the Company was
entitled to nominate one member to the board of directors of Acadian and
nominated Mr Menachem Vorchheimer. The Company held a 19.9% interest in Acadian
at June 30, 2009.
The balance of the subscription by Golden River Resources into Acadian of
CDN$9 million (300,000,000 shares at CDN$0.03 per share) was expected to be
completed in one or more tranches upon the receipt of all necessary regulatory
approvals, approval of the shareholders of Acadian and the satisfaction of
certain other conditions precedent, including completion of due diligence by the
Company. Acadian obtained approval from its shareholders at its annual meeting
in June 2009.
20
Throughout July 2009, Golden River Resources subscribed for further shares
to a value of CDN$4 million and at July 31, 2009, the Company held a 52.764%
interest in Acadian. As a result, Golden River Resources has since that time
consolidated the results of Acadian. On September 30, 2009, a further closing
for an aggregate of CDN$1 million occurred increasing the Company interest in
Acadian to 57.145% and during October 2009, Golden River Resources completed its
subscription in Acadian by subscribing for shares to the value of CDN$4 million
which increased its interest in Acadian to 68.765%.
Costs and expenses increased from CDN$136,000 in the three months ended
December 31, 2008 to CDN$1,598,000 in the three months ended December 31, 2009.
As a result of the acquisition of Acadian, a comparison of costs and expenses
from 2008 to 2009 is not necessarily accurate.
The increase in costs and expenses is a net result of:
a) an increase in legal, accounting and professional expense from
CDN$22,000 for the three months ended December 31, 2008 to CDN$186,000
for the three months ended December 31, 2009, primarily as a result of
costs associated with the Company's SEC and IRS compliance
obligations. Included within legal, accounting and professional
expense for the three months ended December 31, 2009 is CDN$71,000
which relates to the Company's tax compliance work and CDN$35,000 for
Acadian which relates to general legal work, audit and stock transfer
costs.
b) an increase in administrative costs including salaries from
CDN$44,000 in the three months ended December 31, 2008 to CDN$481,000
in the three months ended December 31, 2009. Included within
administrative expense for the three months ended December 31, 2009 is
CDN$277,000 for Acadian which includes head office salaries, rent,
office related costs and travel.
c) an increase in the exploration expenditure expense from
CDN$33,000 for the three months ended December 31, 2008 to CDN$741,000
for the three months ended December 31, 2009. The costs related to
consultants providing exploration reviews and advice. No field work
was undertaken during the three months ended December 31, 2008 or 2009
by the Company on the Slave and Committee Bay properties. Included
within exploration expenditure expense for the three months ended
December 31, 2009 is work undertaken by Acadian for field exploration
activities on its gold properties and certain maintenance work on its
Scotia mine which is currently on care and maintenance and an increase
in site remediation accrual for Acadian's exploration and mining
sites.
d) a decrease in stock based compensation from CDN$37,000 for the
three months ended December 31, 2008 to CDN$6,000 for the three months
ended December 31, 2009 as a result of the number of options being
fully expensed prior to the current period. See Note 7 concerning the
Company's outstanding stock options.
e) an increase in amortization expense from CDN$nil for the three
months ended December 31, 2008 to CDN$269,000 for the three months
ended December 31, 2009. The amortization expenses for the three
months ended December 31, 2009 relates to the activities of Acadian
which is amortizing the mine and mill (which is on care and
maintenance), and equipment.
f) an increase in profit on disposal of equipment expense from
CDN$nil for the three months ended December 31, 2008 to CDN$125,000
for the three months ended December 31, 2009. The profit on disposal
of equipment expense for the three months ended December 31, 2009
relates to the activities of Acadian where part of the mining fleet on
lease was disposed of as the Scotia mine is on care and maintenance.
g) an increase in interest expense from CDN$nil for the three months
ended December 31, 2008 to CDN$40,000 for the three months ended
December 31, 2009. The interest expense for the three months ended
December 31, 2009 relates to the activities of Acadian which was
paying interest on capital debt and the final cost of having the
debtor in possession financing in place.
As a result of the foregoing, the loss from operations increased from
CDN$136,000 for the three months ended December 31, 2008 to CDN$1,598,000 for
the three months ended December 31, 2009.
21
The Company recorded a foreign currency exchange gain of CDN$10,000 for the
three months ended December 31, 2009 compared to a foreign currency exchange
loss of CDN$15,000 for the three months ended December 31, 2008.
A decrease in interest income from CDN$5,000 for the three months ended
December 31, 2008 to CDN$1,000 for the three months ended December 31, 2009.
The loss before income taxes and equity in profits/(losses) of
non-consolidated entities for the three months ended December 31, 2009 was
CDN$1,587,000 compared CDN$146,000 for the three months ended December 31, 2008.
The Company has recorded a increase of CDN$852,000 in the provision for tax for
the three months ended December 31, 2009 compared to CDN$nil for the three
months ended December 31, 2008.
The loss before equity in profits/(losses) of non-consolidated entities for
the three months ended December 31, 2009 was CDN$2,439,000 compared to
CDN$146,000 for the three months ended December 31, 2008.
The share of loss in non-consolidated entities for the three months ended
December 31, 2009 amounted to CDN$70,000 for which there was no comparable
amount in 2008. As noted above, the Company held a 19.89% interest in Acadian at
June 30, 2009 which increased to 52.764% at July 31, 2009. The Company accounted
for its 19.89% interest in Acadian for the month of July 2009 using the equity
method of accounting. Further, the Company via Acadian, held a 29.18% interest
in Royal Roads Corp which is also accounted for using the equity method of
accounting and its share of the loss of the non-consolidated entities for the
three months ended December 31, 2009 was CDN$70,000 (2008: $nil).
The net loss was CDN$2,509,000 for the three months ended December 31, 2009
compared to CDN$146,000 for the three months ended December 31, 2008.
The share of the loss attributable to the non-controlling interests of
Acadian amounted to CDN$559,000, for which there was no comparable amount in
2008.
The net loss attributable to Golden River Resources stockholders amounted
to CDN$1,950,000 for the three months ended December 31, 2009 compared to
CDN$146,000 for the three months ended December 31, 2008.
Six Months Ended December 31, 2009 vs. Six Months Ended December 31, 2008.
Golden River Resources as part of its business strategy is increasing its
gold and base metal exploration activity in Canada and is continually sourcing
new ground in Canada which is one of the most prospective areas in for new gold
discoveries. On March 17, 2009, the Company announced that it had reached
agreement with Acadian Mining Corporation (TSX: ADA) ("Acadian") to subscribe in
a private placement transaction for up to 338,111,334 common shares ("Offering")
in Acadian for aggregate gross investment of up to CDN$10 million. The Offering
was contemplated to close in two or more tranches. Golden River holds 68.765%
of Acadian.
The closing of the first tranche, for an aggregate of CDN$1.0 million
(38,111,334 shares) was subject to receipt of the required regulatory approvals,
including the approval of the Toronto Stock Exchange which occurred in early
June 2009. Upon completion of closing of the initial tranche, the Company was
entitled to nominate one member to the board of directors of Acadian and
nominated Mr Menachem Vorchheimer. The Company held a 19.9% interest in Acadian
at June 30, 2009.
The balance of the subscription by Golden River Resources into Acadian of
CDN$9 million (300,000,000 shares at CDN$0.03 per share) was expected to be
completed in one or more tranches upon the receipt of all necessary regulatory
approvals, approval of the shareholders of Acadian and the satisfaction of
certain other conditions precedent, including completion of due diligence by the
Company. Acadian obtained approval from its shareholders at its annual meeting
in June 2009.
Throughout July 2009, Golden River Resources subscribed for further shares
to a value of CDN$4 million and at July 31, 2009, the Company held a 52.764%
interest in Acadian. As a result, Golden River Resources has since that time
consolidated the results of Acadian. On September 30, 2009, a further closing
for an aggregate of CDN$1 million occurred increasing the Company interest in
Acadian to 57.145% and during October 2009, Golden River Resources completed its
subscription in Acadian by subscribing for shares to the value of CDN$4 million
which increased its interest in Acadian to 68.765%.
22
Costs and expenses increased from CDN$317,000 in the six months ended
December 31, 2008 to CDN$3,119,000 in the six months ended December 31, 2009. As
a result of the acquisition of Acadian, a comparison of costs and expenses from
2008 to 2009 is not necessarily accurate.
The increase in costs and expenses is a net result of:
a) an increase in legal, accounting and professional expense from
CDN$59,000 for the six months ended December 31, 2008 to CDN$294,000
for the six months ended December 31, 2009, primarily as a result of
costs associated with the Company's SEC and IRS compliance
obligations. Included within legal, accounting and professional
expense for the six months ended December 31, 2009 is CDN$71,000 which
relates to the Company's tax compliance work and CDN$35,000 for
Acadian which relates to general legal work, audit and stock transfer
costs.
b) an increase in administrative costs including salaries from
CDN$69,000 in the six months ended December 31, 2008 to CDN$655,000 in
the six months ended December 31, 2009. Included within administrative
expense for the six months ended December 31, 2009 is CDN$423,000 for
Acadian which includes head office salaries, rent, office related
costs and travel.
c) an increase in the exploration expenditure expense from
CDN$72,000 for the six months ended December 31, 2008 to CDN$1,001,000
for the six months ended December 31, 2009. The costs related to
consultants providing exploration reviews and advice. No field work
was undertaken during the six months ended December 31, 2008 or 2009
by the Company on the Slave and Committee Bay properties. Included
within exploration expenditure expense for the six months ended
December 31, 2009 is work undertaken by Acadian for field exploration
activities on its gold properties and certain maintenance work on its
Scotia mine which is currently on care and maintenance and
CDN$1,000,000 increase in provision for site remediation.
d) a decrease in stock based compensation from CDN$117,000 for the
six months ended December 31, 2008 to CDN$39,000 for the six months
ended December 31, 2009 as a result of options being fully expensed
prior to the current period. See Note 7 concerning the Company's
outstanding stock options.
e) an increase in amortization expense from CDN$nil for the six
months ended December 31, 2008 to CDN$732,000 for the six months ended
December 31, 2009. The amortization expenses for the six months ended
December 31, 2009 relates to the activities of Acadian which is
amortizing the mine and mill (which is on care and maintenance), and
equipment.
f) an increase in loss on disposal of equipment expense from CDN$nil
for the six months ended December 31, 2008 to CDN$259,000 for the six
months ended December 31, 2009. The loss on disposal of equipment
expense for the six months ended December 31, 2009 relates to the
activities of Acadian where part of the mining fleet on lease was
disposed of as the Scotia mine is on care and maintenance.
g) an increase in interest expense from CDN$nil for the six months
ended December 31, 2008 to CDN$139,000 for the six months ended
December 31, 2009. The interest expenses for the six months ended
December 31, 2009 relates to the activities of Acadian which was
paying interest on capital debt and the final cost of having the
debtor in possession financing in place.
As a result of the foregoing, the loss from operations increased from
CDN$317,000 for the six months ended December 31, 2008 to CDN$3,119,000 for the
six months ended December 31, 2009.
The Company recorded a foreign currency exchange gain of CDN$5,000 for the
six months ended December 31, 2009 compared to a foreign currency exchange loss
of CDN$22,000 for the six months ended December 31, 2008.
The Company also recorded a decrease in interest income from CDN$5,000 for
the six months ended December 31, 2008 to CDN$1,000 for the six months ended
December 31, 2009.
23
On March 17, 2009, the Company announced that it had reached agreement with
Acadian to subscribe in a private placement transaction for up to 338,111,334
common shares ("Offering") in Acadian for aggregate gross investment of up to
CDN$10 million. The closing of the first tranche, for an aggregate of CDN$1.0
million (38,111,334 shares) was subject to receipt of the required regulatory
approvals, including the approval of the Toronto Stock Exchange which occurred
in early June 2009. Throughout July 2009, further closings for an aggregate of
CDN$4 million occurred and at July 31, 2009, the Company held a 52.764% interest
in Acadian. In accordance with accounting principles generally accepted in the
United States of America, the Company calculated the difference between the fair
market value and the carrying amount of the Company's 19.9% interest in Acadian
at the acquisition date of July 31, 2009 and recorded an adjustment to fair
value on stepped acquisition of CDN$16,098,000, for which there was no
comparable amount in 2008.
The Company has recorded a gain on bargain purchase of CDN$24,626,130 which
is disclosed separately on the consolidated statement of operations. The gain
represents the excess of the fair value of the net assets acquired over (i) fair
value of the non controlling interest; (ii) fair value of the equity investment
held prior to acquisition; and, (iii) the cash consideration paid. Subsequent to
acquiring a majority interest in Acadian, the Company acquired an additional
16.001% interest for CDN$5 million which resulted in the Company's ownership
interest in Acadian being increased from 52.764% to 68.765%As a result of this
additional investment, the Company recorded a credit to Additional Paid-In
Capital of CDN$9,203,832. The Company entered into the a fixed price agreement
with Acadian in early 2009 to subscribe CDN$10 million for a 68.765% interest in
Acadian, at a time when the world stock markets were at a low point given the
world economic crisis at that time. The transaction contemplated several
closings and was subject to several pre-conditions including approval by TSX and
due diligence. Between the time of entering into the agreement and the
acquisition date, world economic conditions have improved, metal prices have
increased significantly and world stock markets have rallied. This resulted in
significantly higher fair values for the assets of Acadian compared to the
values at the time the agreement was entered into. Furthermore, Acadian was in a
distressed state at the time the agreement was entered into. There was no
comparable amount in 2008.
The profit before income tax and equity in profits/(losses) of
non-consolidated entities for the six months ended December 31, 2009 was
CDN$37,611,000 compared to a loss for the six months ended December 31, 2008 of
CDN$334,000.
The Company has recorded a provision for tax of CDN$13,486,000 for the six
months ended December 31, 2009 compared to a provision for tax of CDN$nil for
the six months ended December 31, 2008, as a result of the acquisition of
majority interest in Acadian.
The profit before equity in profits of non-consolidated entities for the
six months ended December 31, 2009 was CDN$24,125,000 compared to a loss for the
six months ended December 31, 2008 of CDN$334,000.
As noted above, the Company held a 19.89% interest in Acadian at June 30,
2009 which increased to 52.764% at July 31, 2009. The Company accounted for its
19.89% interest in Acadian for the month of July 2009 using the equity method of
accounting. Further, the Company via Acadian, held a 29.18% interest in Royal
Roads Corp which is also accounted for using the equity method of accounting and
its share of the loss of the non-consolidated entities for the six months ended
December 31, 2009 was CDN$326,000 (2008: $nil).
The net profit was CDN$24,451,000 for the six months ended December 31,
2009 compared to a net loss of CDN$334,000 for the six months ended December 31,
2008.
The share of the loss attributable to the non-controlling interests of
Acadian amounted to CDN$1,240,000, for which there was no comparable amount in
2008.
The net profit attributable to Golden River Resources stockholders amounted
to CDN$25,691,000 for the six months ended December 31, 2009 compared to a net
loss of CDN$334,000 for the six months ended December 31, 2008.
24
Liquidity and Capital Resources
For the six months ended December 31, 2009, net cash from operating
activities was CDN$1,736,000 primarily consisting of the net profit of
CDN$25,691,000; adjustment to fair value on stepped acquisition of
CDN$16,098,000; gain on bargain purchase of CDN$24,626,000; provision for
deferred tax of CDN$13,486,000;an increase in accounts payable and accrued
expenses of CDN$3,784,000; net cash used in investing activities of
CDN$7,585,000 being the net cost of the additional investment in Acadian to
68.765%; and net cash provided by financing activities of CDN$6,262,000 being
funds from the sale of common stock of CDN$5,568,000; borrowings from affiliates
CDN$4,578,000; repayment to affiliates CDN$3,166,000; re-purchase of warrants
CDN$579,000 and repayment of borrowings CDN$139,000.
As of December 31, 2009, the Company had short-term obligations of
CDN$10,391,000 comprising accounts payable and accrued expenses, lease
liabilities and advance from related parties/associates.
We have CDN$432,000 in cash at December 31, 2009.
The Company will be required to raise further cash to fund its exploration
activities in 2010 and for working capital purposes. In addition, Acadian will
be required to raise further cash to fund its exploration activities and for
working capital purposes and this may be raised through equity or debt. This may
require Golden River Resources to participate in an equity raising or providing
debt financing to Acadian.
We are currently investigating capital raising opportunities which may be
in the form of either equity or debt, to provide funding for working capital
purposes and future exploration programs. There can be no assurance that such a
capital raising will be successful, or that even if an offer of financing is
received by the Company, it is on terms acceptable to the Company.
Cautionary Safe Harbor Statement under the United States Private Securities
Litigation Reform Act of 1995.
Certain information contained in this Form 10-Q's forward looking
information within the meaning of the Private Securities Litigation Act of 1995
(the "Act"). In order to obtain the benefits of the "safe harbor" provisions of
the act for any such forwarding looking statements, the Company wishes to
caution investors and prospective investors about significant factors which
among others have affected the Company's actual results and are in the future
likely to affect the Company's actual results and cause them to differ
materially from those expressed in any such forward looking statements. This
Form 10-Q report contains forward looking statements relating to future
financial results. Actual results may differ as a result of factors over which
the Company has no control including, without limitation, the risks of
exploration and development stage projects, political risks of development in
foreign countries, risks associated with environmental and other regulatory
matters, mining risks and competition and the volatility of gold and copper
prices, movements in the foreign exchange rate and the availability of
additional financing for the Company. Additional information which could affect
the Company's financial results is included in the Company's Form 10-K on file
with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
At December 31, 2009, the Company had outstanding loan facilities of
CDN$7,725,000 and a 100 basis points increase in interest rates would have a
CDN$772,500 effect on the consolidated statement of operations. At December 31,
2009, assuming no change in the cash at bank, a 10% change in the CDN$ versus
US$ exchange rate would have a CDN$4,000 effect on the consolidated statement of
operations.
Item 4. Controls and Procedures.
a) Evaluation of Disclosure Controls and Procedures
Our principal executive officer and our principal financial officer
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
as amended) as of the end of the period covered by this report. Based on that
evaluation, such principal executive officer and principal financial officer
concluded that, the Company's disclosure control and procedures were effective
as of the end of the period covered by this report at the reasonable level of
assurance.
25
b) Change in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during
our most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect our internal control over financial reporting.
c) Other
We believe that a controls system, no matter how well designed and
operated, can not provide absolute assurance that the objectives of the controls
system are met, and no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have
been detected. Therefore, a control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Our disclosure controls and
procedures are designed to provide such reasonable assurance of achieving our
desired control objectives, and our principal executive officer and principal
financial officer have concluded, as of December 31, 2009, that our disclosure
controls and procedures were effective in achieving that level of reasonable
assurance.
26
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
Item 1A. Risk Factors.
Not Applicable for Smaller Reporting Company
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not Applicable
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits.
(a) Exhibit No. Description
3.1 Amendment to Certificate of Incorporation dated December 14,
2009.
31.1 Certification of Chief Executive Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act.
31.2 Certification of Chief Financial Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
Sarbanes-Oxley act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
Sarbanes-Oxley act of 2002.
27
(FORM 10-Q)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Golden River Resources Corporation
By: /s/ Joseph I. Gutnick
---------------------
Joseph I. Gutnick
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Peter Lee
-------------
Peter Lee
Director, Secretary and
Chief Financial Officer
(Principal Financial Officer)
Dated: February 15, 2010
28
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
3.1 Amendment to Certificate of Incorporation dated December 14,
2009.
31.1 Certification of Chief Executive Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act.
31.2 Certification of Chief Financial Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act.
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
Sarbanes-Oxley act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
Sarbanes-Oxley act of 2002.
29