a50164526.htm
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

———————
FORM 10-Q
———————

x
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 
 ACT OF 1934

For the quarterly period ended: December 31, 2011
or

o
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 
 ACT OF 1934

For the transition period from: _____________ to _____________

———————
GOLDEN RIVER RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
———————

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 2860
 (Registrant’s telephone number, including area code)
 
N/A
 (Former name, former address and former fiscal year, if changed since last report)
———————
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
  o
 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
o  
Accelerated filer
o  
Non-accelerated filer
o  
Smaller reporting company
x
 
 
   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
o
 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 56,807,283 outstanding shares of Common Stock as of February 14, 2011.

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.
  o
 Yes
o
 No
 



 
 

 
 
Table Of Contents
 
 
PAGE NO
     
PART I.
FINANCIAL INFORMATION
 
     
2
15
19
19
     
PART II
OTHER INFORMATION
 
     
21
21
21
21
21
21
21
     
     
SIGNATURES
 
22
     
EXHIBIT INDEX
 
23
     
24
25
26
27
     


 
1

 


PART I – FINANCIAL INFORMATION
 
Item 1.
 
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 accounting principles generally accepted in the United States of America (“US GAAP”) 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, 2011.
 
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, 2011, the results of its consolidated operations for the three and six month periods ended December 31, 2011 and December 31, 2010, and the changes in its consolidated cash flows for the six month periods ended December 31, 2011 and December 31, 2010, 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 US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
 
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,
2011
   
June 30,
2011
 
   
CDN$000’s
   
CDN$000’s
 
             
ASSETS
           
             
Current Assets
           
Cash
    804       3,792  
Receivables
    50       152  
Prepaid expenses and deposits
    108       41  
                 
Total Current Assets
    962       3,985  
                 
Non Current Assets
               
Cash held for site remediation (note 10)
    109       109  
Property, plant and equipment (note 11)
    743       979  
Mineral rights (note 9)
    6,542       39,763  
                 
Total Non Current Assets
    7,394       40,851  
                 
Total Assets
    8,356       44,836  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Current Liabilities
               
Accounts payable and accrued expenses
    596       812  
Advances from affiliates (note 3)
    412       -  
Note payable
    -       900  
                 
Total Current Liabilities
    1,008       1,712  
                 
Non Current Liabilities
               
Advances from affiliates (note 3)
    -       54  
Deferred tax liability (note 13)
    -       6,373  
                 
Total Non Current Liabilities
    -       6,427  
                 
Total Liabilities
    1,008       8,139  
                 
Commitments (Note 6)
               
                 
Stockholders’ Equity:
               
Common Stock: $.0001 par value
               
400,000,000 shares authorized
               
56,807,408 issued and outstanding
    5       5  
Additional paid-in-capital
    53,781       53,578  
Less treasury stock at cost, 250 shares
    (19 )     (19 )
Accumulated other comprehensive loss
    (372 )     (372 )
Retained (deficit) during exploration stage
    (25,932 )     (6,553 )
Retained (deficit) prior to exploration stage
    (24,748 )     (24,748 )
                 
Golden River Resources Stockholders’ Equity
    2,715       21,891  
Non Controlling Interests (note 8)
    4,633       14,806  
                 
Total Equity
    7,348       36,697  
                 
Total Liabilities and Equity
    8,356       44,836  
                 
The accompanying notes are an integral part of the 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, 2011 and 2010 and for the cumulative period
July 1, 2002 (inception of exploration activities) to December 31, 2011
(Unaudited)
 
   
Three
Months
Ended
 December 31, 2011
CDN$000’s
   
Three
Months
Ended
December 31, 2010
 CDN$000’s
   
Six Months
Ended
December 31, 2011
CDN$000’s
   
Six Months
Ended
December 31, 2010
 CDN$000’s
   
July 1, 2002
to
December 31, 2011
CDN$000’s
 
                               
Revenues
  $ -     $ -     $ -     $ -     $ -  
                                         
Costs and expenses:
                                       
                                         
Stock based compensation
    14       -       35       -       2,957  
Exploration expenditure
    383       761       1,403       1,590       10,166  
Depreciation and amortization
    60       128       86       253       1,005  
Interest (income) expense, net
    -       (107 )     3       (65 )     486  
Legal, accounting and professional
    49       165       160       401       2,563  
Administrative expenses
    364       424       749       995       8,137  
                                         
Total costs and expenses
    870       1,371       2,436       3,174       25,314  
                                         
                                         
(Loss) from operations
    (870 )     (1,371 )     (2,436 )     (3,174 )     (25,314 )
                                         
Foreign currency exchange (loss)
    (4 )     (21 )     (20 )     (147 )     (379 )
Adjustment to fair value on stepped acquisition
    -       -       -       -       7,433  
Gain on bargain purchase
    -       -       -       -       10,305  
Impairment of mineral rights (notes 8 and 9)
    (33,221 )     -       (33,221 )     -       (33,221 )
Profit on disposal of plant and equipment
    -       48       -       48       48  
Write off on plant and equipment
    -       (170 )     -       (170 )     (170 )
Other Income:
                                       
Profit from sale of equity investment
    -       -       -       -       1,355  
Gain on settlement of guarantee obligation
    -       -       -       -       1,199  
Net gain from sale of subsidiary
    -       -       -       -       641  
Interest (expense) income  – net, related entity
    -       -       -       -       5  
– other
    -       (34 )     -       1       17  
                                         
(Loss) before income tax and equity in (losses) of unconsolidated entities
    (34,095 )     (1,548 )     (35,677 )     (3,442 )     (38,081 )
                                         
Benefit/(provision) for deferred income taxes (note 13)
    6,333       -       6,373       (105 )     -  
                                         
(Loss) before equity in (losses) of unconsolidated entities
    (27,762 )     (1,548 )     (29,304 )     (3,547 )     (38,081 )
Equity in (losses) of unconsolidated entities
    -       -       -       -       (26 )
                                         
Net (loss)
    (27,762 )     (1,548 )     (29,304 )     (3,547 )     (38,107 )
                                         
Net loss attributable to non-controlling interests
    9,527       347       9,925       795       12,175  
                                         
Net (loss) attributable to Golden River Resources stockholders
    (18,235 )     (1,201 )     (19,379 )     (2,752 )     (25,932 )
                                         
Basic and diluted net (loss) per common equivalent shares
                                       
Net (loss) per share
  $ (0.32 )   $ (0.05 )   $ (0.34 )   $ (0.11 )   $ (2.33 )
                                         
Weighted average number of common equivalent shares used per share calculation
    56,807       24,712       56,807       24,435       11,132  

The accompanying notes are an integral part of the consolidated financial statements.
 

 
 
4

 

GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
Six Months Ended December 31, 2011 and 2010 and for the cumulative period
July 1, 2002 (inception of exploration activities) to December 31, 2011
(Unaudited)
 
   
Six months ended
December 31, 2011
CDN$000’s
   
Six months ended
December 31, 2010
 CDN$000’s
   
July 1, 2002
to
Dec 31, 2011
CDN$000’s
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES
                 
                   
Net (loss)
    (29,304 )     (3,547 )     (38,107 )
                         
Adjustments to reconcile net (loss) to net cash (used) in operating activities
                       
Foreign currency exchange (gain)/ loss
    20       147       379  
Impairment of mineral rights
    33,221       -       33,221  
Depreciation/amortization of plant and equipment
    86       253       1,005  
Stock based compensation
    35       -       2,957  
(Benefit)/provision for deferred income tax
    (6,373 )     105       -  
Equity in profits of non-consolidated entities
    -       -       26  
Adjustment to fair value on stepped acquisition
    -       -       (7,433 )
Bargain purchase of controlled entities
    -       -       (10,305 )
Profit from sale of equity investment
    -       -       (1,355 )
Profit on disposal of plant and equipment
    -       (48 )     (48 )
Gain on settlement of guarantee option
    -       -       (1,199 )
Gain on disposal of subsidiary
    -       -       (641 )
Write off of exploration costs
    -       377       377  
Write off of plant and equipment
    -       170       170  
Accrued interest added to principal
    -       -       259  
Net change net of acquisition in:
                       
Receivables
    102       (6 )     (57 )
Staking deposit
    -       -       22  
Prepaid expenses and deposits
    (67 )     (23 )     (138 )
Accounts payable and accrued expenses
    (234 )     998       (1,813 )
Accrued site remediation
    -       400       (200 )
                         
Net Cash (Used) in Operating Activities
    (2,514 )     (1,174 )     (22,880 )
                         
CASH FLOW FROM INVESTING ACTIVITIES
                       
                         
Acquisition of majority owned subsidiary net of cash acquired
    (80 )     (1,477 )     (10,142 )
Proceeds of sale of equity investment
    -       -       1,963  
Proceeds of disposal of plant and equipment (net)
    221       76       297  
Proceeds of disposal of subsidiary (net)
    -       -       9,803  
Purchase of plant and equipment
    (71 )     (19 )     (441 )
                         
Net Cash Provided/(Used) in Investing Activities
    70       (1,420 )     1,480  
                         
CASH FLOW FROM FINANCING ACTIVITIES
                       
                         
Borrowings from affiliates
    358       672       9,199  
Repayments to affiliates
    (900 )     (1,622 )     (8,056 )
Proceeds from issuance of stock
    -       3,097       13,861  
Repayment of borrowings
    -       -       (139 )
Sale of warrants (net)
    -       -       4,749  
Re-purchase of warrants
    -       -       (579 )
Proceeds from loan payable
    -       -       3,261  
                         
Net Cash (Used)/Provided by Financing Activities
    (542 )     2,147       22,296  
                         
Effects of Exchange Rate on Cash
    (2 )     -       (92 )
                         
Net (Decrease)/Increase in Cash
    (2,988 )     (447 )     804  
Cash at Beginning of Period
    3,792       957       -  
                         
Cash at End of Period
    804       510       804  
Supplemental Disclosures
                       
Interest Paid
    3       42       526  
                         
NON CASH FINANCING ACTIVITY
                       
Debt repaid through issuance of shares
    -       -       5,771  
Write-off of plant and equipment
    -       -       170  
Stock options recorded as deferred compensation
    -       -       1,258  
Extinguishment of related party debt
    -       -       593  
Stock issued for acquisition of properties
    -       -       627  

The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
5

 
 
 
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
December 31, 2011
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2011
(Unaudited)
 
   
Shares
   
Common
Stock
Amount
   
Treasury
Stock, at
Cost
   
Additional
Paid-in
Capital
   
Retained
Profit/(Deficit)
during the
Exploration
stage
   
Retained
 (Deficit)
prior to
Exploration
Activities
   
Deferred
Compen
-sation
   
Accumulated
Other
Compre-
hensive
Loss
   
Non-Controlling
Interests
   
Total
 
      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
   
CDN$000’s
 
                                                                                 
Balance June 30, 2002
    635       -     $ (19 )   $ 24,061       -     $ (24,748 )     -     $ (461 )     -     $ (1,167 )
Net loss
    -       -       -       -     $ (639 )     -       -       -       -       (639 )
Balance June 30, 2003
    635       -     $ (19 )   $ 24,061     $ (639 )   $ (24,748 )     -     $ (461 )     -     $ (1,806 )
Issuance of 175,398 shares and warrants in lieu of debt repayment
    175       -       -     $ 2,331       -       -       -       -       -     $ 2,331  
Sale of 167,000 shares and warrants
    167       -       -     $ 2,221       -       -       -       -       -     $ 2,221  
Issuance of 694,306 shares on cashless exercise of options
    694       -       -       -       -       -       -       -       -     $ 0  
Net unrealized (loss) on foreign exchange
    -       -       -       -       -       -       -     $ (317 )     -     $ (317 )
Net (loss)
    -       -       -       -     $ (1,616 )     -       -       -       -     $ (1,616 )
Balance June 30, 2004
    1,671       -     $ (19 )   $ 28,613     $ (2,255 )   $ (24,748 )     -     $ (778 )     -     $ 813  
Issuance of 140,000 options under 2004 stock option plan
    -       -       -     $ 1,646       -       -     $ (1,646 )     -       -     $ 0  
Amortization of 140,000 options under 2004 stock option plan
    -       -       -       -       -       -     $ 1,095       -       -     $ 1,095  
Net unrealized (loss) on foreign exchange
    -       -       -       -       -       -       -     $ (17 )     -     $ (17 )
Net/(loss)
    -       -       -       -     $ (3,156 )     -       -       -       -     $ (3,156 )
Balance June 30, 2005
    1,671       -     $ (19 )   $ 30,259     $ (5,411 )   $ (24,748 )   $ (551 )   $ (795 )     -     $ (1,265 )
To eliminate deferred compensation against Additional Paid-In Capital
    -       -       -     $ (551 )     -       -     $ 551       -       -     $ 0  
Issuance of 1,000,000 shares and 2,000,000 options in lieu of debt repayment
    1,000       -       -     $ 3,321       -       -       -       -       -     $ 3,321  
Capital gain on shares and options issued in lieu of debt repayment
    -       -       -     $ (1,610 )     -       -       -       -       -     $ (1,610 )
Sale of 2,000,000 normal warrants
    -       -       -     $ 827       -       -       -       -       -     $ 827  
Sale of 1,000,000 special warrants
    -       -       -     $ 887       -       -       -       -       -     $ 887  
Amortization of 140,000 options under 2004 stock option plan
    -       -       -     $ 532       -       -       -       -       -     $ 532  
Net unrealized gain on foreign exchange
    -       -       -       -       -       -       -     $ 369       -     $ 369  
Net (loss)
    -       -       -       -     $ (1,588 )     -       -       -       -     $ (1,588 )
Balance June 30, 2006
    2,671       -     $ (19 )   $ 33,665     $ (6,999 )   $ (24,748 )   $ -     $ (426 )     -     $ 1,473  
 
 
 
 
6

 
 
 
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
December 31, 2011
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2011
 (Unaudited) Continued
 
   
 
 
 
Shares
   
 
Common
Stock
Amount
   
 
Treasury
Stock, at
Cost
   
 
Additional
Paid-in
Capital
   
Retained
Profit/(Deficit)
during the
Exploration
stage
   
Retained
 (Deficit)
prior to
Exploration
Activities
   
 
Deferred
Compen
-sation
   
Accumulated
Other
Compre-
hensive
Loss
   
Non-
Controlling
Interests
   
 
 
 
Total
 
      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
   
CDN$000’s
 
                                                                                 
Costs associated with sale of normal and special warrants
    -       -       -     $ (3 )     -       -       -       -       -     $ (3 )
Amortization of 140,000 options under 2004 stock option plan
    -       -       -     $ 19       -       -       -       -       -     $ 19  
Amortization of 465,000 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
    2,671     $ -     $ (19 )   $ 34,191     $ (8,964 )   $ (24,748 )   $ -     $ (378 )     -     $ 82  
Amortization of 465,000 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
    2,671     $ -     $ (19 )   $ 34,524     $ (10,037 )   $ (24,748 )   $ -     $ (351 )     -     $ (631 )
Amortization of 465,000 options under 2006 stock option plan
    -       -       -     $ 173       -       -       -       -       -       173  
Sale of 10,000,000 shares
    10,000     $ 1       -     $ 681       -       -       -       -       -       682  
Net unrealized loss on foreign exchange
    -       -       -       -       -       -       -     $ (43 )     -     $ (43 )
Forgiveness of advances from affiliate
    -       -       -     $ 588       -       -       -       -       -       588  
Net (loss)
    -       -       -       -     $ (1,252 )     -       -       -       -     $ (1,252 )
Balance June 30, 2009
    12,671     $ 1     $ (19 )   $ 35,966     $ (11,289 )   $ (24,748 )   $ -     $ (394 )     -     $ (483 )
Amortization of 465,000 options under 2006 stock option plan
    -       -       -     $ 39       -       -       -       -             $ 39  
Sale of 9,960,351 shares
    9,960     $ 1       -     $ 10,763       -       -       -       -       -     $ 10,764  
Issuance of 300,000 shares as part purchase price of mining properties
    300       -       -     $ 627       -       -       -       -       -     $ 627  
Re-purchase of warrants
    -       -       -     $ (579 )     -       -       -       -       -     $ (579 )
Net unrealized gain on foreign exchange
    -       -       -       -       -       -       -     $ 22       -     $ 22  
Net profit
    -       -       -       -     $ 10,261       -       -       -       -     $ 10,261  
Adjustment for  additional investment in consolidated subsidiary
    -       -       -     $ 1,994       -       -       -       -     $ (1,994 )     -  
Fair value of non-controlling interest
    -       -       -       -       -       -       -       -     $ 20,552     $ 20,552  
Net loss attributable to non-controlling interests
    -       -       -       -     $ 1,404       -       -       -     $ (1,404 )     -  
Balance June 30, 2010
    22,931     $ 2     $ (19 )   $ 48,810     $ 376     $ (24,748 )   $ -     $ (372 )   $ 17,154     $ 41,203  
 
 
 
7

 
 

 
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
December 31, 2011
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2011
(Unaudited) Continued
 
   
 
 
 
Shares
   
 
Common
Stock
Amount
   
 
Treasury
Stock, at
Cost
   
 
Additional
Paid-in
Capital
   
Retained
 Profit/(Deficit)
during the
Exploration
stage
   
Retained
 (Deficit)
prior to
Exploration
Activities
   
 
Deferred
Compen-
sation
   
Accumulated
Other
Compre-
hensive
Loss
   
Non-Controlling
Interests
   
 
 
 
Total
 
      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
   
CDN$000’s
 
                                                                                 
Issue of 33,875,000 shares
    33,876     $ 3       -     $ 3,094       -       -       -       -       -     $ 3,097  
Amortization of 800,000 options under employee stock option plan
    -       -       -     $ 162       -       -       -       -       -     $ 162  
Net (loss)
    -       -       -       -     $ (7,775 )     -       -       -       -     $ (7,775 )
Adjustment for additional investment in consolidated subsidiary
    -       -       -     $ 1,512       -       -       -       -     $ (1,512 )   $ 0  
Adjustment due to issue of shares by subsidiary
    -       -       -       -       -       -       -       -     $ 10     $ 10  
Net loss attributable to non-controlling interests
    -       -       -       -     $ 846       -       -       -     $ (846 )   $ 0  
Balance June 30, 2011
    56,807     $ 5     $ (19 )   $ 53,578     $ (6,553 )   $ (24,748 )   $ -     $ (372 )   $ 14,806     $ 36,697  
Amortization of 1,100,000 options under employee stock option plan
    -       -       -     $ 35       -       -       -       -       -     $ 35  
Net (loss)
    -       -       -       -     $ (29,304 )     -       -       -       -     $ (29,304 )
Adjustment for additional investment in consolidated subsidiary
    -       -       -     $ 168       -       -       -       -     $ (248 )   $ (80 )
Net loss attributable to non-controlling interests
    -       -       -       -     $ 9,925       -       -       -     $ (9,925 )   $ 0  
Balance December 31, 2011
    56,807     $ 5     $ (19 )   $ 53,781     $ (25,932 )   $ (24,748 )   $ -     $ (372 )   $ 4,633     $ 7,348  
 
The accompanying notes are an integral part of the consolidated financial statements
 
 
 
8

 

GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011
 
(1)      Organisation
 
Golden River Resources Corporation (“Golden River Resources” or the “Company”) is incorporated in the State of Delaware. The principal shareholders of Golden River Resources are companies associated with the President of Golden River Resources and his spouse. These companies owned 96.6% of Golden River Resources as of December 31, 2011.
 
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.
 
Golden River Resources, as part of its business strategy, is engaged in gold and base metal exploration activity in Canada. 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 giving Golden River Resources a 68.67% holding of Acadian. As of December 31, 2011, Golden River Resources held 38,994,020 common shares in Acadian for a 71.96% interest. (See Note 14 for a discussion of changes in the Company’s ownership interest in Acadian after December 31, 2011.)  On November 17, 2010, Acadian consolidated its outstanding common shares on the basis of one post-consolidated share for every ten pre-consolidated shares as approved by Acadian shareholders.
 
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. However, Golden River Resources is an exploration stage company which has not yet commenced revenue producing operations and has sustained recurring losses since inception, all of which raises substantial doubt as to its ability to continue as a going concern.
 
In addition, Golden River Resources has historically relied on loans and advances from corporations affiliated with the President of Golden River Resources and fund raising through the sale of equity instruments.  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.  The Company’s ability to continue operations through fiscal 2012 is dependent upon future funding from capital raisings, or its ability to commence revenue producing operations and positive cash flows.
 
(2)      Recent Accounting Pronouncements
 
In June 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-05, Comprehensive Income — Presentation of Comprehensive Income.  ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. It requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, Comprehensive Income — Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05,  to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.
 
In September 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-08, Testing Goodwill for Impairment. This ASU is intended to simplify how entities test goodwill for impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350, Intangibles-Goodwill and Other. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.
 
 
 
9

 
 
 
In December 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet — Disclosures about Offsetting Assets and Liabilities.  ASU 2011-11 requires entities to disclose information about offsetting and related arrangements of financial instruments and derivative instruments and will be applied retrospectively for all comparative periods presented. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company does not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

(3)    Affiliate Transactions
 
Golden River Resources advances to and receives advances from various affiliates.  All advances between consolidated affiliates are eliminated on consolidation.
 
The Company has entered into an agreement with AXIS Consultants Pty Ltd (“AXIS”) to provide geological, management and administration services to the Company. AXIS is affiliated through common management. The Company is one of ten affiliated companies to which AXIS provides services. Each of the companies has some common Directors, officers and shareholders. Golden River Resources holds a 9.09% interest in AXIS at a cost of A$1 and is accounted for under the cost method. Any profits generated by AXIS are returned to its shareholders in the form of dividends.
 
During the six months ended December 31, 2010, AXIS advanced the Company CDN$602,633 and provided services in accordance with the service agreement of CDN$66,607. During the six months ended December 31, 2010, the Company repaid CDN$1,622,400. During the six months ended December 31, 2010, AXIS did not charge interest. The amount owed to AXIS at June 30, 2011 was CDN$54,242 and is reflected in non-current liabilities – advances from affiliates.
 
During the six months ended December 31, 2011, AXIS advanced the Company CDN$231,582 and provided services in accordance with the service agreement of CDN$126,701. The amount owed to AXIS at December 31, 2011 was CDN$412,505 and is reflected in current liabilities – advances from affiliates. During the six months ended December 31, 2011, AXIS did not charge interest. The amount owing to AXIS has been repaid in the third quarter of 2012 and accordingly has been reclassified from non-current liabilities to current liabilities at December 31, 2011.
 
During fiscal 2010, the Company sold shares of common stock to Northern Capital Resources Corp, a Nevada corporation (“NCRC”), pursuant to certain subscription agreements. Mr Joseph Gutnick, the Company’s President, is the Chairman and Chief Executive Officer of NCRC. As of December 31, 2011, NCRC owned approximately 96.6% of the outstanding common stock of the Company.
 
(4)    Issue of Options under Stock Option Plan
 
In October 2004, the Board of Directors and Remuneration Committee of the Company adopted a Stock Option Plan. The Company issued 605,000 options under the plan. At December 31, 2011, the options are fully vested.
 
Since the issue of the options, 120,000 options have lapsed following the termination of participants to the issue.
 
A summary of the options outstanding and exercisable at December 31, 2011 are as follows:
 
   
Outstanding
   
Outstanding
   
Exercisable
   
Exercisable
 
                                 
Number of options
    80,000       405,000       80,000       405,000  
                                 
Exercise price
 
CDN$10.00
   
CDN$3.08
   
CDN$10.00
   
CDN$3.08
 
                         
Expiration date
 
October 15, 2014
   
October 15, 2016
   
October 15, 2014
   
October 15, 2016
 
 
Acadian
 
At the annual and special meeting of shareholders of Acadian held on June 14, 2007, the shareholders adopted a 10% "rolling" incentive stock option plan (the "Plan"). Options granted under the Plan have a five-year term. Options are granted at a price no lower than the market price of the common shares at the time of the grant. The rules of the Toronto Stock Exchange ("TSX") provide that all unallocated options issuable under a "rolling" stock option plan must be approved by shareholders every three years after institution of the stock option plan. The plan was approved at the Annual General Meeting of Acadian held June 24, 2010. In determining the stock-based compensation expense, in fiscal 2011, the fair value of the options issued were estimated using a Black-Scholes option pricing model with the weighted average assumptions used of risk-free interest rate of 1.50%, expected dividend yield of 0.00% expected stock price volatility of 62%, expected life of options of 5 years and grant date fair value CDN$0.30.
 
 
 
10

 
 
 
Acadian options currently outstanding are:
 
On June 15, 2010, the Company granted 500,000 options to one director of the Company with an exercise price of CDN$0.45 per share expiring June 15, 2015, to be vested one-third on grant date, one-third after 12 months from grant date and one-third after 24 months from grant date. The total value of the options equates to CDN$138,765 and such amount is amortized over the vesting period. For the six months ending December 31, 2011, stock based compensation expense relating to stock options was CDN$11,564.
 
A summary of the Acadian options outstanding and exercisable at December 31, 2011 are as follows:
 
   
Outstanding
   
Exercisable
 
             
Number of options
    500,000       333,333  
                 
Exercise price
 
CDN$0.45
   
CDN$0.45
 
                 
Expiration date
 
June 15, 2015
   
June 15, 2015
 
 
As at December 31, 2011, there was CDN$11,564 of unrecognized compensation cost, before income taxes, related to unvested stock options.
 
On August 18, 2010, the Company granted 300,000 Acadian options to three directors of the Company with an exercise price of CDN$0.45 per share expiring August 18, 2015, to be vested one-third on grant date, one-third after 12 months from grant date and one-third after 24 months from grant date. The total value of the options equates to CDN$56,349 and such amount is amortized over the vesting period. For the six months ending December 31, 2011, stock based compensation expense relating to stock options was CDN$7,826.
 
A summary of the options outstanding and exercisable at December 31, 2011 are as follows:
 
   
Outstanding
   
Exercisable
 
             
Number of options
    300,000       200,000  
                 
Exercise price
 
CDN$0.45
   
CDN$0.45
 
                 
Expiration date
 
August 18, 2015
   
August 18, 2015
 
 
As at December 31, 2011, there was CDN$6,261 of unrecognized compensation cost, before income taxes, related to unvested stock options.
 
On June 23, 2011, Acadian granted 100,000 options to its Chief Financial Officer with an exercise price of CDN$0.45 per share, expiry date of June 23, 2016 to be vested one third on grant date, one third after 12 months from grant date and one third after 24 months from grant date. The total value of the options equates to CDN$12,338 and such amount is amortized over the vesting period. For the six months ended December 31, 2011, stock based compensation expense relating to stock options was CDN$3,085.
 
A summary of the options outstanding and exercisable at December 31, 2011 are as follows:
 
   
Outstanding
   
Exercisable
 
             
Number of options
    100,000       33,333  
                 
Exercise price
 
CDN$0.45
   
CDN$0.45
 
                 
Expiration date
 
June 23, 2016
   
June 23, 2016
 
 
As at December 31, 2011, there was CDN$5,141 of unrecognized compensation cost, before income taxes, related to unvested stock options.
 
 
On July 13, 2011, the Company granted an aggregate of 200,000 options to seven employees with an exercise price of $0.45 per share, expiring July 13, 2016, to be vested one third on grant date, one third 12 months from grant date and one third 24 months from grant date. The total value of the options equates to CDN$20,712 and such amount is amortised over the vesting period. For the six months ending December 31, 2011, stock based compensation expense relating to stock options was CDN$11,219.
 
A summary of the options outstanding and exercisable at December 31, 2011 are as follows:
 
   
Outstanding
   
Exercisable
 
             
Number of options
    200,000       66,666  
                 
Exercise price
 
CDN$0.45
   
CDN$0.45
 
                 
Expiration date
 
July 13, 2016
   
July 13, 2016
 
 
As at December 31, 2011, there was CDN$9,493 of unrecognized compensation cost, before income taxes, related to unvested stock options.
 
 
 
11

 
 
 
(5)      (Loss) per share
 
The Company calculates profit/(loss) per share in accordance with ASC Topic 260, Earnings per Share. Basic profit/(loss) per share is computed based on the weighted average number of common shares outstanding during the period.
 
The following table reconciles the diluted weighted average shares outstanding used for the computation:
 
   
Six months ended
December 31
 
 
Diluted weighted average shares
    2011 ‘000       2010 ‘000  
Basic
    56,807       24,435  
Effect of employee stock based awards
    -       -  
Diluted weighted average shares outstanding
    56,807       24,435  
 
Options to acquire 485,000 shares of common stock were not included in the diluted weighted average shares outstanding as such effects would be anti-dilutive.
 
(6)      Commitments
 
In July 2011, the Company entered into a lease for an office premises with minimum annual lease payments of CDN$112,682. The lease begins on July 1, 2011 and ends on June 30, 2016 with a right to terminate after June 30, 2013 for a penalty equal to four months base rent.
 
The Company is committed to minimum annual lease payments of CDN$103,607 on its office premises until October 2013. Effective September 1, 2010, the Company has sublet the office premises for a rental equivalent of the lease commitment.
 
Future minimum contractual obligations under operating leases are as follows:
 
   
CDN$
 
2012
    108,144  
2013
    216,289  
2014
    147,217  
2015
    112,682  
2016
    112,682  
      697,014  
 
The Company has an obligation to spend CDN$611,252 on its exploration properties or make payments in lieu of expenditure during fiscal 2012 to maintain its properties.
 
 
Total rent expense incurred by the Company amounted to CDN$45,986 for the six months ended December 31, 2011 and CDN$29,341 for the six months ended December 31, 2010.
 
Acadian has an obligation to spend CDN$234,000 and issue 29,118 Acadian shares on its exploration properties during fiscal 2012 to maintain its properties.
 
(7)      Fair Value Of Financial Instruments
 
The Company’s financial instruments consist of cash, receivables, prepaid expenses, accounts payable, accrued expenses and advances from affiliates. The carrying amounts of receivables, accounts payable and accrued expenses approximate their respective fair values because of the short maturities of these expenses. The fair values of advances from affiliates are not practicable to estimate as no similar market exists for these instruments and as it does not have a specified date of repayment.
 
(8)      Investments/Subsidiaries
 
At June 30, 2011, the Company’s holding in Acadian was 71.48%. During the six months ended December 31, 2011, the Company purchased an additional 259,500 shares in Acadian through on-market purchases in the Toronto Stock Exchange, increasing its holding in Acadian to 71.96% at December 31, 2011. The cost to the Company was CDN$79,985. As a result of this transaction, the Company recorded a CDN$168,000 adjustment to additional paid in capital and CDN$248,000 to non-controlling interest, representing the difference between the amount paid for such additional shares and the carry amount of the investment. Subsequent to December 31, 2011, the Company sold a portion of its holding in Acadian – refer footnote 14.
 
 
 
12

 
 
 
The amount of revenue of Acadian for the six months ended December 31, 2011 and December 31, 2010 included in the consolidated statement of operations were CDN$nil and CDN$nil and the amount of loss was CDN$2,168,000 and CDN$2,927,000 respectively.
 
(9)      Mineral Rights
 
The fair-value of the mineral rights acquired in the acquisition of Acadian was based upon a valuation report prepared by an investment banking firm with substantial experience in merger and acquisition transactions including provision of fairness opinions and valuations.  Accordingly, the Company had attributed a fair value of CDN$43,790,000 to mineral rights. On May 31, 2011, Acadian sold 100% of its shares in ScoZinc Limited, a wholly owned subsidiary, the attributed fair value of CDN$4,026,855 to ScoZinc mineral rights was included in the assets sold.
 
Following the end of the December 2011 quarter, the Company made an assessment of the carrying value of the mineral rights of Acadian and concluded that it did not expect to be able to realize the carrying value. This assessment took into account various factors including the exploration results from Acadian’s exploration programs since the Company’s initial acquisition of shares in Acadian and the transaction noted in note 14, and the market capitalization of Acadian. As a result, the Company impaired the carrying value of the mineral rights and has recorded an impairment of mineral rights of CDN$33,221,000 and a benefit to deferred tax of CDN$6,373,000 in the Company’s consolidated statement of operations.
 
The carrying value of mineral rights at December 31, 2011 is CDN$6,542,000 (2010:CDN$39,763,000).
 
Under US GAAP, exploration expenditure is expensed to the consolidated statement of operations as incurred, unless there is a mineral reserve on the property.
 
(10)   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, Acadian has CDN$109,000 on deposit with the relevant authorities in Canada to cover the cost of this remediation work.
 
(11)   Property, Plant and Equipment
 
Property, plant and equipment is stated at cost.  The Company records depreciation and amortization, when appropriate, using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property's useful life are capitalized. Assets sold or retired, together with the related accumulated depreciation are removed from the appropriate accounts and the resultant gain or loss is included in net income (loss).
 
   
At December 31, 2011
   
At June 30, 2011
 
   
Cost
   
Accumulated Depreciation
   
Net Book Value
   
Cost
   
Accumulated Depreciation
   
Net Book Value
 
   
CDN$
   
CDN$
   
CDN$
   
CDN$
   
CDN$
   
CDN$
 
                                     
Office
    283,871       (28,533 )     255,338       260,119       (21,986 )     238,133  
Automotive equipment
    93,726       (22,026 )     71,700       93,726       (9,373 )     84,353  
Office fixtures and computer equipment
    386,589       (155,009 )     231,580       339,238       (88,321 )     250,917  
Land
    184,717       -       184,717       405,617       -       405,617  
      948,903       (205,568 )     743,335       1,098,700       (119,680 )     979,020  
 
The depreciation expense for the six months ended December 31, 2011 amounted to CDN$86,000 and for the six months ended December 31, 2010 amounted to CDN$253,000. Net book value of assets disposed of for the six months ended December 31, 2011 amounted to CDN$221,000.
 
(12)   Comprehensive Income (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. Changes in unrealized foreign currency translation adjustments during the six months ended December 31, 2011 and 2010 amounted to CDN$nil and CDN$nil respectively.  Accordingly, comprehensive (loss) for the six months ended December 31, 2011 and 2010 amounted to CDN$(19,379,000) and CDN$(2,752,000) respectively.
 
 
 
13

 
 
 
(13)   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.
 
The Company’s net deferred taxes at December 31, 2011 is summarized as follows:
 
   
USA
CDN$000s
   
Canada
CDN$000s
   
Total
CDN$000s
 
                   
Deferred tax assets
                 
  Net operating loss carry-forward
    2,062       186       2,248  
  Exploration expenditure
    564       1,573       2,137  
      2,626       1,759       4,385  
  Less valuation allowance
    (2,626 )     (1,759 )     (4,385 )
Net deferred taxes
    -       -       -  
 
The Company’s net deferred taxes at June 30, 2011 is summarized as follows:
 
   
USA
CDN$000s
   
Canada
CDN$000s
   
Total
CDN$000s
 
                   
Deferred tax assets
                 
  Net operating loss carry-forward
    1,923       218       2,141  
  Exploration expenditure
    805       1,675       2,480  
      2,728       1,893       4,621  
  Less valuation allowance
    (2,728 )     (1,893 )     (4,621 )
      -       -       -  
Deferred tax liability
                       
  Investment in subsidiary
    (6,373 )     -       (6,373 )
Net deferred taxes
    (6,373 )     -       (6,373 )
 
Total available net operating loss carry-forwards in the United States, which are subject to limitations, amount to approximately CDN$5,700,000 at June 30, 2011 and expire in years 2023 through 2030. Net operating loss carry-forwards in Canada do not have a definite expiration date and amounted to CDN$4,869,000.
 
Included in accounts payable and accrued expenses is an amount of CDN$257,428 being an estimated liability to the IRS in relation to late filing of prior year tax returns. The Company has estimated the potential maximum liability and is making representations to the IRS in relation to the quantum of this liability.
 
As part of the transactions noted on notes 9 and 14, the Company recorded a benefit to deferred tax of CDN$6,373,000.
 
(14)   Subsequent Events
 
The Company has evaluated significant events subsequent to the balance sheet date and has determined that there were no subsequent events or transactions except as described below which would require recognition or disclosure in the consolidated financial statements.
 
On January 31, 2012, the Company entered into a share purchase agreement with an arms-length third party to sell 10,783,145 shares in Acadian at a price of CDN$0.15 for proceeds of CDN$1,617,472. Closing occurred on February 6, 2012. Following closing, the Company holds 52.01% of Acadian. As part of the agreement, the Company provided certain representations and warranties to the purchaser in relation to Acadian, and indemnified the purchaser in respect to the items subject to the representations and warranties, if the cumulative financial effect of the indemnity exceeds CDN$300,000. Further, one of the Company’s nominees to the board of directors of Acadian has resigned and has been replaced by a nominee of the purchaser.

On February 7, 2012 the Company paid the current amount owing to AXIS in full.
 
 
14

 


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, 2010
CDN$1.00 = US$1.0001
6 months ended December 31, 2011
CDN$1.00 = US$.98044
6 months ended December 31, 2010
CDN$1.00 = A$0.98420
6 months ended December 31, 2011
CDN$1.00 = A$0.96344
 
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 are 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.
 
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 three and six months ended December 31, 2011 to the three and six months ended December 31, 2010 does not always present a true comparison.
 
GENERAL
 
Golden River Resources as part of its business strategy is engaged in gold exploration activity in Canada. As part of this strategy in fiscal 2009, the Company acquired an interest in Acadian Mining Corporation (“Acadian”), a Canadian gold, lead and zinc exploration corporation. Effective May 31, 2011, Acadian sold its lead and zinc assets, including Scotia Mine for CDN$10 million. During the six months ended December 31, 2011, the Company purchased an additional 259,500 shares in Acadian at a cost of CDN$79,985. As at December 31, 2011, Golden River Resources held a 71.96% interest in Acadian. On January 31, 2012, the Company entered into a share purchase agreement with an arms-length third party to sell 10,783,145 shares in Acadian at a price of CDN$0.15 for proceeds of CDN$1,617,472. Closing occurred on February 6, 2012. Following closing, the Company holds 52.01% of Acadian.
 
RESULTS OF OPERATIONS
 
Three Months Ended December 31, 2011 vs. Three Months Ended December 31, 2010
 
As a result of the sale by Acadian of all of the shares in ScoZinc Limited on May 31, 2011, there is a lack of comparability between the Company’s results for the three months ended December 31, 2011 compared to the three months ended December 31, 2010.
 
Costs and expenses decreased from CDN$1,371,000 in the three months ended December 31, 2010 to CDN$870,000 in the three months ended December 31, 2011.
 
 
The decrease in costs and expenses is a net result of:
 
a)
an increase in stock based compensation from CDN$nil for the three months ended December 31, 2010 to CDN$14,000 for the three months ended December 31, 2011 as a result of options issued to Directors and employees of Acadian which are being progressively expensed over the vesting period. See Note 4 concerning the Company’s outstanding stock options.
 
b)
a decrease in the exploration expenditure expense from CDN$761,000 for the three months ended December 31, 2010 to CDN$383,000 for the three months ended December 31, 2011. For Golden River Resources, the costs related to consultants providing exploration reviews and advice on the Slave and Committee Bay properties as no field work was undertaken during the three months ended December 31, 2010 or 2011 by the Company. Included within exploration expenditure expense for the three months ended December 31, 2011 is CDN$346,000 for work undertaken by Acadian for field exploration activities on its gold properties. The decrease in exploration expenditure during the three months ended December 31, 2011 was primarily due to completion by Acadian of a drill program on the Fifteen Mile project. Included within exploration expenditure expense for the three months ended December 31, 2010 is CDN$220,000 for certain maintenance work undertaken by Acadian on its Scotia mine which was on care and maintenance until its sale on May 31, 2011. There is no comparable amount for the three months ended December 31, 2011.
 
 
 
15

 
 
 
c)
a decrease in depreciation and amortization expense from CDN$128,000 for the three months ended December 31, 2010 to CDN$60,000 for the three months ended December 31, 2011. The depreciation and amortization expense relates to the activities of Acadian. For the three months ending December 31, 2010 depreciation and amortization for Acadian included amortization of the ScoZinc mine and mill and equipment.
 
d)
a decrease in interest expense/(income) from CDN$(107,000) for the three months ended December 31, 2010 to CDN$nil for the three months ended December 31, 2011. The interest (income  for the three months ended December 31, 2010 relates to an accrual for interest payable by Acadian on a third party liability which was subsequently reversed following confirmation of the amount owing by the third party.  During May 2011 the debt was settled and satisfied.
 
e)
a decrease in legal, accounting and professional expense from CDN$165,000 for the three months ended December 31, 2010 to CDN$49,000 for the three months ended December 31, 2011. Included within legal, accounting and professional expense for the three months ended December 31, 2011 is CDN$24,000 for costs associated with the Company’s SEC compliance obligations and CDN$25,000 for Acadian which relates to general legal work, audit and stock transfer costs. The decrease is primarily the result of a reduction in secretarial services, financial reporting reviews and taxation services.
 
f)
a decrease in administrative costs including salaries from CDN$424,000 in the three months ended December 31, 2010 to CDN$364,000 in the three months ended December 31, 2011. Included within administrative expense for the three months ended December 31, 2011 is CDN$306,000 for Acadian compared to CDN$368,000 for the three months ended December 31, 2010 , which includes head office salaries, rent, office related costs and travel. The decrease relates to a decrease in head office salaries, office and statutory filing costs.
 
As a result of the foregoing, the loss from operations decreased from CDN$1,371,000 for the three months ended December 31, 2010 to CDN$870,000 for the three months ended December 31, 2011.
 
The Company recorded a foreign currency exchange loss of CDN$4,000 for the three months ended December 31, 2011 and CDN$21,000 for the three months ended December 31, 2010, primarily due to revaluation of advances from affiliates which are denominated in Australian dollars.
 
Following the end of the December 2011 quarter, the Company made an assessment of the carrying value of the mineral rights of Acadian and concluded that it did not expect to be able to realize the carrying value. This assessment took into account various factors including the exploration results from Acadian’s exploration programs since the Company’s initial acquisition of shares in Acadian, and the market capitalization of Acadian. As a result, the Company impaired the carrying value of the mineral rights and has recorded an impairment of mineral rights of CDN$33,221,000 (2010: CDN$nil), in the Company’s consolidated statement of operations.
 
The Company recorded a profit on disposal of plant and equipment of CDN$48,000 for the three months ended December 31, 2010 for which there was no comparable amount for the three months ended December 31, 2011. Acadian disposed of surplus equipment.
 
The Company recorded a write-off of plant and equipment of CDN$170,000 for the three months ended December 31, 2010 for which there was no comparable amount for the three months ended December 31, 2011. Acadian wrote down the carrying value of plant and equipment after a physical review.
 
The loss before income taxes and equity in (losses) of unconsolidated entities for the three months ended December 31, 2011 was CDN$34,095,000 compared to CDN$1,548,000 for the three months ended December 31, 2010.
 
The Company has recorded a benefit to deferred tax of CDN$(6,333,000) for the three months ended December 31, 2011 as a result of impairment of mineral rights compared to a provision for tax of CDN$nil for the three months ended December 31, 2010.
 
The loss before equity in (losses) of unconsolidated entities for the three months ended December 31, 2011 was CDN$27,762,000 compared to CDN$1,548,000 for the three months ended December 31, 2010.
 
The net loss was CDN$27,762,000 for the three months ended December 31, 2011 compared to CDN$1,548,000 for the three months ended December 31, 2010.
 
 
 
16

 
 
 
The share of the loss attributable to the non-controlling interests of Acadian amounted to CDN$9,527,000 for the three months ended December 31, 2011 compared to CDN$347,000 for the three months ended December 31, 2010. At December 31, 2010, the Company’s interest in Acadian was 71.48% and at December 31, 2011, its interest was 71.96%. Further, the impairment of mineral rights referred to above results in a share of the loss of non-controlling interest of Acadian.
 
The net loss attributable to Golden River Resources stockholders amounted to CDN$18,235,000 for the three months ended December 31, 2011 compared to CDN$1,201,000 for the three months ended December 31, 2010.
 
Six Months Ended December 31, 2011 vs. Six Months Ended December 31, 2010.
 
As a result of the sale by Acadian of all of the shares in ScoZinc Limited on May 31, 2011, there is a lack of comparability between the Company’s results for the six months ended December 31, 2011 compared to the six months ended December 31, 2010.
 
Costs and expenses decreased from CDN$3,174,000 in the six months ended December 31, 2010 to CDN$2,436,000 in the six months ended December 31, 2011.
 
 
The decrease in costs and expenses is a net result of:
 
a)
an increase in stock based compensation from CDN$nil for the six months ended December 31, 2010 to CDN$35,000 for the six months ended December 31, 2011 as a result of options issued to Directors and staff of Acadian which are being progressively expensed over the vesting period. See Note 4 concerning the Company’s outstanding stock options.
 
g)
a decrease in the exploration expenditure expense from CDN$1,590,000 for the six months ended December 31, 2010 to CDN$1,403,000 for the six months ended December 31, 2011. For Golden River Resources, the costs related to consultants providing exploration reviews and advice on the Slave and Committee Bay properties as no field work was undertaken during the six months ended December 31, 2010 or 2011 by the Company. Included within exploration expenditure expense for the six months ended December 31, 2011 is CDN$1,279,000 for work undertaken by Acadian for field exploration activities on its gold properties. The decrease in exploration expenditure during the six months ended December 31, 2011 was primarily due to Acadian conducting a  drilling program on the Fifteen Mile project. Included within exploration expenditure expense for the six months ended December 31, 2010 is CDN$680,000 for certain maintenance work undertaken by Acadian on its Scotia mine which was on care and maintenance until its sale on May 31, 2011. There is no comparable amount for the three months ended December 31, 2011.
 
b)
a decrease in depreciation and amortization expense from CDN$253,000 for the six months ended December 31, 2010 to CDN$86,000 for the six months ended December 31, 2011. The depreciation and amortization expense relates to the activities of Acadian. For the six months ending December 31, 2010 depreciation and amortization for Acadian included amortization of the ScoZinc mine and mill and equipment, which was sold in May 2011.
 
c)
a decrease in interest expense/(income) from CDN$(65,000) for the six months ended December 31, 2010 to CDN$3,000 for the six months ended December 31, 2011. The interest (income) for the six months ended December 31, 2010 relates to an accrual for interest payable by Acadian on a third party liability which was subsequently reversed following confirmation of the amount owing by the third party.  During May 2011 the debt was settled and satisfied.
 
d)
a decrease in legal, accounting and professional expense from CDN$401,000 for the six months ended December 31, 2010 to CDN$160,000 for the six months ended December 31, 2011. Included within legal, accounting and professional expense for the six months ended December 31, 2011 is CDN$49,000 for costs associated with the Company’s SEC compliance obligations and CDN$111,000 for Acadian which relates to general legal work, audit and stock transfer costs. The decrease is primarily the result of a reduction in secretarial services, financial reporting reviews and taxation services.
 
e)
a decrease in administrative costs including salaries from CDN$995,000 in the six months ended December 31, 2010 to CDN$749,000 in the six months ended December 31, 2011. Included within administrative expense for the six months ended December 31, 2011 is CDN$321,000 for Acadian compared to CDN$940,000 for the six months ended December 31, 2010, which includes head office salaries, rent, office related costs and travel. The decrease relates to the reduction in head office salaries, office and statutory filing costs.
 
As a result of the foregoing, the loss from operations decreased from CDN$3,174,000 for the six months ended December 31, 2010 to CDN$2,436,000 for the six months ended December 31, 2011.
 
 
 
17

 
 
 
The Company recorded a foreign currency exchange loss of CDN$20,000 for the six months ended December 31, 2011 and CDN$147,000 for the six months ended December 31, 2010, primarily due to revaluation of advances from affiliates which are denominated in Australian dollars.
 
Following the end of the December 2011 quarter, the Company made an assessment of the carrying value of the mineral rights of Acadian and concluded that it did not expect to be able to realize the carrying value. This assessment took into account various factors including the exploration results from Acadian’s exploration programs since the Company’s initial acquisition of shares in Acadian, and the market capitalization of Acadian. As a result, the Company impaired the carrying value of the mineral rights and has recorded an impairment of mineral rights of CDN$33,221,000 (2010: CDN$nil), in the Company’s consolidated statement of operations.
 
The Company recorded a profit on disposal of plant and equipment of CDN$48,000 for the six months ended December 31, 2010 for which there was no comparable amount for the six months ended December 31, 2011. Acadian disposed of surplus equipment.
 
The Company has recorded a write-off of plant and equipment of CDN$170,000 for the six months ended December 31, 2010 for which there was no comparable amount for the six months ended December 31, 2011. Acadian wrote down the carrying value of plant and equipment after a physical review.
 
The loss before income taxes and equity in (losses) of unconsolidated entities for the six months ended December 31, 2011 was CDN$35,677,000 compared to CDN$3,442,000 for the six months ended December 31, 2010.
 
The Company has recorded a benefit to deferred tax of CDN$(6,373,000) for the six months ended December 31, 2011 as a result of impairment of mineral rights compared to a provision for tax of CDN$105,000 for the six months ended December 31, 2010.
 
The loss before equity in (losses) of unconsolidated entities for the six months ended December 31, 2011 was CDN$29,304,000 compared to CDN$3,547,000 for the six months ended December 31, 2010.
 
The net loss was CDN$29,304,000 for the six months ended December 31, 2011 compared to CDN$3,547,000 for the six months ended December 31, 2010.
 
The share of the loss attributable to the non-controlling interests of Acadian amounted to CDN$9,925,000 for the six months ended December 31, 2011 compared to CDN$795,000 for the six months ended December 31, 2010. At December 31, 2010, the Company’s interest in Acadian was 71.48% and at December 31, 2011, its interest was 71.96%. During the six months ended September 30, 2011, the Company purchased a further 259,500 shares in Acadian through on-market purchase in the TSX at a cost of CDN$79,985, which resulted in a decrease in non-controlling interest of CDN$248,000. Further, the impairment of mineral rights referred to above results in a share of the loss of non-controlling interest of Acadian.

The net loss attributable to Golden River Resources stockholders amounted to CDN$19,379,000 for the six months ended December 31, 2011 compared to CDN$2,752,000 for the six months ended December 31, 2010.
 
Liquidity and Capital Resources
 
For the six months ended December 31, 2011, net cash used by operating activities was CDN$2,514,000 primarily consisting of the net loss of CDN$29,304,000; the impairment of mineral rights of CDN$33,221,000 and a corresponding benefit for the adjustment to deferred tax of CDN$6,373,000; a decrease in accounts payable and accrued expenses of CDN$234,000; net cash provided by investing activities of CDN$70,000 being the net cost of the additional investment in Acadian of CDN$80,000; proceeds for the sale of land of CDN$221,000; purchase of plant and equipment of CDN$71,000; and net cash used in  financing  activities of  CDN$542,000 consisting of borrowings and repayments to affiliates.
 
As of December 31, 2011, the Company had short-term obligations of CDN$1,007,000 comprising accounts payable and accrued expenses.
 
We have CDN$804,000 in cash at December 31, 2011. On January 31, 2012, the Company entered into an arms-length share purchase agreement with a third party to sell 10,783,145 shares in Acadian at a price of CDN$0.15 for proceeds of CDN$1,617,472. Closing occurred on February 6, 2012.
 
Since fiscal 2004, we have undertaken field exploration programs on our Committee Bay and Slave properties. In relation to the Committee Bay properties, this was more than the minimum required expenditure and as a result, we have not had a legal obligation to undertake further exploration on these properties. However, our properties are prospective for gold and other minerals and commencing in fiscal 2013, we will be required to bring the Committee Bay properties to lease status by completing a survey and making application for lease status. In respect to the Slave properties, the Company will be required to incur expenditure or make payments in lieu of expenditure of CDN$553,780 in respect  of 2011 and CDN$611,252 prior to the end of 2012. Further, Acadian has an obligation to spend amounts on its mineral properties in order to maintain the leases and is required to spend CDN$234,000 and issue 29,118 Acadian shares on gold exploration properties during fiscal 2012. Our budget for general and administration costs for fiscal 2012 is CDN$500,000 and Acadian’s budget for the general and administration costs for fiscal 2012 is CDN$1,530,000. 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 capital raising will be successful, or that even if an offer of financing was received by the Company, it is on terms acceptable to the Company.
 
 
 
18

 
 
Information Regarding Forward Looking Statements
 
This report and other reports, as well as other written and oral statements made or released by us, may contain forward looking statements. Forward looking statements are statements that describe, or that are based on, our current expectations, estimates, projections and beliefs. Forward looking statements are based on assumptions made by us, and on information currently available to us. Forward-looking statements describe our expectations today of what we believe is most likely to occur or may be reasonably achievable in the future, but such statements do not predict or assure any future occurrence and may turn out to be wrong. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words "believe," "anticipate," "intend," "expect," "estimate," "project", "predict", "hope", "should", "may", and "will", other words and expressions that have similar meanings, and variations of such words and expressions, among others, usually are intended to help identify forward-looking statements.
 
Forward-looking statements are subject to both known and unknown risks and uncertainties and can be affected by inaccurate assumptions we might make.  Risks, uncertainties and inaccurate assumptions could cause actual results to differ materially from historical results or those currently anticipated.  Consequently, no forward-looking statement can be guaranteed.  The potential risks and uncertainties that could affect forward looking statements include, but are not limited to:
 
 
the risks of mineral exploration stage projects,
 
political risks in foreign countries,
 
risks associated with environmental and other regulatory matters,
 
exploration risks and competitors,
 
the volatility of gold and other mineral prices,
 
availability of financing,
 
movements in foreign exchange rates,
 
increased competition, governmental regulation,
 
performance of information systems,
 
ability of the Company to hire, train and retain qualified employees,
 
the availability of sufficient, transportation, power and water resources, and
 
our ability to enter into key exploration and supply agreements and the performance of contract counterparties.
 
In addition, other risks, uncertainties, assumptions, and factors that could affect the Company's results and prospects are described in this report, and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011, including under the heading “Risk Factors” and elsewhere and may further be described in the Company's prior and future filings with the Securities and Exchange Commission and other written and oral statements made or released by the Company.
 
We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date of this document.  The information contained in this report is current only as of its date, and we assume no obligation to update any forward-looking statements.
 
Item 3.       Quantitative and Qualitative Disclosures About Market Risk.
 
The Company reports in CDN$ and holds cash in Australian dollars. At December 31, 2011, this amounted to CDN$804,000. A change in the exchange rate between the A$ and the CDN$ will have an effect on the amounts reported in the Company’s consolidated financial statements, and create a foreign exchange gain or loss. A movement of 1% in the A$ versus the CDN$ exchange rate will have a CDN$8,000 effect on the consolidated balance sheet and statement of operations.
 
Item 4.       Controls and Procedures.
 
(a)
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 controls and procedures were effective as of the end of the period covered by this report at the reasonable level of assurance.
 
 
 
19

 
 
 
(b)
Changes in Internal Control Over Financial Reporting
   
 
There were no changes in our internal control over financial reporting during the second quarter of fiscal 2012 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
 
(c)
Other
 
 
We believe that a controls system, no matter how well designed and operated, cannot 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, 2011, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.
 

 
 
20

 
 
PART II – OTHER INFORMATION
 
Item 1.
 
Not Applicable
 
Item 1A.
 
Not Applicable for Smaller Reporting Company
 
Item 2.
 
Not Applicable
 
Item 3.
 
Not Applicable
 
Item 4.
 
Not Applicable
 
Item 5.
 
See Item 2 above.
 
Item 6.
 
(a)        
Exhibit No.
Description
 
 
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
 
 
101
The following materials from the Golden River Resources Corporation Quarterly Report on Form 10-Q for the six months ended December 31, 2011 formatted in Extensible Business Reporting Language (XBRL):  (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) related notes.
 
   
#101.INS    XBRL Instance Document.
   
#101.SCH   XBRL Taxonomy Extension Schema Document.
   
#101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.
   
#101.LAB   XBRL Taxonomy Extension Label Linkbase Document.
   
#101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.
   
#101.DEF    XBRL Taxonomy Extension Definition Linkbase Document.
   
__________________
   
 
#    Filed herewith.  In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed “not filed” for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under that section.
 
 
 
21

 
 
(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 13, 2012
     

 
 
22

 

 
EXHIBIT INDEX

Exhibit No.
Description
 
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
 
101
The following materials from the Golden River Resources Corporation Quarterly Report on Form 10-Q for the six months ended December 31, 2011 formatted in Extensible Business Reporting Language (XBRL):  (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) related notes.
 
 
#101.INS    XBRL Instance Document.
 
#101.SCH   XBRL Taxonomy Extension Schema Document.
 
#101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.
 
#101.LAB   XBRL Taxonomy Extension Label Linkbase Document.
 
#101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.
 
#101.DEF    XBRL Taxonomy Extension Definition Linkbase Document.
 
__________________
 
 
#    Filed herewith.  In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed “not filed” for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under that section.
 
 
 
23