The financial data presented below should be read in conjunction with the more
detailed financial statements and related notes, which are included elsewhere in
this report. Information discussed herein, as well as elsewhere in this Annual
Report on Form 10-K, includes forward-looking statements or opinions regarding
future events or the future financial performance of the Company, and are
subject to a number of risks and other factors which could cause the actual
results to differ materially from those contained in forward-looking statements.
Among such factors are general business and economic conditions, and risk
factors as listed in this Form 10-K or listed from time to time in documents
filed by the Company with the
Based on the nature of Sungro's business, management anticipates incurring operating losses in the foreseeable future. Management bases this expectation, in part, on the fact that exploration and development of mineral properties will cost a substantial amount of money, and possibly take several years before they are capable of generating revenue or be profitable. Sungro's future financial results are also uncertain due to a number of factors, some of which are outside its control. These factors include, but are not limited to:
º Sungro's ability to reaise additional funding; º Sungro's ability to identify and successfully negotiate the acquistion of potential properties or assets; and º If such opportunities or businesses acquired will be profitablde.
Due to Sungro's lack of operating history and present inability to generate revenues, Sungro's independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements for 2011 indicating substantial doubt about Sungro's ability to continue as a going concern. This means that there is substantial doubt whether Sungro can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our bills.
Sungro's internal sources of liquidity will be loans that may be available to Sungro from management. Although Sungro has no written arrangements with its management, Sungro expects that the officers may provide Sungro with nominal liquidity, when and if it is required.
Sungro's external sources of liquidity will be private placements for equity and debt financing.
During the year, by mutual agreement between the Company and the investor, the following sums (which included the balance forward of
The Company raised
The Company repaid
The Company repaid
There are no assurances that Sungro will be able to achieve further sales of its common stock or any other form of additional financing. If Sungro is unable to achieve the financing necessary to continue its plan of operations, then Sungro will not be able to continue its exploration programs and its business will fail.
Sungro's current cash is not sufficient to fully finance its operations at current and planned levels for the next 12 months. Management intends to manage Sungro's expenses and payments to preserve cash until Sungro is profitable, otherwise additional financing must be arranged. Specifically, management is deferring payments due them until such time as there is sufficient financing in place to permit their payment or the possible issuance of the Company's stock in settlement of amounts due.
Results of Operations
We did not earn any revenues for the fiscal year ended
We incurred total expenses in the amount of
Years Ended November 30, Expense Item 2012 2011 Mineral Property Maintenance $ -
$ 125,492Royalty Payments (250,000) 250,000 Payroll and bonuses 95,123 486,300 Consulting 422,052 1,030,080 Accounting 43,500 39,000 Legal 3,947 27,723 Amortization of debt discount 268,413 400,625 Interest expense 115,855 101,905 Loss on mineral rights - 2,837,550 Other (232,993) (143,822) Total $ 465,897 $ 5,154,853
Off-Balance Sheet Arrangements
Sungro has no off-balance sheet arrangements.
8 Critical Accounting Policies
Exploration Stage Company
The Company is considered to be in the exploration stage. The Company is devoting substantially all of its present efforts to exploring and identifying mineral properties suitable for development.
The accounting and reporting policies of the Company conform to
Mineral Property Exploration
The Company is in the exploration stage and has not yet realized any revenue from its planned operations. Mineral property acquisition costs are capitalized. Additionally, mine development costs incurred either to develop new ore deposits and constructing new facilities are capitalized until operations commence. All such capitalized costs are amortized using a straight-line basis, based on the minimum original license term at acquisition, but do not exceed the useful life of the capitalized costs. Upon commercial development of an ore body, the applicable capitalized costs would then be amortized using the units-of-production method. Exploration costs, costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected cash flows and/or estimated salvage value in accordance with guidance issued by the FASB, "Accounting for Impairment or Disposal of Long-Lived Assets."
Location / Access:
The Project is located in the southern
Access to the Conglomerate Mesa area can be accomplished by two-wheel drive vehicle via the Santa Rosa Flat road, a poorly improved jeep trail which traverses the main wash through Santa Rosa Flat. The Santa Rosa Flat road is accessed via the paved
Title / Conditions:
A Mineral Agreement was completed on
The Company defaulted on its last annual payment in
Sungro had mineral rights to the property for lode mining.
Geological Description / Mineralization:
Conglomerate Mesa hosts multiple large-scale hydrothermal gold-silver systems that are similar in style, geology, and geochemistry to the highly productive
Narrow WNW-trending, vertical to near-vertical, porphyritic dioritic dikes and sills occur within the Conglomerate Mesa area.
Although the dioritic dikes are the only intrusive rocks exposed in the Conglomerate Mesa area, it is inferred from occurrences elsewhere in the southern
Adjacent to the southern edges of the property are gently ESE-dipping basaltic flows that form Malpais Mesa. Typically, a thin sequence of bedded basaltic pyroclastic deposits underlies the thicker lava flows. These volcanic rocks were deposited on an erosional surface cut on Lower Permian rocks. Locally thin conglomeratic/breccia deposits derived from Permian lithologies occur at the base of the volcanic section.
The following general fault types occur in the project area: 1) moderate to steeply west-dipping reverse faults of the Conglomerate Mesa fault system; 2) moderately west-dipping cleavage parallel normal faults; 3) northeast-trending high-angle faults; and 4) Late Tertiary or Quaternary high-angle normal faults.
Several deposit types were the focus of previous exploration work conducted within the Conglomerate Mesa area. The primary targets identified by Newmont, BHP, and Asamera are
Ore stage mineralization consists of gold in the lattice of arsenical pyrite rims on pre-mineral pyrite cores and of disseminated sooty auriferous pyrite and is commonly overprinted by late ore-stage realgar, orpiment and stibnite in fractures, veinlets and cavities.
At a regional scale, they occur within north-trending bands of favorable Paleozoic slope-facies carbonate turbidites and debris flows within the North-American continental passive margin. These slope-facies carbonate rocks form the lower plate to Paleozoic deep water siliciclastic rocks that have been repeatedly over thrust from the west during late Paleozoic through Cretaceous orogenic events, resulting in the development of low-angle structures and open-folds.
Gold mineralization at Conglomerate Mesa has been shown through rock chip sampling and drilling to be controlled by both mineralized structures and favorable stratigraphy. Asamera drilled several areas in the western portion of the property which contained significant gold intercepts. Newmont drilled significant gold mineralization in the Resource area and this was followed by a BHP discovery in the Dragonfly area. All areas exhibit holes with significant gold mineralization which is controlled by both structural and stratigraphic components. Surface geochemistry completed by Newmont, Asamera and BHP show a strong Au-As-Hg-Sb correlation in rock and soil samples.
Replacement deposits consist of massive lenses and/or pipes known as mantos or replacement ore bodies, and veins of lead, zinc, copper, and iron sulfide minerals commonly rich in silver and/or gold. They are hosted by, and replace, limestone, dolomite, or other sedimentary units. Most massive ore from these deposits contains more than 50% sulphide minerals. Sediment hosted ores are commonly intimately associated with igneous intrusions from which the metal bearing fluids are derived. Some polymetallic replacement deposits are associated with skarn deposits in which carbonate rocks are replaced by calc-silicate +/- iron oxide mineral assemblages. Most polymetallic vein and replacement deposits are zoned such that gold-copper ore is proximal to intrusions, whereas lead-zinc-silver ore is laterally and vertically distal to the intrusions. The
Background / Work Completed to date / Current Condition
The Company is in a unique situation in that their land position covers the entire district that was originally discovered by Mobil's metal exploration group and
Mobil's metal exploration group first conducted exploration activities in the western portions of the Conglomerate Mesa area in 1984. They completed an extensive rock chip, soil, and stream sediment sampling program and identified important host rocks and northwest trending reverse and normal faults which allowed hydrothermal fluids to infiltrate the favorable lithologies and create zones of silicification, brecciation, and argillization. Their work identified numerous areas of anomalous gold and silver mineralization and numerous drill targets.
In 1997, BHP drilled a total of ten widely spaced holes in three of the newly discovered target areas and the Newmont resource area for a total of 8,060 feet. Significant gold mineralization was encountered in all of the holes.
BHP subsequently dropped the property prior to drill testing all of their target areas as they made a corporate decision to terminate all gold exploration programs.
Timberline Resources acquired the property in 2006 and completed mapping and sampling to better define drill targets. Timberline submitted a Notice of Intent (NOI) to the
Currently, the property which was returned to its pre-exploration state remains in this "reclaimed" state with no current activity taking place on the claims.
Plant / Equipment / Improvements
Currently, there are physical improvements, equipment, or roadways either on the surface or subsurface of any of the claims.
As described in the previous section above, the property has been explored by a number of mining and exploration companies. There are no exploration activities currently underway.
To date, the Company has spent approximately
The property has no power or water within its bounds; however, both are available at the foot of the mountain which can be extended to the location when required.
The property has no reserves as defined in accordance with Industry Guideline 7.
Based on prior explorations, the Company believes there to be significant mineralization and intends to undertake an exploration program to prove the reserves and take the properties to "feasibility" and ultimately, production.
Cautionary Statement Regarding Forward-Looking Statements
This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the following discussion, including under the heading "Risk Factors". Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe that such comparisons cannot be relied upon as indicators of future performance. Other important factors that could cause actual results to differ materially include the following: business conditions, the price of precious metals, ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's