UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2013

Commission File Number: 000-25301

SIERRA RESOURCE GROUP, INC.

(Exact name of registrant as specified in its charter)

NEVADA	88-0413922
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9550 S. Eastern Ave., Suite 253, Las Vegas, NV 89123

(Address of principal executive offices)

Registrant’s telephone number, including area code: (702) 462-7285

(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     ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     x  Yes     ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ¨  Yes     x  No

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 1, 2013 the issuer had 685,468,801 issued shares of Common Stock, $0.001 par value.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Condensed financial statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4T.	Controls and Procedures	26
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6	Exhibits	35
SIGNATURES		36
CERTIFICATIONS

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
32.2	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
	101.INS – XBRL Instance Document
	101.SCH – XBRL Taxonomy Extension Schema Document
	101.CAL – XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF – XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB – XBRL Taxonomy Extension Label Linkbase Document
	101.PRE – XBRL Taxonomy Extension Presentation Linkbase Document

2

PART I

FINANCIAL INFORMATION

Item 1. Condensed financial statements

The accompanying interim condensed financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the condensed financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that can be expected for the year ending December 31, 2013. Our registered independent accountants, Marcum LLP, have not yet reviewed our interim financial statements contained in this quarterly report on Form 10-Q. Upon completion of the review, we will file an amended report on Form 10-Q/A accordingly.

3

 

SIERRA RESOURCE GROUP, INC.

(An Exploration Stage Company)

CONDENSED BALANCE SHEETS

(Unaudited)

	September 30, 2013		December 31, 2012
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	14,992	$	31,864
Prepaid expenses		2,000		2,000
Other Current Assets		25,000		25,000
TOTAL CURRENT ASSETS		41,992		58,864
Mineral Property Rights		5,131,358		—
Mine Development Costs		870,742		653,523
OTHER ASSETS		7,970		7,971
TOTAL ASSETS	$	6,052,062	$	720,358
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses	$	901,323	$	1,126,910
Accrued payroll and compensation – related parties		473,935		221,235
Embedded derivative Liabilities		11,262,927		154,000
Advances		90,573		90,573
Obligation to Issue Common Stock		75,000		89,700
Notes Payable (net of debt discount $105,812 and $97,423 respectively)		2,668,916		872,765
Other current liabilities		49,208		—
TOTAL CURRENT LIABILITIES		15,521,882		2,555,183
LONG-TERM DEBT
Note Payable (net of debt discount $3,827,039 and $0, respectively)		229,377		—
TOTAL LIABILITIES	$	15,751,259	$	2,555,183
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Class A Common stock, $0.001 par value: 970,000,000 shares authorized;     509,791,111 and 347,833,085 issued and outstanding at September 30, 2013     and December 31, 2012, respectively	$	509,791	$	347,833
Class B Common stock, $0.001 par value: 10,000,000 shares authorized; none     issued and outstanding at September 30, 2013 and December 31, 2012		—		—
Class A Preferred stock, $0.001 par value: 10,000,000 shares authorized;     1,000,000 issued and outstanding at September 30, 2013 and December 31, 2012		1,000		1,000
Common stock shares subscribed, not issued $.001 par value 51,057,467 and     18,390,801 at September 30, 2013 and December 31, 2012, respectively		310,857		278,191
Additional Paid-in capital		9,421,258		8,775,195
Accumulated deficit		(19,942,103)		(11,237,044)
TOTAL STOCKHOLDERS’ DEFICIT		(9,699,197)		(1,834,825)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	6,052,062	$	720,358

The accompanying notes are an integral part of these condensed financial statements.

4

 

SIERRA RESOURCE GROUP, INC.

(An Exploration Stage Company)

CONDENSED STATEMENT OF OPERATIONS

(Unaudited)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				December 21, 1992 (Inception) to September 30, 2013
	2013		2012		2013		2012
REVENUE
Revenue	$	—		—		—		—	$	1,275
Total revenue		—		—		—		—		1,275
OPERATING EXPENSES
Amortization		—		—		—		—		11,972
Selling, general and      administrative expenses		155,172		245,129		703,534		888,901		3,537,723
Total operating expenses		155,172		245,129		703,534		888,901		3,549,695
Operating loss		(155,172)		(245,129)		(703,534)		(888,901)		(3,548,420)
Other Income (expense)
Financing costs including interest and      amortization of discounts		(379,316)		(108,697)		(945,383)		(173,876)		(1,950,587)
Derivative Expense		—		(27,262)		(7,056,141)		(54,500)		(7,109,615)
Forgiveness of debt and accrued      interest				—		—		797,445		161,116
Loss on Impairment of goodwill      and equipment				—		—		—		(7,494,596)
Total other income (expense)		(379,316)		(135,959)		(8,001,524)		569,069		(16,393,682)
INCOME (LOSS) BEFORE INCOME      TAXES		(534,488)		(381,088)		(8,705,058)		(319,832)		(19,942,103)
PROVISION FOR INCOME TAXES		—		—		—		—
NET INCOME (LOSS)		(534,488)		(381,088)		(8,705,058)		(319,832)		(19,942,102)
BASIC NET INCOME (LOSS) PER      COMMON SHARE	$	(0.00)	$	(0.00)	$	(0.02)	$	(0.00)
WEIGHTED AVERAGE COMMON      SHARES OUTSTANDING		428,347,650		346,597,728		405,196,667		309,812,775

The accompanying notes are an integral part of these condensed financial statements.

5

 

SIERRA RESOURCE GROUP, INC.

(An Exploration Stage Company)

CONDENSED STATEMENT OF CASH FLOWS

(Unaudited)

					December 21, 1992
	For the Nine Months Ended				(Inception) to
	September 30,				September 30,
	2013		2012		2013
Cash flows from operating activities:
Net Loss	$	(8,705,058)	$	61,257	$	(19,942,102)
Adjustments to reconcile net income (loss) to net cash used in     operating activities
Stock issued for services		—		—		763,384
Stock options issued for services		—		73,276		63,481
Stock subscribed not issued for services		—		—		262,000
Partial release of liability in exchange for stock and options to      be issued		30,697		—		30,697
Forgiveness of debt and accrued interest		—		(797,445)		(161,116)
Derivative expense		7,056,141		100,738		7,089,403
Interest expense for conversion of stock		—		—		373,357
Accrued interest		245,315		73,554		283,457
Accrued interest – related party		—		—		98,816
Adjustment on impairment of goodwill and equipment		—		—		7,494,596
Amortization of discount on convertible debt		696,767		47,396		858,453
Amortization		—		—		11,972
Changes in operation assets and liabilities:
Other current assets		—		(2,500)		(27,000)
Other assets		—		(1,470)		(7,970)
Accounts payable and accrued expenses		200,516		56,443		927,368
Accrued payroll and compensation – related parties		252,700		—		473,935
Net Cash used in operating activities		(222,922)		(388,751)		(1,407,269)
Cash flows from investing activities:
Capitalization of mine expenses		—		(52,379)		(101,205)
Purchase of minority interest		—		(6,500)		—
Investment in oil and gas interests		—		—		(29,500)
Net Cash used in investing activities		—		(58,879)		(130,705)
Cash flows from financing activities:
Issuance of common stock		—		10,000		11,860
Payments on notes payable		(18,750)		(18,750)		(86,500)
Obligation to issue common stock		(14,700)		14,700		—
Proceeds from issuance of subscribed shares		—		66,666		141,667
Proceeds from officer advances		—		—		90,573
Proceeds from note payable – related party		—		—		29,500
Proceeds from notes payable		239,500		390,833		1,365,866
Net Cash provided by financing activities		206,050		463,449		1,552,966
Net increase (decrease) in cash and cash equivalents		(16,872)		15,819		14,992
Cash and cash equivalents at beginning of period		31,864		132		—
Cash and cash equivalents at end of period	$	14,992	$	15,951	$	14,992
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities
Capitalization of mineral property rights and     corresponding increase in accounts payable		217,219
Capitalization of mineral property rights and     corresponding increase in notes payable		4,750,000
Capitalization of mineral property rights and     corresponding increase in paid in capital and     stock subscribed – not issued		381,358
Conversion of notes payable and corresponding     accrued interest to common stock		158,420
Initial set up of derivative liability relating to     embedded conversion feature		10,461,695
Increase in debt discount and corresponding note     payable related to original issue discount		2,778
Embedded conversion option reclassified to equity     upon conversion of debt		113,500
Increase in debt discount and paid in capital relating     to forbearance agreement		101,160
Increase in debt issuance costs and notes payable     relating to forbearance agreement		17,500
Conversion of accounts payable to notes payable		536,860

The accompanying notes are an integral part of these condensed financial statements.

6

 

SIERRA RESOURCE GROUP, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013

(UNAUDITED)

NOTE 1. DESCRIPTION OF BUSINESS

Sierra Resource Group, Inc. (the “Company,” “we,” “us,” and “our “) was incorporated in the state of Nevada on December 21, 1992, to engage in the lease, acquisition, exploration and development of interests in natural resource properties such as those involving oil and gas interests. The Company has not commenced significant operations and, in accordance with ASC Topic 915, the Company is considered an exploratory stage company

Our business plan has been to lease, acquire, explore and develop interests in natural resource properties since our inception.

NOTE 2. GOING CONCERN ISSUES

The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At September 30, 2013, we had an accumulated deficit of $19,942,103 and a working capital deficit of $15,479,890. During the nine months ended September 30, 2013, we had a net loss of $8,705,058. As we had no significant revenues or earnings from operations, the net loss for the six months ended September  30, 2013 was a result of our operating expenditures and financing costs. We will in all likelihood sustain operating expenses without corresponding revenues. This may result in us incurring a net operating loss, which will increase continuously unless and until we can achieve meaningful revenues.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

The Company’s ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations and/or the discovery, exploration, development and sale of mining reserves. The Company cannot reasonably be expected to earn revenue in the exploration stage of operations. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.

These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Exploration Stage Enterprise

The Company’s financial statements are prepared pursuant to the provisions of Topic 26, “Accounting for Development Stage Enterprises,” as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in major commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the development stage. Mining companies subject to Topic 26 are required to label their financial statements as an “Exploratory Stage Company,” pursuant to guidance provided by SEC Guide 7 for Mining Companies.

7

Revenue Recognition

As the Company is continuing exploration of its mineral properties, no significant revenues have been earned to date. The Company recognizes revenues at the time of delivery of the product to the customers.

Revenue includes sales value received for our principle product, copper, and associated by-product revenues from the sale of by-product metals consisting primarily of gold, silver and zinc. Revenue is recognized when title to the product passes to the buyer and when collectability is reasonably assured. The passing of title to the customer is based on terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets for example, the London Bullion Market, an active and freely traded commodity market, for both gold and silver, in an identical form to the product sold.

Pursuant to guidance in Topic 605, “Revenue Recognition for Financial Statements”, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, no obligations remain and collectability is probable. The passing of title to the customer is based on the terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets, for example the London Bullion Market for both gold and silver, in an identical form to the product sold.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash on hand and cash in the bank.

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.

The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow:

Asset Category	Depreciation/ Amortization Period
Furniture and Fixture	3 Years
Office equipment	3 Years
Leasehold improvements	5 Years

Mine Exploration and Development Costs

All exploration costs are expensed as incurred. Mine development costs are capitalized after proven and probable reserves have been identified. Amortization is calculated using the units-of-production method over the expected life of the operation based on the estimated recoverable mineral ounces.

Property Evaluations

Management of the Company will periodically review the net carrying value of its properties on a property-by-property basis. These reviews will consider the net realizable value of each property to determine whether a permanent impairment in value has occurred and the need for any asset write-down. An impairment loss will be recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset. Measurement of an impairment loss will be based on the estimated fair value of the asset if the asset is expected to be held and used.

Although management will make its best estimate of the factors that affect net realizable value based on current conditions, it is reasonably possible that changes could occur in the near term which could adversely affect management’s estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.

Reclamation and Remediation Costs (Asset Retirement Obligations)

The Company plans to recognize liabilities for statutory, contractual or legal obligations, including those associated with the reclamation of mineral and mining properties and any plant and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. Initially, a liability for an asset retirement obligation will be recognized at its fair value in the period in which it is incurred. Upon initial recognition of the liability, the corresponding asset retirement cost will be added to the carrying amount of the related asset and the cost will be amortized as an expense over the economic life of the asset using either the unit-of-production method or the straight-line method, as appropriate. Following the initial recognition of the asset retirement obligation, the carrying amount of the liability will be increased for the passage of time and adjusted for changes to the amount or timing of the underlying cash flows needed to settle the obligation.

The Company had no operating properties at September 30, 2013 but the Company’s mineral properties will be subject to standards for mine reclamation that are established by various governmental agencies. For these non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Costs of future expenditures for environmental remediation are not discounted to their present value. Such costs are based on management’s current estimate of amounts that are expected to be incurred when the remediation work is performed within current laws and regulations. It is reasonably possible that due to uncertainties associated with defining the nature and extent of environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.

8

The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the associated long-lived assets and depreciated over the lives of the assets on a units-of-production basis. Reclamation costs are accreted over the life of the related assets and are adjusted for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate on the underlying obligation.

Mineral property rights

All direct costs related to the acquisition of mineral property rights are capitalized. Exploration costs are charged to operations in the period incurred until such time as it has been determined that a property has economically recoverable reserves, at which time subsequent exploration costs and the costs incurred to develop a property are capitalized.

The Company reviews the carrying values of its mineral property rights whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts. An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds its fair value.

At such time as commercial production may commence, depletion of each mining property will be provided on a unit-of-production basis using estimated proven and probable recoverable reserves as the depletion base. In cases where there are no proven or probable reserves, depletion will be provided on the straight-line basis over the expected economic life of the mine.

Impairment of Long-Lived Assets

In accordance with ASC Topic 360, long-lived assets, such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Goodwill and Other Intangible Assets

In accordance with Accounting Standards Codification (“ASC Topic 350”) “Goodwill and Other Intangible Assets,” goodwill, which represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method, acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are not amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if events and circumstances indicate impairment may have occurred in accordance with ASC Topic 350. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value.

Income Taxes

Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized.

9

The Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes.” It prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result, the Company has applied a more-likely-than-not recognition threshold for all tax uncertainties. The guidance only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the various taxing authorities. The Company is subject to taxation in the United States. The Company’s tax years since inception remain subject to examination by Federal and state jurisdictions.

The Company classifies penalties and interest related to unrecognized tax benefits as income tax expense in the consolidated statements of operations.

Concentration of Credit Risk

The Company maintains its operating cash balances in banks in Fort Lauderdale, Florida. The Federal Depository Insurance Corporation (FDIC) insures accounts at each institution up to $250,000.

Stock-Based Compensation

The Company accounts for stock based compensation in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for services provided to the Company. Under the provisions of ASC 718, the Company recognizes stock-based compensation by measuring the cost of services to be rendered based on the grant-date fair value of the equity award. Compensation expense is to be recognized over the requisite service period to provide service in exchange for the award, generally referred to as the requisite service period. The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life.

Basic and Diluted Net Loss Per Share

Net loss per share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted net loss per share for the Company is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.

Derivative Financial Instruments

The Company does not designate its derivatives as hedging instruments to mitigate against various risks. These derivative financial instruments were not designated or did not qualify for hedge accounting. The Company’s primary use of these derivative instruments is to attract investment into the Company. Changes in fair value of these derivative instruments are immediately recognized.

The Company has estimated the fair value of its derivative financial instruments as of September 30, 2013. The fair value measurements guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:

• Level 1 – Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity.

The Company measures fair value as an exit price using the procedures described below for all instruments measured at fair value. If quoted market prices are not available, fair value is based upon external valuation and internally developed models that use, where possible, current market-based or independently-sourced market parameters such as interest rates and stock prices. Items valued using internally developed models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be inputs that are readily observable. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments.

10

Fair Value of Financial Instruments

The carrying value of the Company’s accounts payable and accrued expenses, compensation – related parties, advances, notes payable and embedded derivative liabilities approximates their fair value due to the short-term nature of such instruments.

Accrued payroll and compensation – related parties

The Company accounts for accrued payroll or compensation for it’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board within Accrued payroll and compensation – related parties.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation for comparative purposes.

Recent Accounting Pronouncements

FASB Accounting Standards Update 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.

The FASB has issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification (Codification) or subject to a master netting arrangement or similar agreement.

An entity is required to apply the amendments in ASU 2013-01 for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of these new amendments had no impact on the Company’s financial position or results of operations.

FASB Accounting Standards Update 2012-04, Technical Corrections and Improvements.

The FASB has issued ASU No. 2012-04, Technical Corrections and Improvements. In November 2010, the FASB Chairman added a standing project to the FASB’s agenda to address feedback received from stakeholders on the Codification and to make other incremental improvements to U.S. GAAP. This perpetual project will facilitate Codification updates for technical corrections, clarifications, and improvements, and should eliminate the need for periodic agenda requests for narrow and incremental items. These amendments are referred to as Technical Corrections and Improvements. This ASU also includes amendments that identify when the use of fair value should be linked to the definition of fair value in Topic 820, Fair Value Measurement, and contains conforming amendments to the Codification to reflect the measurement and disclosure requirements of Topic 820. These amendments are referred to as Conforming Amendments. In addition, this ASU deletes the second glossary definition of fair value that originated from AICPA Statement of Position 92-6, Accounting and Reporting by Health and Welfare Benefit Plans. The first definition originating from FASB Statement No. 123 (revised 2004), Share-Based Payment, and the third definition originating from FASB Statement No. 157, Fair Value Measurements, remain.

The amendments in this ASU that will not have transition guidance will be effective upon issuance. The amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption of these new amendments had no impact on the Company’s financial position or results of operations.

FASB Accounting Standards Update 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.

The FASB has issued Accounting Standards Update (ASU) No. 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Codification Subtopic 350-30, Intangibles—Goodwill and Other, General Intangibles Other than Goodwill.

The amendments in this ASU are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of these new amendments had no impact on the Company’s financial position or results of operations.

ASU 2011-04 – Amendments to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs

The amendments in ASU 2011-04 do not modify the requirements for when fair value measurements apply; rather, they generally represent clarifications on how to measure and disclose fair value under ASC 820, Fair Value Measurement, including the following revisions:

• The concepts of highest and best use and valuation premise are relevant only for measuring the fair value of nonfinancial assets and do not apply to financial assets and liabilities.

• An entity should measure the fair value of an equity-classified financial instrument from the perspective of the market participant that holds the instrument as an asset.

• An entity that holds a group of financial assets and financial liabilities whose market risk (that is, interest rate risk, currency risk, or other price risk) and credit risk are managed on the basis of the entity’s net risk exposure may apply an exception to the fair value requirements in ASC 820 if certain criteria are met. The exception allows such financial instruments to be measured on the basis of the reporting entity’s net, rather than gross, exposure to those risks.

• Premiums or discounts related to the unit of account are appropriate when measuring fair value of an asset or liability if market participants would incorporate them into the measurement (for example, a control premium). However, premiums or discounts related to size as a characteristic of the reporting entity’s holding (that is, a “blockage factor”) should not be considered in a fair value measurement.

The amendments to ASC 820, Fair Value Measurement, included in ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, are effective prospectively for public entities for interim and annual periods beginning after December 15, 2011 (that is, the quarter ending June 30, 2012 for calendar-year entities). Early adoption is not permitted for public entities. The adoption of these amendments had no impact on the Company’s financial position or results of operations.

ASU 2011-01 – Troubled debt restructuring disclosures for public-entity creditors deferred

The FASB issued Accounting Standards Update (ASU) 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, which temporarily defers the date when public-entity creditors are required to provide the new disclosures for troubled debt restructurings in ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The deferred effective date will coincide with the effective date for the clarified guidance about what constitutes a troubled debt restructuring, which the Board is currently deliberating. The clarified guidance is expected to apply for interim and annual periods ending after June 15, 2011. When providing the new disclosures under ASU 2010-20, public entities would be required to retrospectively apply the clarified guidance on what constitutes a troubled debt restructuring to restructurings occurring on or after the beginning of the year in which the proposed clarified guidance is adopted.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its condensed financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

11

 

NOTE 4 – NET EARNINGS (LOSS) PER SHARE

The net loss per common share is calculated by dividing the loss by the weighted average number of shares outstanding:

The following table represents the computation of basic and diluted losses per share:

	Three Months Ended		Nine Months Ended
	September 30, 2013	September 30, 2012	September 30, 2013	September 30, 2012
Income (Loss) available for common     shareholders	(534,488)	(381,088)	(8,705,058)	(319,832)
Weighted average common shares     outstanding	428,347,650	346,597,728	405,196,667	309,812,775
Net Earnings (Loss) per share is based     upon the weighted average shares of     common stock outstanding	(.00)	.00	(.02)	.00

NOTE 5. CHLORIDE COPPER PROJECT

On April 23, 2010, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Medina Property Group LLC, a Florida limited liability company (“Medina”). Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof, the Company agreed to purchase 80% of certain mining interests of Medina known as the Chloride Copper Project, a former copper producer comprised of a mineral deposit and some infrastructure located near Kingston, Arizona (the “Copper Mine”).

The Company’s acquisition of the Chloride Copper Project was accounted for in accordance with ASC 805 Business Combinations and the Company has allocated the purchase price based upon the fair value of the net assets acquired and liabilities assumed.

The purchase price was $7,505,529 which, pursuant to the Purchase Agreement, included the issuance of 12,750,000 shares of common stock by the Company to Medina or its assignees, return of 5,358,000 share of common stock by Black Diamond and the payment of $125,000 to the original seller of certain equipment where the Chloride Copper Mine is located, as designated by Medina in the Purchase Agreement. The purchase price was determined based on the Company’s analysis of a recently completed comparable acquisition and based on the value of the associated underlying shares of the Company’s common stock which value of $1.00 per share represented the offering price of the Company’s Common Stock in its most recently completed equity transaction prior to the date of the Purchase Agreement. The Company recognized goodwill of $7,602,069 and assumed $384,540 in liabilities, which consisted of a $360,000 promissory note and $3,040 in accrued interest and $21,500 in accounts payable.

The following table summarizes the acquisition with a total purchase price of $7,505,529:

Mining Property Rights	$	163,000
Equipment	$	125,000
Liabilities	$	(384,540)
Goodwill	$	7,602,069
Net Assets	$	7,505,529

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In addition, pursuant to the Purchase Agreement, Black Diamond Realty Management, LLC returned 5,348,000 shares of the Company’s Common Stock, and as a result, a change of our shareholder voting control occurred. The Acquisition formally closed on June 21, 2010. The shares of Common Stock constituting the equity portion of the purchase price were issued on August 9, 2010 to certain assignees of Medina, and although this issuance of shares approximately doubled our outstanding shares of Common Stock, no single person or cohesive group took a controlling interest in our Company as a result of this transaction.

The Company had impairment on the entire purchase price for the Medina Property acquisition and impairment on the Chloride Cooper Project related to fixed assets and mining interests. During the year ended December 31, 2010 impairment was $7,890,069 was comprised of $7,602,069 write-off of goodwill, $163,000 write-off of mining interests and $125,000 for the write-down of fixed assets. All these assets were acquired and recorded as part of the Chloride Copper Project.

On April 12, 2013, the Company executed a Second Amendment to the Asset Purchase Agreement (“Second Amendment”) between the Company and Medina Property Group, LLC dated April 23, 2010, amended by the First Amendment to the Asset Purchase Agreement dated June 10, 2010. This Second Amendment provides for the acquisition of Medina’s remaining twenty (20%) percent right, title, and interest in the asset known as the Chloride Copper Mine. The execution of this transaction increased the Company’s interests in the Chloride Copper Mine to 100%. In consideration of the 20% interest, the Company entered into a 6-month promissory note for seven hundred fifty thousand ($750,000) dollars, forty million (40,000,000) shares of Class A common stock which have not been issued as of September 30, 2013, a 5- year convertible promissory note for four million ($4,000,000) dollars, and a 10-year-warrant purchase agreement for Medina to purchase up to twenty million (20,000,000) shares of its Class A common stock at a share price of $0.27. Because the Company had control (80%) over the interest in the assets known as the Chloride Copper Mine, the acquisition of the remaining 20% interest was accounted for as an equity transaction. If the Company does not meet all conditions in the Second Amendment, the Medina Property Group, LLC has a right of reversion which includes the return of the title to all of the conveyed assets back to Medina Property Group, LLC. 

NOTE 6. NOTES PAYABLE

The Company had the following notes payable outstanding as of September 30, 2013 and December 31, 2012:

	September 30, 2013		December 31, 2012
Current Notes Payable
Promissory note payable dated     August 16, 2010 due to Brian Hebb     including accrued interest.	$	44,107		41,570
Promissory note payable dated     August 6, 2010 due to Black     Diamond Realty Mgmt including     accrued interest.		33,804		30,098
Promissory note payable dated May 5,     2010 due to Brian Hebb including     accrued interest.		176,880		153,469
Promissory note payable dated     February 16, 2012 due to Grand     View Ventures including accrued     interest		221,583		215,992
Promissory note payable dated     May 3, 2012 due to Grand     View Ventures including accrued     interest		182,990		147,029
Promissory note payable dated May 17,     2012 due to Tangiers Investors, LP     including accrued interest		32,794		15,900
Promissory note payable dated July 17,     2012 due to Asher Enterprises     including accrued interest		-0-		54,940
Promissory notes payable dated     July 31, 2012 due to FOGO, Inc.     including accrued interest		237,573		210,060
Promissory note payable dated     October 5, 2012 due to Asher     Enterprises including accrued interest		-0-		33,120
Promissory note payable dated     November 14, 2012 due to All     Business Consulting, Inc. including     accrued interest		26,217		25,258
Promissory note payable dated     December 4, 2012 due to Asher     Enterprises including accrued     interest		-0-		42,752
Promissory note payable dated     February 5, 2013 due to Paul C.     Rizzo & Associates including     accrued interest		590,666		-0-
Promissory note payable dated     February 25, 2013 due to Asher     Enterprises including accrued     interest		50,447		-0-
Promissory note payable dated     February 27, 2013 due to Asher     Enterprises including accrued     interest		5,240		-0-
Promissory note payable dated     April 8, 2013 due to Asher     Enterprises including accrued     interest		58,169		-0-
Promissory note payable dated     April 12, 2013 due to Medina     Property Group, LLC		750,000		-0-
Promissory note payable dated     June 19, 2013 due to JMJ     Financial including accrued interest		27,778		-0-
Promissory note payable dated     July 17, 2013 due to Tangiers     Investors, LP including accrued     interest		53,568		-0-
Promissory note payable dated     August 8, 2013 due to Asher     Enterprises including accrued interest		38,441		-0-
Total Current Notes Payable		2,530,257		970,188
Non Current Notes Payable
Promissory note payable dated     April 12, 2013 due to Medina     Property Group, LLC including     accrued interest		4,056,416		-0-
Less: Debt discount		(3,688,380)		(97,423)
Total Notes Payable		2,898,293		872,765

A summary of future maturities of long term debt are as follows:

For the year ended September 30,
2014	-0-
2015	-0-
2016	-0-
2017	-0-
2018	4,025,973
Thereafter	-0-
	4,025,973

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The Company entered into a promissory note with Brian Hebb on August 16, 2010 in the amount of $34,527. The note has an interest rate of 8% with the maturity date of July 15, 2011. The Company is currently in default of the note. As of September 30, 2013 and December 31, 2012, the Company had a balance due including principal, interest and default penalties in the amount of $44,107 and $41,570, respectively. Although management questions whether this amount is a valid liability of the Company, Generally Accepted Accounting Principles (GAAP) requires it to be carried on the Company’s books. The Company will seek all remedies to have the debt removed at a later date.

The Company entered into a promissory note with Black Diamond Realty Management on August 6, 2010 in the amount of $25,000. The note has an interest rate of 8% with the maturity date of August 16, 2011. The Company is currently in default of the note. As of September 30, 2013 and December 31, 2012, the Company had a balance due including principal, interest and default penalties in the amount of $33,804 and $30,098, respectively. Although management questions whether this amount is a valid liability of the Company, Generally Accepted Accounting Principles (GAAP) requires it to be carried on the Company’s books. The Company will seek all remedies to have the debt removed at a later date.

The Company entered into a promissory note with Brian Hebb on May 5, 2010 in the amount of $125,000. The note has an interest rate of 8% with the maturity date of August 16, 2011. The Company is currently in default of the note. As of September 30, 2013 and December 31, 2012, the Company had a balance due including principal, interest and default penalties in the amount of $176,880 and $153,469, respectively. Although management questions whether this amount is a valid liability of the Company, Generally Accepted Accounting Principles (GAAP) requires it to be carried on the Company’s books. The Company will seek all remedies to have the debt removed at a later date.

The Company entered into a Convertible Promissory Note with Grand View Ventures on February 16, 2012 in the amount of $190,000. The note has an interest rate of 15% with a maturity date of February 16, 2013 (see Note 7). The balance due including principal and accrued interest was $221,583 and $215,992 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Grand View Ventures on May 3, 2012 in the amount of $133,333. The note has an interest rate of 15% with a maturity date of November 1, 2012 (see Note 7). The balance due including principal and accrued interest was $182,990 and $147,029 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Tangiers on October 14, 2011 in the amount of $31,500. The note has an interest rate of 10% with the maturity date of July 14, 2012. The Company has renegotiated the terms of the note. The new terms require the Company to make two payments of $18,750, which one payment has been timely satisfied, and issue 3,000,000 shares of common stock to Tangiers. The second payment of $18,750 has not been paid as of June 30, 2013. In addition, as of September 30, 2013, the Company has not issued shares of common stock to Tangiers. The balance due including principal and accrued interest was $32,794 and $15,900 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Asher Enterprises Inc. on July 17, 2012 in the amount of $53,000. The note had an interest rate of 8% with a maturity date of April 19, 2013. This obligation has been satisfied as of September 30, 2013 (See Note 7).

The Company entered into a Promissory Note with FOGO, Inc. on July 31, 2012 in the amount of $200,000. The note had an interest rate of 12% with a maturity date of January 1, 2013. On January 30, 2013, the Company and Fogo Inc. (“Fogo”) entered into an amendment to the Promissory Note dated July 31, 2012, which changed the maturity date of the note to July 31, 2013 (see Note 14). The note interest rate shall bear an interest rate of 13.5% annual rate beginning February 2013 and increasing 1.5% each month with an maximum of 20% in July 2013 provided the note is outstanding.  The balance due including principal and accrued interest was $237,573 and $210,060 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Asher Enterprises Inc. on October 5, 2012 in the amount of $32,500. The note had an interest rate of 8% with a maturity date of July 10, 2013. This obligation has been satisfied as of September 30, 2013 (See Note 7).

The Company entered into a Convertible Promissory Note with All Business Consulting Inc. on November 14, 2012 in the amount of $25,000. The note had an interest rate of 8% with a maturity date of November 14, 2013. The balance due including principal and accrued interest was $26,217 and $25,258 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Asher Enterprises Inc. on December 4, 2012 in the amount of $42,500. The note had an interest rate of 8% with a maturity date of September 16, 2013 (See Note 7). This obligation has been satisfied as of September 30, 2013 (See Note 7).

14

On February 5, 2013, the Company and Paul C. Rizzo Associates, Inc. entered into an agreement which provided for the execution of a Promissory Note, the granting of warrants to purchase 3,000,000 shares of the Common Stock at an exercise price of $0.0125 per share if the final Environmental Assessment is delivered to the Bureau of Land Management by April 1, 2013 with an additional 250,000 warrants to be issued upon the same terms for each full week that the final EA is delivered before April 1, 2013. A final EA had not been delivered by April 1, 2013. The Promissory Note was executed on February 5, 2013 which the principal amount of $536,860 representing all outstanding invoices up to December 1, 2012. The Promissory Note shall bear interest at an annual rate of 15% with a maturity date of sixty (60) days after the date the United States Bureau of Reclamation issues a submittal of Environmental Assessment documentation seeking a Finding of No Significant Impact (“FONSI”) or August 1, 2013 whichever occurs first (See Note 14). The balance due including principal and accrued interest was $590,666 and $0 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Asher Enterprises Inc. on February 25, 2013 in the amount of $63,000. The note had an interest rate of 8% with a maturity date of November 27, 2013 (See Note 7). The balance due including principal and accrued interest was $50,447 and $0 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Asher Enterprises Inc. on February 27, 2013 in the amount of $5,000. The note had an interest rate of 8% with a maturity date of December 4, 2013 (See Note 7). The balance due including principal and accrued interest was $5,240 and $0 at September 30, 2013 and December 31, 2012, respectively.

The Company entered into a Convertible Promissory Note with Asher Enterprises Inc. on April 8, 2013 in the amount of $56,000. The note had an interest rate of 8% with a maturity date of January 10, 2014 (See Note 7). The balance due including principal and accrued interest was $58,169 and $0 at September 30, 2013 and December 31, 2012, respectively.

In April 2013, the Company acquired the remaining 20% interest in certain assets and properties of Medina Property Group, LLC (see Note 5). Part of the considerations consists of a 3% convertible note in the amount of $4,000,000, due in April 2018, and convertible into common stock at a conversion rate equal to 30% of the average closing price for the ten trading days immediately preceding the day of conversion. Because the conversion price of the 3% $4,000,000 convertible note is uncertain and the number of shares issuable upon conversion are unknown and unlimited, equity classification of the conversion option is prohibited. Therefore, the conversion option is required to be separated from the debt and recorded as a derivative liability, with subsequent changes in fair value reflected in the statement of operations. The Company estimated the fair value of the conversion option on the date of issuance using Monte Carlo simulations and the following assumptions: volatility – 134.16%; risk free rate -0.7%; Term – 5 Years. The Company estimated the fair value of the conversion option as of the issuance date to be $10,309,000. The excess of the initial fair value of the conversion option over the face value of the convertible note, totaling $6,309,395, was recorded as derivative expense on the issuance date and $4,000,000 was recorded as a discount against the convertible note to be amortized into interest expense over the five-year term of the note.  During the nine months ended September 30, 2013, the Company recognized $172,961 of interest expense from the amortization of the discount. In addition to the amortization of the discount, the Company recognized $25,973 of interest expense on the Convertible Note for the three and nine months ended September 30, 2013. The carrying value of the convertible note as of September 30, 2013 was $229,377, net of unamortized discount of $3,827,039.

The Company entered into a Convertible Promissory Note with JMJ Financial on June 19, 2013 for the principal sum of $300,000. Only $25,000 of the note was advanced to the Company, resulting in a $27,778 note payable net of $2,778 original issue discounts. The lender may advance additional Principal (up to the $300,000) to the Company at the lender’s sole discretion. The note has an interest rate of 0% for the first 90 days beginning on the advancement date and a one-time interest charge of 12% on the principal sum advanced thereafter with a maturity date of June 19, 2014 (see Note 7). The balance due was $27,778 and $0 at September 30, 2013 and December 31, 2012, respectively.

NOTE 7. Convertible Notes

8 % Convertible Notes

In July 2012, the Company issued a convertible note with a face value of $53,000. The note was to mature in April 2013, bears interest at an annual rate of 8%, and was convertible into common stock of the Company at the option of the holder at a conversion rate equal to 51% of the average of the lowest three closing trading prices of the Company’s common stock during the ten trading days immediately preceding the conversion date. Because the convertible note was convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option was required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operation.

On the date of issuance the Company recorded a derivative liability of $81,000, a debt discount of $53,000 and initial derivative liability expense of $28,000. The debt discount was being amortized into expense through the maturity date of the convertible note. During the nine months ended September 30, 2013, the holder of the convertible notes elected to convert all principal and interest into 18,696,052 shares of common stock. On each date of conversion, a portion of the remaining unamortized discount attributable to the principal converted was amortized into interest expense and the related derivative liability was reclassed to equity. During the nine months ended September 30, 2013, the Company recorded amortization expense of $20,931. As of September 30, 2013, no principal or interest remained outstanding. In addition to the amortization of the discount the Company recognized $180 of interest expense on the convertible note for the nine months ended September 30, 2013.

The fair value of the embedded derivatives as of each conversion date was determined using Monte Carlo Simulations and the following assumptions, resulting in derivative expense of $2,000 for the nine months ended September 30, 2013: 

Volatility	35.45% - 122.6%
Risk Free Rate	0.05% - 0.12%
Expected Term	0.1 - .22 Years
Dividend Rate	0%

In October 2012, the Company issued a convertible note with a face value of $32,500. The note was to mature in July 2013, accrued interest at an annual rate of 8%, and was convertible into common stock of the Company at the option of the holder at a conversion rate equal to 51% of the average of the lowest three closing trading prices of the Company’s common stock during the ten trading days immediately preceding the conversion date. In April 2013, the entire principal amount of $32,500 was converted into 14,733,447 shares of common stock. Because the convertible note was convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option was required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operations.

15

On the date of issuance the Company recorded a derivative liability of $36,000, a debt discount of $32,500 and initial derivative liability expense of $3,500. The debt discount being amortized into expense through the conversion dates of the convertible note. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $0 and $22,329, respectively. As of September 30, 2013, no amounts remained outstanding on the note. In addition to the amortization of the discount the Company recognized $0 and $680 of interest expense on the convertible note for the three and nine months ended September 30, 2013, respectively.

The fair value of the embedded derivatives as of each conversion date was determined using Monte Carlo Simulations and the following assumptions, resulting in derivative expense of $1,000 for the three months ended September 30, 2013 and reclassification of $32,000 to equity on the conversion dates: 

Volatility	100.30 - 118.79%
Risk Free Rate	0.05% - 0.06%
Expected Term	0.18 - .23 Years
Dividend Rate	0%

In November 2012, the Company issued a convertible note with a face value of $25,000. The note matured in March 2013, bears interest at an annual rate of 8%, and was convertible into common stock of the Company at the option of the holder at a conversion rate equal to 45% of the average of the lowest three closing trading prices of the Company’s common stock during the ten trading days immediately preceding the conversion date. Because the convertible note is convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option is required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operations. In May 2013, the maturity date of the note was extended to November 2013 and $986 of accrued but unpaid interest was added to the principal balance of the note. As consideration for the extension, the Company agreed to amend the conversion price to the lower of 1) 45% of the lowest trading price during the 15 days prior to conversion or 2) $0.0009.

On the date of issuance the Company recorded a derivative liability of $31,000, a debt discount of $25,000 and initial derivative liability expense of $6,000. The debt discount was amortized into expense through the maturity date of the convertible note. Immediately prior to the extension of the maturity date and amendment to the conversion feature, the fair value of the conversion option was determined to be $31,000. Immediately following the amendment and extension, the fair value of the conversion option was determined to be $101,000. The Company adjusted the carrying value of the conversion option to $101,000, and recorded an additional debt discount of $25,986, to be amortized into interest expense through the extended maturity date, and derivative expense of $44,014. The Company determined that the fair value of the derivative liability on September 30, 2013, was $37,000. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $6,497 and $28,201, respectively. As of September 30, 2013, the carrying value of the convertible note was $12,993, net of a remaining unamortized discount of $12,993. In addition to the amortization of the discount the Company recognized $231 and $959 of interest expense on the convertible note for the three and nine months ended September 30, 2013, respectively.

The fair value of the embedded derivative as of the date of amendment, and as of September 30, 2013, was determined by using Monte Carlo Simulations and the following assumptions, resulting in net derivative income of $19,986 for the three and nine months ended September 30, 2013: 

Volatility	108.96% - 115.7%
Risk Free Rate	0.04% - 0.08%
Expected Term	0.00 - 0.50 Years
Dividend Rate	0%

In December 2012, the Company issued a convertible note with a face value of $42,500. The note matures in September 2013, bears interest at an annual rate of 8%, and is convertible into common stock of the Company at the option of the holder at a conversion rate equal to 51% of the average of the lowest three closing trading prices of the Company’s common stock during the ten trading days immediately preceding the conversion date. Because the convertible note is convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option is required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operations. During the nine months ended September 30, 2013, the holder of the convertible note elected to convert the entire principal balance of $42,500 and $1,700 of accrued interest into 35,644,928 shares of common stock.

On the date of issuance the Company recorded a derivative liability and debt discount of $42,500. The debt discount is being amortized into expense through the maturity date of the convertible note. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $2,889 and $38,391, respectively. In addition to the amortization of the discount the Company recognized $302 and $2,105 of interest expense on the convertible note for the three and nine months ended September 30, 2013.

The fair value of the embedded derivatives as of the date of conversion, and as of the September 30, 2013, was determined using Monte Carlo Simulations and the following assumptions, resulting in no charge to earnings since the fair value of the derivative did not change from March 31, 2013, and reclassification of $28,500 to equity on the date of conversion:

Volatility	112.52% - 122.40%
Risk Free Rate	0.05% - 0.04%
Expected Term	0.18 - .22 Years
Dividend Rate	0%

16

In February 2013, the Company issued two convertible notes with an aggregate face value of $68,000. The notes mature in nine months from the date of issuance, bear interest at an annual rate of 8%, and are convertible into common stock of the Company at the option of the holder at a conversion rate equal to 51% of the average of the lowest three closing trading prices of the Company’s common stock during the ten trading days immediately preceding the conversion date. Because the convertible notes are convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option is required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operations. The Company estimated the fair value of the derivative liabilities on the dates of issuance using Monte Carlo Simulations and the following assumptions:

Volatility	124.2%
Risk Free Rate	0.16% - 0.17%
Expected Term	0.75 Years
Dividend Rate	0%

On the dates of issuance the Company recorded derivative liabilities and debt discounts totaling $65,800. The debt discounts are being amortized into expense through the maturity dates of the convertible notes. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $21,933 and $51,178, respectively. As of September 30, 2013, the carrying value of the convertible notes was $53,378, net of remaining unamortized discounts of $14,622. In addition to the amortization of the discount the Company recognized $1,409 and $2,210 of interest expense on the convertible note for the three and nine months ended September 30, 2013, respectively.

The fair value of the embedded derivatives as of the September 30, 2013 was determined to be $65,800, resulting in no charge to earnings since the fair value of the derivative did not change from March 31, 2013, by using Monte Carlo Simulations and the following assumptions:

Volatility	112.66	%
Risk Free Rate	0.10	%
Expected Term	0.42 Years
Dividend Rate	0	%

In April 2013, the Company issued a convertible note with face value of $56,000. The note matures nine months from the date of issuance, bears interest at an annual rate of 8%, and is convertible into common stock of the Company at the option of the holder at a conversion rate equal to 45% of the average of the lowest two closing trading prices of the Company’s common stock during the thirty trading days immediately preceding the conversion date. Because the convertible note is convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option is required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operations. The Company estimated the fair value of the derivative liability on the date of issuance using Monte Carlo Simulations and the following assumptions:

Volatility	128.10	%
Risk Free Rate	0.13	%
Expected Term	0.75 Years
Dividend Rate	0	%

On the date of issuance the Company recorded derivative liability of $68,000, a debt discount of $56,000, and derivative expense of $12,000. The debt discount is being amortized into expense through the maturity date of the convertible note. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $18,599 and $35,379, respectively. As of September 30, 2013, the carrying value of the convertible notes was $35,379, net of remaining unamortized discounts of $20,621. In addition to the amortization of the discount the Company recognized $1,150 and $2,168 of interest expense on the convertible note for the three and nine months ended September 30, 2013, respectively.

The fair value of the embedded derivative as of the September 30, 2013 was determined to be $68,500. The fair value of the derivative from the date of issuance, by using Monte Carlo Simulations and the following assumptions:

Volatility	112.66	%
Risk Free Rate	0.10	%
Expected Term	0.5 Years
Dividend Rate	0	%

15% Convertible Notes

In February 2012, the Company issued a convertible note with a face value of $190,000. The note matured on February 16, 2013, bears interest at an annual rate of 15%, and is convertible into common stock of the Company at the option of the holder at a conversion price of $0.045 per share. The investor in the convertible debt also acquired 8,650,00 shares of common stock and warrants to acquire 6,900,000 share of common stock for an exercise price of $0.015 per share over a four-year term for proceeds for $10,000. The Company allocated the proceeds from the sale of convertible debt, common stock, and warrants to their equity and liability components and recorded an additional debt discount equal to the amount of proceeds allocated the warrants equal to $8,289 to be amortized into expense through the maturity date of the convertible note. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $4,799 and $5,863, respectively. As of September 30, 2013, the outstanding principal balance was $171,250. In addition to the amortization of discounts the Company recognized $8,371 and $24,342 of interest expense on the convertible note for the three and nine months ended September 30, 2013, respectively.

In May 2012, the Company issued a convertible note with a face value of $133,000. The note matured on November 1, 2012, accrued interest at an annual rate of 15%, and is convertible into common stock of the Company at the option of the holder at a conversion price of $0.045 per share. In conjunction with the issuance of the convertible note, the Company also granted the holder of the convertible note the right to purchase a number of shares of common stock equal to 62.5% of the common stock issuable upon conversion of the convertible notes issued in January and February of 2012, for an exercise price equal to the outstanding principal on the notes issued in January and February of 2012. The Company was required to use the proceeds of such exercise to settle the notes issued in January and February of 2012. Because the exercise price and number of shares purchasable under the purchase option are indeterminable, the Company was required to record a derivative liability for the fair value of the purchase option.

On the date of issuance the Company a recorded a derivative liability and debt discount of $6,000. The debt discount was amortized into expense through the maturity date of the convertible notes.

During the quarter ended September 30, 2012, the holders of the convertible debt issued in January and February of 2012 converted the notes into common stock, effectively terminating the purchase right. Accordingly, the fair value of the derivative liability of $6,000 was reclassed to additional paid in capital.

The investor in the convertible debt also acquired 6,666,666 shares of common stock and warrants to acquire 6,666,666 share of common stock for an exercise price of $0.12 per share over a four-year term for proceeds for $33,333. The Company allocated the proceeds from the sale of convertible debt, common stock, and warrants to their equity and liability components and recorded an additional debt discount equal to the amount of proceeds allocated the warrants equal to $15,915 which has been fully amortized into expense through the maturity date of the convertible note. In connection with a January 2013, forbearance agreement described below, the principal balance of the convertible note was increased by $17,500. As of September 30, 2013, the outstanding principal balance of the note was $150,833. In addition to the amortization of discounts the Company recognized $6,666 and $18,461 of interest expense on the convertible note for the three and nine months ended September 30, 2013, respectively.

17

The Company has failed to comply with certain terms of the convertible notes issued in May 2012 and February 2012 and, in January 2013, entered into a forbearance agreement the holder of these notes. Among other events of default, the Company did not repay the notes on their respective maturity dates in November 2012 and February 2013. In consideration for entering into the Agreement, the Company has agreed that it shall perform (or agree to the terms of) the following material requirements: (a) the May Note shall bear an 18% interest rate from November 1, 2012 forward, (b) a deed of trust on the Company’s 80% interest in the Chloride Copper Mine shall be filed to secure the February and May Notes , (c) the exercise price associated with Warrants issued in connection with the February and May Notes shall be reset, and (d) the Company shall issue additional warrants to purchase 6,750,000 shares of the Common Stock with an exercise price of $0.008 provided that the Company may repurchase a certain percentage of such warrants at a purchase price of $0.001 per share if the February 2012 and May 2012 Notes are paid prior to July 15, 2013. In consideration for entering into the agreement, the Note Holder has agreed to the following material terms; (i) waive any defaults and breaches of the Company or all dates prior to the date of the Forbearance Agreement, and (ii) both the February 2012 and May 2012 Notes are amended to extend the maturity date of each to July 15, 2013 (see Note 14).

The Company recorded an additional discount of $101,160 against the notes to be amortized into expense through the new maturity date of notes of July 15, 2013. The Company recognized amortization expense of $8,158 and $101,160, respectively, during the three and nine months ended September 30, 2013. The discount is equal to the fair value of the additional consideration consisting of the following: 1) the excess of the fair value of the modified warrants (reduced exercise price) over the fair value of the original warrants, both measured at the forbearance date, and 2) the fair value of the additional warrants at the Forbearance date. The fair value of the warrants, including the incremental fair value resulting from the modification of existing warrants and the issuance of additional warrants, was calculated using the Black Scholes model and the following assumptions:

Volatility	125.38%
Risk Free Rate	0.37%
Expected Term	3.0 - 4.0 Years
Dividend Rate	0%

The carrying value of the February and May 2012 notes as of September 30, 2013, was $340,500.

The Company also increased the principal balance of the May Note by $17,500 as reimbursement for legal fees incurred by the lender. The May Note is convertible at $0.045 per share. Since the trading price of the stock was $0.0072 on the forbearance date, there was no additional beneficial conversion resulting from the increase in face value of the May Note. The Increase in Face Value was recorded as debt issuance costs to be amortized through the new maturity date. The Company recognized $1,411 and $17,500, respectively, of amortization expense during the three and nine months ended September 30, 2013.

Other Convertible Notes

In June 2013, the Company issued a convertible note for the principal sum of $300,000. Only $25,000 of the note was advanced to the Company, resulting in a $27,778 note payable net of $2,778 original issue discounts. The lender may advance additional Principal (up to the $300,000) to the Company at the lender’s sole discretion. The note matures one year from the date of issuance, is issued at a 10% discount to the face value, and is convertible into common stock of the Company at the option of the holder at a conversion rate equal to the lower of $.0036 and 60% of the lowest closing trading price of the Company’s common stock during the twenty five trading days immediately preceding the conversion date. Because the convertible note is convertible into an indeterminable number of shares of common stock, the fair value of the embedded conversion option is required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the statement of operations. The Company estimated the fair value of the derivative liability on the date of issuance using Monte Carlo Simulations and the following assumptions:

Volatility	93.46	%
Risk Free Rate	0.15	%
Expected Term	1.0 Year
Dividend Rate	0	%

On the date of issuance the Company recorded derivative liability and debt discount of $18,500. The debt discount is being amortized into expense through the maturity date of the convertible note. The original issue discount of $2,778 is being amortized into interest expense through the maturity date. During the three and nine months ended September 30, 2013, the Company recorded amortization expense of $5,363 and $6,249, respectively. As of September 30, 2013, the carrying value of the convertible notes was $12,504, net of remaining unamortized discounts of $15,274.

The fair value of the embedded derivative as of the September 30, 2013 was determined to be $18,500 using Monte Carlo Simulations and the following assumptions:

Volatility	112.66	%
Risk Free Rate	0.15	%
Expected Term	1.0 Year
Dividend Rate	0	%

NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS

The following table represents the Company’s fair value hierarchy for its derivative financial instruments measured at fair value on a recurring basis as of December 31, 2012:

	Balance at September 30, 2013		Quoted Prices in Active Mkts. for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Embedded conversion feature on convertible debt	$	11,262,927		—		—	$	11,262,927
Total	$	11,262,927	$	—	$	—	$	11,262,927

The table below sets forth the summary of changes in the fair value of the Company’s Level 3 derivative financial instruments for the six month period ended September 30, 2013:

Balance-December 31, 2012	$	154,000
Convertible debt issued with conversion feature		10,531,695
Embedded conversion option reclassified to equity upon conversion of debt		(113,500)
Fair value change in derivative liability		690,732
Balance-September 30, 2013	$	11,262,927

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NOTE 9. ADVANCES

On March 17, 2010, Brian Hebb a creditor, assumed the debt of $90,573 that an officer had advanced the Company. As of September 30, 2013 and December 31, 2012, an advance note payable of $90,573 is due to Brian Hebb. 

NOTE 10. STOCK-BASED COMPENSATION

On November 17, 2011 the Board of Directors approved the parameters for a Company Qualified Stock Option Plan (the “Plan”). under which employees, directors and service providers of the Company may be granted awards to purchase shares of the Company’s common stock at a price to be determined by the Board of Director’s compensation committee. During the six months ended June 30, 2013, the Company did not grant any options to acquire shares of common stock and there were not forfeitures.

Option activity for the period from inception through September 30, 2013 was as follows:

	# of shares		Weighted Average Exercise Price		Weighted Average Remaining Term
Outstanding January 1, 2013		174,164,606		0.045		3.43
Granted		—		—		—
Forfeitures		—		—		—
Outstanding September 30, 2013		174,164,606		0.045		3.43
Exercisable September 30, 2013		37,664,606		0.030		3.41

The following table summarizes information about the stock options outstanding at September 30, 2013:

Exercise Price		# of shares		Weighted Average Remaining Term		Weighted Average Grant Date Fair Value
$	0.004		15,326,250		3.64		0.0011
$	0.0059		1,500,000		3.16		0.0034
$	0.0510		4,838,356		2.93		0.0024
$	0.0500		152,500,000		3.85		0.0016
			174,164,606

The stock options had no intrinsic value at September 30, 2013.

As of September 30, 2013, there is $188,752 of unrecognized compensation cost (pre-tax) that will be recognized in the future.

In March 2013, the Company entered into an agreement with a provider of legal fees to settle legal fees of $42,000 of the $302,353 owed by the Company as of December 31, 2012. In settlement of the amounts due, the Company agreed to issue to the provider of legal services, 6,000,000 shares of common stock, issue options to acquire 6,000,000 shares of common stock for an exercise price of $0.01 per share for five years, and pay $260,353, bearing interest at an annual rate of 12%, in cash as soon as practicable. The Company determined the fair value of the common stock to be $39,600 based on the trading price of the Company’s common stock on the date of the agreement. The Company determined the fair value of the stock options to be $33,097 using the Black Scholes model and the following assumptions: expected volatility – 133.06%, risk free rate – 0.81%, expected term – 5 years, and dividend rate – 0.0%. The Company recorded additional legal fee expense equal to the excess of the fair value of the consideration given over the carrying value of the accrued legal fees, resulting in additional expense during the nine months ended September 30, 2013 of $30,697. As of September 30, 2013, the 6,000,000 shares have not been issued. 

NOTE 11. EQUITY

As of September 30, 2013, the Company is authorized to issue 990,000,000 shares of common stock, $0.001 par value and 10,000,000 shares of preferred stock, $0.001 par value. The Company’s common stock was divided into two classes of common stock with 970,000,000 shares to the Class A common stock and 10,000,000 shares to the Class B common stock.

On March 9, 2012, former Director James Stonehouse and the Company entered in to a settlement agreement and general release of claims whereby all debt of approximately $106,000 owed by the Company to Mr. Stonehouse were satisfied in exchange for 250,000 options at an exercise price of $0.05 per share.

On January 22, 2013, the company filed an Amendment to its Articles with the Nevada Secretary of State. The company’s Board of Directors and the holders of a majority of the outstanding shares of our Company entitled to vote on September 7, 2012 had unanimously approved the Amendment. The purpose of the Amendment was to increase the shares of our authorized capital stock from 460,000,000, to 990,000,000 of which 970,000,000 shall be designated our Class A Common Stock, par value $0.001, 10,000,000 shall continue to be designated our Class B Common Stock, par value $0.001, and 10,000,000 shall continue to be designated Preferred Stock, par value $0.001 per share of which 1,000,000 shares have been designated and issued as Series A Preferred Stock, as set forth in the Company’s Definitive Information Statement on SEC Form 14C, filed on December 26, 2012.

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Common Stock

On December 21, 1992, we issued one thousand eight hundred and sixty (1,860) shares of our common stock in consideration of $1,860 in cash.

On December 18, 1998, we amended and restated our Articles of Incorporation, to increase our authorized capitalization from two thousand five hundred (2,500) common stock to twenty five million (25,000,000) common stock. The no par value was changed to $0.001 per share.

On December 18, 1998, our shareholders approved a forward split of our common stock at the ratio of one thousand (1,000) shares for every one (1) share of the existing shares. The number of common stock outstanding increased from one thousand eight hundred and sixty (1,860) to one million eight hundred sixty thousand (1,860,000). Prior period information has been restated to reflect the stock split, on a retroactive basis.

On July 14, 2006, our shareholders declared a five and one half (5.5) share dividend for each one share of the issued and outstanding shares. The record date was July 28, 2006; payable July 31, 2006. The number of common stock outstanding increased from 1,860,000 to 12,090,000.

See Note 5. Chloride Copper Project – Business Combination for a discussion of an Asset Purchase Agreement (the “Purchase Agreement”) entered into by the Company together with Medina Property Group LLC, a Florida limited liability company (“Medina”), pursuant to which the Company agreed to purchase 80% of certain assets of Medina known as the Chloride Copper Project and pursuant to which the purchase price consisted of the issuance of 12,750,000 shares of our common stock, which shares were issued on or about August 9, 2010, to Medina and certain of its designees. In connection with and pursuant to the terms of the Purchase Agreement, Black Diamond Realty Management, LLC returned 5,348,000 shares of the Company’s Common Stock, which shares were returned on June 23, 2010 and, as a result, a change of our shareholder voting control occurred. The net shared issued for this transactions is 7,402,000 shares.

On June 1, 2010, the Company issued Michael Doherty, our former Director, President (Principal Executive Officer), Chief Financial Officer, and Secretary of the Company, 100,000 shares of the Company’s Common Stock in consideration for his services to the Company which shares of common stock were valued at $3,000 based on the value of the associated underlying shares of the Company’s common stock which value of $1.00 per share, represented the offering price of the Company’s Common Stock in its most recently completed equity transaction prior to the date of the Purchase Agreement and for which the Company recorded a debit to consulting expense in the amount of $100,000.

Effective June 1, 2010, we amended our Certificate of Incorporation and declared a six (6) share stock split for each one share of the issued and outstanding shares. Total shares to be issued was six to 1. The record date and that date such shares were issued was June 25, 2010. The number of common stock outstanding increased from 19,592,000 to 117,552,000.

At August 23, 2010, the Company entered into a subscription agreement with an investor in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. The Company issued and sold to the investor an aggregate of 300,000 shares of its common stock. This issuance resulted in aggregate gross proceeds to the Company of $75,000. At June 30, 2013 the 300,000 shares of common stock had not yet been issued and accordingly, the Company recorded a credit to subscribed shares.

On January 13, 2011 the Company issued Patrick Champney, our former Chief Executive Officer, and a Director of the Company, 1,000,000 shares of the Company’s Common Stock in consideration for his services to the Company and as per his employment agreement. The shares of common stock were valued at $510,000 based on the value of the associated underlying shares of the Company’s common stock as per the trading price at issuance, which was $.51 per share.

On January 19, 2011 the Company issued Brenda Hamilton, an attorney for the Company, 120,000 shares of the Company’s Common Stock in consideration for her services to the Company. The shares of common stock were valued at $62,400 based on the value of the associated underlying shares of the Company’s common stock as per the trading price at issuance, which was $.52 per share.

On January 19, 2011 the Company issued, Kathi Rodriguez a contractor for the Company, 10,000 shares of the Company’s Common Stock in consideration for her services to the Company. The shares of common stock were valued at $5,200 based on the value of the associated underlying shares of the Company’s common stock as per the trading price at issuance, which was $.52 per share.

20

On January 24, 2011 the Company issued Cella Lange and Cella, LLP an attorney for the Company, 100,000 shares of the Company’s Common Stock in consideration for their services to the Company. The shares of common stock were valued at $53,000 based on the value of the associated underlying shares of the Company’s common stock as per the trading price at issuance, which was $.53 per share.

On February 2, 2011 the Company issued Cella Lange and Cella, LLP an attorney for the Company, 100,000 shares of the Company’s Common Stock in consideration for their services to the Company. The shares of common stock were valued at $19,000 based on the value of the associated underlying shares of the Company’s common stock as per the trading price at issuance, which was $.19 per share.

On February 2, 2011 the Company issued Bradley Hacker our Chief Financial Officer for the Company, 100,000 shares of the Company’s Common Stock in consideration for his services to the Company and terms for his appointment as Chief Financial Officer. The shares of common stock were valued at $19,000 based on the value of the associated underlying shares of the Company’s common stock as per the trading price at issuance, which was $.19 per share.

On April 18, 2011 the Company issued Eduardo Munoz a consultant for the Company, 100,000 shares of the Company’s Common Stock in consideration for his services and reimbursement of expenses to the Company. The Company recorded professional expenses and travel costs in the amount of $6,000 based on the market trading value of the shares on the date of issuance.

From May, 12, 2011 through December 31, 2011 the Company issued Asher Enterprises during seventeen dates a total of 86,672,004 shares of the Company’s Common stock. The stock was issued in exchange for the conversion of notes payable totaling $538,493 issued during 2010 and 2011.

On May 24, 2011 the Company issued First Capital Partners, Inc. a public relations firm for the Company, 750,000 shares of the Company’s Common Stock in consideration for their services to the Company. The Company recorded professional expenses of $15,000 based on the market trading value of the shares on the date of issuance.

On June 7, 2011 the Company issued Michael Rowland as consultant for the Company, 300,000 shares of the Company’s Common Stock in consideration for his services to the Company. The Company recorded professional expenses of $6,000 based on the market trading value of the shares on the date of issuance.

On May 10, 2012, the Company issued Barton Budman a common stock purchase option to purchase 1,000,000 shares of common stock with an exercise price of $0.05 per share as outlined in the consulting agreement dated February 21, 2012 between Barton Budman, a consultant, and the Company,

During the quarter ended June 30, 2012, the Company entered into a subscription agreement with Grandview Ventures, whereas, for the value of $10,000 the Company agreed to issue 8,650,000 shares of the Company’s common stock. The Company has received the $10,000 and has issued the common shares to the third party.

From January 3, 2012 through July 31, 2012 the Company issued Asher Enterprises a total of 124,879,081 shares of the Company’s Common stock. The stock was issued in exchange for the conversion of notes payable totaling $128,800 (including interest) issued during 2011 and 2012.

From January 1, 2013 through September 30, 2013 the Company issued Asher Enterprises a total of 94,928,640 shares of the Company’s Common stock. The stock was issued in exchange for the conversion of notes payable totaling $153,300 (including interest) issued during 2012 and 2013. For the three month period ending September 30, 2013, the Company issued  60,528,526 shares in exchange for the conversion of notes payable totaling $38,300 (including interest).

Common Shares Subscribed, Not Issued

During the year ending December 31, 2010, the Company entered into a subscription agreement. Whereas, for the value of $75,000 the Company agreed to issue 300,000 shares of the Company’s common stock. The Company received the $75,000 however as of September 30, 2013 the Company had not issued the common shares to the third party.

The Company entered into a demand Promissory Note with Blackpool Partners LLC; a company owned by the Company’s CEO and a related party on May 18, 2011 in the amount of $6,700. This note has been satisfied and converted into 2,857,467 shares of common stock; however as of this filing the Company has not issued these shares The stock is in exchange for the conversion of a note payable totaling $6,858 (including interest).

Effective March 10, 2011, the Company entered into a two month independent consulting agreement with J. Rod Martin, its current CEO, in consideration for 200,000 shares of restricted Common Stock. The terms of the agreement were satisfied; however as of this filing the Company has not issued these shares. Effective May 11, 2011, the Company entered into a four month independent consulting agreement with J. Rod Martin, its current CEO, in consideration for 2,000,000 shares of restricted Common Stock. The terms of the agreement were satisfied; however as of this filing the Company has not issued these shares. The Company recorded a consulting expense on the date agreements were issued.

The Company entered into a Convertible Promissory Note with Tangiers on October 14, 2011 in the amount of $31,500. The Company has renegotiated the terms of the note May, 2012. The new terms require the Company to make two payments of $18,750, which one payment has been satisfied, and issue 3,000,000 shares of common stock valued at $14,700 to Tangiers; however as of this filing the Company has not issued these shares.

21

On March 6, 2013 the Company and Cella, Lange, Cella LLP (“Cella”) entered into an agreement whereby Cella was issued 6,000,000 shares of the Company’s Class A common stock in exchange for the payment of $42,000 of the balance due to Cella. In consideration for this agreement, the Company also granted Cella fully vested options to purchase up to 6,000,000 additional shares at an exercise price of $0.01 per share. Cella may in its sole discretion elect to apply the amount of the option exercise against outstanding amounts owed to Cella in lieu of receiving a cash payment from the Company. The outstanding balance owed to Cella as of December 31, 2012 shall bear an annual interest rate of 12% until paid. As of September 30, 2013, the Company has not issued the 6,000,000 shares of Class A common stock.

In April 2013, the Company acquired the remaining 20% interest in certain assets and properties of Medina Property Group, LLC part of the consideration consisted of 40,000,000 shares of common stock. As of September 30, 2013, these shares had not yet been issued.

Preferred Stock

As of September 30, 2013 and December 31, 2012, the company had 10,000,000 authorized shares of Preferred Stock, with a par value of $0.001 per share. On January 31, 2012, the board of directors approved and issued 500,000 shares of Series A Preferred Stock each to Timothy Benjamin, Chairman, and J. Rod Martin, CEO. The Company has valued the preferred stock at $1,000 based on the voting rights, the probability of redemption and the value of the Company’s common stock. There are 1,000,000 issued and outstanding shares of Preferred Stock at September 30, 2013 and December 31, 2012. 

NOTE 12. INCOME TAXES

The Company adopted ASC Topic 740, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

For income tax reporting purposes, the Company’s aggregate unused net operating losses approximate $11,237,044, which expire in various years through 2030, subject to limitations of Section 382 of the Internal Revenue Code, as amended. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company, it is more likely than not that the benefits will not be realized.

NOTE 13. OTHER EVENTS

On January 11, 2012, the Company Amended its Article of Incorporation and increased the authorized common stock of the Company from 450,000,000 to 1,500,000,000 shares. Subsequently, on April 13, 2012 the Company canceled the Amendment. Therefore, the Company continues to operate with 450,000,000 common shares and 10,000,000 preferred shares of authorized stock under its Articles of Incorporation.

On January 31, 2012 the Company filed for an amendment of its Articles of Incorporation creating two classes of Preferred stock with 1,000,000 shares of Class A preferred Shares and 9,000,000 shares of Class B Preferred Shares.

As of September 30, 2013, the Company is authorized to issue 990,000,000 shares of common stock, $0.001 par value and 10,000,000 shares of preferred stock, $0.001 par value. The Company’s common stock was divided into two classes of common stock with 970,000,000 shares to the Class A common stock and 10,000,000 shares to the Class B common stock. 

NOTE 14. SUBSEQUENT EVENTS

The Company and Fogo Inc (“Fogo”) are presently in negotiations for an extension to the Promissory Note dated July 31, 2012. As of the date of this filing an extension agreement has not been finalized. The Company will continue negotiations with Fogo to finalize an extension agreement. 

The Company and Grand View Ventures are presently in negotiations for an extension to the Promissory Notes of February and May 2012. As of the date of this filing, an extension agreement has not been finalized. The Company will continue negotiations with Grand View Ventures to finalize an extension agreement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this quarterly report. Portions of this document that are not statements of historical or current fact are forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this quarterly report should be read as applying to all related forward-looking statements wherever they appear in this quarterly report. From time to time, we may publish forward-looking statements relative to such matters as anticipated financial performance, business prospect, and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in this section or elsewhere in this report are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following: changes in the economy; changes in operating expenses; the effect of commodity price increases or decreases; the variability and timing of business opportunities including acquisitions, alliances; our ability to realize the anticipated benefits of acquisitions and other business strategies; the incurrence of debt and contingent liabilities in connection with acquisitions; changes in accounting policies and practices; the effect of organizational changes within the Company, adverse state and federal regulation and legislation; and the occurrence of extraordinary events, including natural events and acts of God, fires, floods and accidents.

Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2012, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The primary effort of the Company is to acquire the necessary funding to bring the Chloride Copper Mine into production in order to generate working capital from its operation. The Company will also continue its strategy to acquire other mining prospects in addition to further development of the Chloride Copper Mine.

To date the Company has received initial assay results from its Chloride Copper Mine (AKA Emerald Isle Mine) drill program on the tailings impoundment at its Chloride Copper Mine Property near the town of Chloride, in Mohave County Arizona. Copper grade ranged from a minimum of 0.16% Cu to a maximum of 0.43% Cu with the average being 0.36% Cu. The report also estimated the tailings to contain approximately 1.2 million tons of material. The objectives of this drill program were designed to collect material in order to confirm the grade of copper mineralization that was previously reported by SGV Resources Inc. The copper distribution appears to be consistent over all the samples collected from the tailings impoundment. The tailings are the waste product from the previous operation of the Emerald Isle Mine from 1943 to 1973 when copper recovery was much lower than recovery rates available with today’s technology. This low recovery indicates that a substantial amount of copper-bearing material was sent to the tailings impoundment. The objective of this tailings program is to determine whether the tailings can be economically mined and processed to recover the contained copper in them. There can be no assurance that the Company will receive material value for the tailings.

The Chloride Copper Mine property consists of 37 unpatented lode mining claims and 14 mill site claims and it is located 24km northwest of Kingman, in the Wallapai District, Mohave County, Arizona. The Chloride Copper Mine is comprised of an open pit mine and the existing onsite SXEW (Solvent extraction/electro winning) processing plant.

The Chloride Copper Mine deposit is hosted by Late Tertiary conglomerates and, to a lesser extent, by Quaternary alluvium and Cretaceous granitic rocks. Copper mineralization at Chloride Copper Mine is in the form of mineralized lenses contained within a paleochannel a few thousands of feet long and up to 750 feet wide. The source of copper at Chloride Copper Mine is interpreted to be the low grade porphyry-type copper mineralization at Alum Wash, about 3.5 miles northeast of the Chloride Copper Mine deposit. The mineralization is characterized by dark blue to black rock similar to the Exotica deposit, a satellite deposit of the huge Chuquicamata copper deposit in Chile.

Effective February 20, 2012 the Board of Directors approved the purchase of half of the minority interest in the Chloride Copper Mine from the Medina Property Group, LLC under the terms of a letter of intent. The execution of this transaction would increase the Company’s interests in the Chloride Copper Mine to 90%. On April 12, 2013, the Company acquired the entire minority interest in the Chloride Copper Mine, thus increasing the Company’s interests in the Chloride Copper Mine to 100% (See Note 5).

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Amendments to our By-Laws

Critical accounting estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

We have identified the following as critical accounting estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions and conditions.

Income taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the differences are expected to be recovered or settled. For the Company, the differences are attributable to differing methods of reflecting depreciation and stock based compensation for financial statement and income tax purposes.

The likelihood of a material change in the Company’s expected realization of these assets is dependent on, among other factors, future taxable income and tax settlements. While management believes that its judgments and interpretations regarding income taxes are appropriate, significant differences in actual experience may require future adjustments to our tax assets and liabilities, which could be material.

We are also required to assess the realizability of our deferred tax assets. We evaluate positive and negative evidence and use judgments regarding past and future events, including operating results and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, we determine when it is more likely than not that all or some portion of our deferred tax assets may not be realized, in which case we would be required to apply a valuation allowance to offset our deferred tax assets in an amount equal to future tax benefits that may not be realized. We currently have a valuation allowance against our deferred tax assets. However, if facts and circumstances change in the future, valuation allowances may be removed.

Significant judgment is required in determining income tax provisions and in evaluating tax positions. We establish additional provisions for income taxes when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold, which is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority. In the normal course of business, various federal and state tax authorities examine the Company and its subsidiaries. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of our provision for income taxes. We adjust the income tax provision, the current tax liability and deferred taxes in any period in which facts that give rise to an adjustment become known. The ultimate outcomes of the examinations of our income tax returns could result in increases or decreases to our recorded tax liabilities, which could affect our financial results.

Results of Operations

Total Assets were approximately $6,052,062 at September 30, 2013 compared to $720,358 at December 31, 2012. The increase in total assets is attributed to the capitalization of mineral property rights costs corresponding to the acquisition of the Minority’s entire 20% interest in the Chloride Mine.

Operating Expenses

Selling, general and administrative expenses decreased $89,957 and $185,367 for the three and nine month period ended September 30, 2013, respectively, when compared to the same periods in 2012. The decrease is attributable to decreased expenditures on legal matters and reduction in travel expenses.

Financing costs, including interest and amortization of discounts

Financing costs, including interest and amortization of discounts increased $270,619 and $771,507 for the three and nine month period ended September 30, 2013, respectively, when compared to the same periods in 2012. The increase was primarily attributable to the net effect of convertible notes.

Forgiveness of debt and accrued interest

Income recognized from the forgiveness of debt and accrued interest decreased $0 and $797,445 for the three and nine month period ended September 30, 2013, respectively, when compared to the same periods in 2012. The decreases were solely due to the Company’s recognition of income from the forgiveness of debt and accrued interest in 2012.

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Net loss

The net loss for the three and nine month period ended September 30, 2013 increased $153,400 and $8,385,226, respectively, as compared to the same periods in 2012. The increases were primarily the result of the recognition of the derivative expense associated with the acquisition of the Minority’s interest in the Chloride Mine.

Liquidity and Capital Resources

We had working capital deficit of $15,479,890 and $2,496,319 at September 30, 2013 and December 31, 2012, respectively.

The primary effort of the Company is to acquire the necessary funding to bring the Chloride Copper Mine into production in order to generate working capital from its operation. The Company entered into additional debt instruments (Notes) as well as issued equity instruments (warrants) in order to raise funds to cover expenditures related to bringing the Chloride Copper Mine into production.

However, without obtaining the necessary funding, there is substantial doubt about our ability to continue as a going concern.

Cash Flows

Cash and cash equivalents decreased by $16,872 during the nine month period ended September 30, 2013. The decrease is attributable to the proceeds raised from the Company’s issuance of debt and convertible debt instruments offset by funds used for operations.

Cash Flows from Operating Activities

During the nine month period ended September 30, 2013, net cash used by operating activities was $222,922, as compared to $388,751 during the same period prior year. The decrease in net cash used for the nine month period ended September 30, 2013 as compared to the same period in 2012 was primarily attributable to the Company’s decrease in selling, general and administrative cash expenditures.

Cash Flows from Investing Activities

The Company had no significant investment activity for the nine month period ended September 30, 2013 or September 30, 2012.

Cash Flows from Financing Activities

Net cash provided by financing activities was $206,050 in the nine month period ended September 30, 2013, as compared to net cash provided by financing activities of $463,449 for the same period prior year. The decrease in cash provided by financing activities for the nine month period ending September 30, 2013 as compared to the same period prior year was primarily attributable to the Company’s decrease in proceeds from notes payable.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues and results of operations, liquidity, or capital expenditures.

At September 30, 2013 and through the date of this report, we did not and do not have any material commitments for capital expenditures, nor do we have any other present commitment that is likely to result in our liquidity increasing or decreasing in any material way.

WHERE YOU CAN FIND MORE INFORMATION

You are advised to read this Quarterly Report on Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

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Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The disclosure controls and procedures were effective as of September 30, 2013. Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over our financial reporting. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting was effective as of September 30, 2013.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

(b) Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal controls over financial reporting or in other factors that could materially affect, or are reasonably likely to affect, our internal controls over financial reporting during the quarter ended September 30, 2013. There have not been any significant changes in the Company’s critical accounting policies identified since the Company filed its Annual Report on Form 10-K as of December 31, 2012.

PART II

Item 1. Legal Proceedings.

We may be subject to legal proceedings from time to time in the ordinary course of our business. The Company is not currently a party to, nor is any of its property currently the subject of, any material legal proceeding. None of the Company’s directors, officers or affiliates is involved in a proceeding adverse to the Company’s business or has a material interest adverse to the Company’s business.

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Item 1A. Risk Factors.

You should carefully consider the following risk factors together with the other information contained in this Report on Form 10-K, and in prior reports pursuant to the Securities Exchange Act of 1934, as amended and the Securities Act of 1933, as amended. If any of the risks factors actually occur, our business, financial condition or results of operations could be materially adversely affected. In such cases, the trading price of our common stock could decline. We believe there are no changes that constitute material changes from the risk factors previously disclosed in the prior reports pursuant to the Securities Exchange Act of 1934, as amended and the Securities Act of 1933 and include or reiterate the following risk factors:

Risks Related to our Business

We engaged in mining developmental activities, which subjects us to risks associated with similarly situated development stage companies in the mining business.

We are a development stage company with a limited operating history since inception. We have no revenues and no record of profitability in our current business. Our likelihood of success must be considered in light of the risks, expenses, difficulties and delays frequently encountered by companies that have a limited operating history.

Because the probability of any of our properties or claims being profitable is subject to many variables, any funds that we spend on exploration may be lost.

We own a one hundred percent (100%) interest in one property, the Chloride Copper Project, which may not have deposits of copper or other metals that may be mined at a profit. Whether we will be able to mine this property at a profit, depends upon many factors, including:

• the size and grade of the deposit;

• whether we can obtain sufficient financing on acceptable terms to conduct our exploration activities;

• volatile and cyclical price activity of copper and other precious metals; and the cost, personnel, and time burdens of governmental regulation, including taxes, royalties, land use, importing and exporting of minerals, and environmental protection.

If we are unable to operate the Chloride Copper project at a profit because the deposits may not be of the quality or size that would enable us to make a profit from actual mining activities or because it may not be economically feasible to extract metals from the deposits, any funds spent on exploration activities could be lost, which may result in a loss of part or all of your investment.

Additionally, there is a risk of loss of 20% interest in the Chloride Copper Project as Medina Property Group has a right of reversion if the Company does not meet all requirements in the Asset Purchase Agreement.

Development of the Chloride Copper Project may lead to increased costs and burdens on our operations, which may negatively affect our financial condition and results of operations.

Development of the Chloride Copper Project will involve substantial efforts by us and/or third parties we retain. We may encounter various technical and control problems during our development of this property. Our proposed mining operations may involve longer periods of time or greater expenditures then are presently contemplated. Such technical or operational problems may negatively impact the economic performance of the mining project and our financial condition.

Production of the Copper Chloride Mine is dependent on the availability of a sufficient water supply to support our mining operations.

Our mining operations require water for mining, ore processing and related support facilities. Production at the Chloride Copper Mine is dependent on continuous maintenance of our water rights. Under Arizona law groundwater outside an active management area may be withdrawn and used for reasonable and beneficial use. The character of the water right that is groundwater versus surface water, may at some point become at issue and may be subject to adjudication to the extent certain water is determined to be surface water, which may subject us to additional costs and delays.

We may not have access to all of the materials we need to begin exploration, which could cause us to delay or suspend activities.

Due to competitive demands for exploration services and obtaining necessary supplies and/or equipment, there may be disruptions in our planned exploration activities, especially if there are unforeseen shortages. While we intend to attempt to arrange alternatives and redundancy, we have not yet attempted to locate or negotiate with any alternative suppliers of products, equipment or materials. We will attempt to locate suitable equipment, materials, manpower and fuel if sufficient funds are available; if we are unable to do so, we will experience delays or suspension of our planned activities, which will adversely affect our exploration activities and financial condition.

Our estimates of reserves may be subject to uncertainty.

Reserve estimates are subject to uncertainty. Estimates are arrived at by using standard acceptable geological techniques, and are based on interpretive geological data obtained from drill holes, sampling techniques, assaying, surveying, and mapping. Feasibility studies are used to derive estimates of cash operating costs based on anticipated tonnage and grades of copper to be mined and processed, predicted configuration of ore bodies, expected recovery rates of metal from copper, operating costs, and other factors. Actual cash operating costs and economic returns may differ significantly from original estimates due to:

• fluctuations in current prices of metal commodities extracted from the deposits;

• changes in fuel prices and equipment;

• labor rates;

• changes in permit requirements; and

• variations in actual extraction costs from those projected.

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Any one or a combination of these factors may negatively affect the relative certainty or uncertainty of geological reports or reserve estimates.

Our Business depends upon the continued involvement of our Existing Management.

The loss, individually or cumulatively, of Messrs. Martin, Benjamin or Budman could adversely affect our business, prospects, and our ability to successfully conduct our exploration activities. We anticipate that our business may become dependent upon other key personnel and/or consultants in the future. We do not presently carry key-man insurance on any of our officers, directors or employees, and cannot predict when or whether we will carry such insurance in the near future. We do not believe that we will be able to operate as planned in the event that we lose their services. Before you decide whether to invest in our common stock, you should carefully consider our reliance upon these personnel and that if we lose the benefit of their expertise, your investment may be negatively impacted.

Should we fail to effectively manage our growth, our operations and financial condition will be negatively affected.

We have plans to develop the Chloride Copper project, which will place a significant strain on our management, operational and financial resources. We expect to add additional key personnel to develop the property. Additional employees will place significant demands on our management. In order to manage the expected growth of our operations, we will be required to engage mining personnel, to improve existing structures, including improvement of internal management systems, on a timely basis. There can be no assurance that our current personnel, systems, procedures and controls will be adequate to support our future operations or that management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to manage and exploit existing and potential opportunities successfully. If we are unable to manage our operations effectively, our business, results of operations and financial condition will be materially adversely affected.

We may never achieve production, which is dependent on a number of assumptions and factors beyond our control.

Although we have prepared estimates of future copper production, we may never achieve our production estimates. Our estimated mining costs and assumptions regarding ore grades and recovery rates may be incorrect. Additionally, ground conditions, physical conditions of mineralization and our ability to obtain and maintain development and production related permits also may negatively affect whether we successfully enter and maintain a production phase. Our actual production may vary from our estimates if any of these assumptions prove to be incorrect and we may never achieve profitability.

Our estimate of ore reserves at the Chloride Copper Mine is based on total copper assays rather than soluble copper assays.

A reserve estimate based on total copper is an indirect measurement of copper recovery through leaching. Accordingly, we may have over-estimated the amount of recoverable copper at the Chloride Copper Mine.

We may be subject to unanticipated risks related to inadequate infrastructure.

Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure, such as reliable roads, bridges, power sources and water supply. Unusual or infrequent weather phenomena, sabotage, government or other interference could adversely affect infrastructure and hence our mining operations.

Our development of new ore bodies and other capital costs may cost more and provide less return than we estimate.

Capitalized development projects may cost more and provide less return than we estimate. If we are unable to realize a return on these investments, we may incur a related asset write-down that could adversely affect our financial results or condition. Before we can begin a development project, we must first determine whether it is economically feasible to do so.

This determination is based on estimates of several factors, including:

• ore reserves;

• expected recovery rates of metals from the ore;

• future metals prices;

• facility and equipment costs;

• availability of affordable sources of power and adequacy of water supply;

• exploration and drilling success;

• capital and operating costs of a development project;

• environmental considerations and permitting;

• adequate access to the site, including competing land uses (such as agriculture);

• applicable tax rates;

• assumptions used in determining the value of our pension plan assets and liabilities;

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• foreign currency fluctuation and inflation rates; and

• availability of financing.

These estimates are based on geological and other interpretive data, which may be imprecise. As a result, actual operating and capital costs and returns from a development project may differ substantially from our estimates as a result of which it may not be economically feasible to continue with a development project.

Our ore reserve estimates may be imprecise.

Our ore reserve figures and costs are estimates and should not be interpreted in any way that we will actually recover the indicated quantities of these metals. You are strongly cautioned not to place undue reliance on estimates of reserves. Reserve estimation is interpretive and based upon available data and various assumptions. Our reserve estimates may change based on actual production experience. Further, reserves are valued based on estimates of costs and metals prices, which may be inconsistent with our other operating and non-operating properties.

The economic value of ore reserves may be adversely affected by:

• declines in the market price of the various metals we mine;

• increased production or capital costs;

• reduction in the grade or tonnage of the deposit;

• increase in the dilution of the ore; and

• reduced recovery rates.

Short-term operating factors relating to our ore reserves, such as the need to sequentially develop ore bodies and the processing of new or different ore grades, may adversely affect our cash flow. We may use forward sales contracts and other hedging techniques to partially offset the effects of a drop in the market prices of the metals we mine. However, if the prices of metals that we produce decline substantially below the levels used to calculate reserves for an extended period, we could experience:

• delays in new project development;

• net losses;

• reduced cash flow;

• reductions in reserves; and

• write-downs of asset values.

Efforts to expand the finite lives of our mines may be unsuccessful, which could hinder our growth and decrease the value of our stock.

Mineral exploration, particularly for copper is highly speculative and expensive. It involves significant risks and is often non-productive. Even if we have a valuable mineral deposit, it may be several years before production from that deposit is possible. During that time, it may become no longer feasible to produce those minerals for economic, regulatory, political or other reasons. As a result of high costs and other uncertainties, we may not be able to expand or replace our existing ore reserves as they are depleted, which would adversely affect our business and financial position in the future.

Our ability to market our metals production may be affected by disruptions or closures of custom smelters and/or refining facilities.

We may sell substantially all of our metallic concentrates to custom smelters, with our ore bars sent to refiners for further processing before being sold to metal traders. If our ability to sell concentrates to such smelters becomes unavailable, our operations could be adversely affected.

Mining accidents or other adverse events at an operation could decrease our anticipated production.

Production may be reduced below our historical or estimated levels as a result of mining accidents; unfavorable ground conditions; work stoppages or slow-downs; lower than expected ore grades; the metallurgical characteristics of the ore are less economical than anticipated; or our equipment or facilities fail to operate properly or as expected.

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Our operations may be adversely affected by risks and hazards associated with the mining industry that may not be fully covered by insurance.

Our business is subject to a number of risks and hazards including:

• environmental hazards;

• labor disputes or strikes;

• unusual or unexpected geologic formations;

• cave-ins;

• explosive rock failures; and

• unanticipated hydrologic conditions, including flooding and periodic interruptions due to inclement or hazardous weather conditions.

Such risks and hazards could result in:

• personal injury or fatalities;

• damage to or destruction of mineral properties or producing facilities;

• environmental damage;

• delays in exploration, development or mining;

• monetary losses; and

• legal liability.

We presently do not maintain insurance to protect against losses that may result from some of these risks at levels consistent with our historical experience, industry practice and circumstances surrounding each identified risk. Insurance against environmental risks is generally either unavailable or, we believe, too expensive for us, and we therefore do not maintain environmental insurance. Occurrence of events for which we are not insured may have an adverse effect on our business.

Financial Risks

Should we fail to successfully compete with our competitors, our name, operations, and financial condition will be negatively affected.

We will compete with other companies engaged in the copper mining industry, most of which are well established, have substantially greater financial and other resources than us, and have an established reputation for success in mining. Therefore, we will face substantial competition in hiring and retaining of highly qualified mining, metallurgical, financial and administrative personnel. Accordingly, there can be no assurance that we will be able to compete successfully with other companies or that we will achieve profitability.

We have not had any significant revenues since our inception and there is no assurance that we will be able to achieve the financing necessary to enable us to precede with our exploration activities.

We have not had any significant revenues since our inception. We will apply any proceeds from copper sales generated from our activities at the Chloride Copper Project to help cover our exploration expenditures, but we anticipate that revenue may not be generated until FY2013. Our projected expenditures will likely far exceed proceeds from sales over the next twelve months, which will require that we obtain substantial financing in order for us to pursue our current plan of operations. If we do not achieve the necessary financing, then we will not be able to proceed with other planned activities, including our planned exploration activities, and our financial condition, business prospects and results of operations could be materially adversely affected to the point of having to cease operations, which would likely cause our investors to lose their entire investment.

Our financial condition raises substantial doubt about our ability to continue as a going concern.

We had an accumulated deficit of $11,237,044 at December 31, 2012, and our auditors had issued a going concern opinion. This means that there is substantial doubt whether we can continue as an ongoing business. We will need substantial financing to conduct our planned exploration activities; if we fail to obtain sufficient financing, we will be unable to pursue our business plan or our business operations will have to be curtailed or terminated, in which case you will lose part or all of your investment in our common stock.

We have limited cash resources and may be dependent on accessing additional financing to meet our expected cash needs.

We have cash requirements for ongoing operating expenses, capital expenditures, working capital, and general corporate purposes, which we may be unable to obtain.

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The global financial crisis may have an impact on our business and financial condition in ways that we currently cannot predict.

The continued credit crisis and related turmoil in the global financial system has had and may continue to have an impact on our business and financial position. The financial crisis may limit our ability to raise capital through credit and equity markets.

We have accumulated losses that may continue and/or increase in the future.

Many of the factors affecting our operating results are beyond our control, including the volatility of metals prices; smelter terms; diesel fuel prices; interest rates; global or regional political or economic policies; inflation; developments and crises; governmental regulations; continuity of ore bodies; and speculation and sales by central banks and other holders and producers of copper in response to these factors. We cannot foresee whether our operations will continue to generate sufficient revenue in order for us to generate net cash from operating activities.

We will have to spend additional funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit.

We may also need capital more rapidly than currently anticipated and we may be unsuccessful in obtaining sufficient capital to accomplish any or all of our objectives Our inability to raise additional funds on a timely basis could prevent us from achieving our business objectives and could have a negative impact on our business, financial condition, results of operations and the value of your investment.

A major increase in our input costs, such as those related to acid, electricity, fuel and supplies, may have an adverse effect on our financial condition.

Our operations are affected by the cost of commodities and goods such as electrical power, sulfuric acid, fuel and supplies. A major increase in any of these costs may have an adverse impact on our financial condition. For example, we expect that sulfuric acid and energy, including electricity and diesel fuel, will represent a significant portion of production costs at our operations. Shortages of sulfuric acid, electricity and fuel, may have an adverse effect on our financial condition. Sulfuric acid supply in the southwestern U.S. is produced primarily as a smelter by product at smelters in the southwest U.S. and in Mexico. We may not have an adequate supply of sulfuric acid without interruptions and we may be subject to market fluctuations in the price and supply of sulfuric acid.

Other risks pertaining to mining operations may negatively affect our potential profitability or lead to additional accumulated losses or otherwise negatively affect our operations and financial condition.

Our Copper Mining operations inherently imply certain risks, including:

• Worldwide economic cycles influence prices of base and precious metals. As economies recede, demand for these commodities may decline, which may negatively impact the supply and demand ratio, causing prices to respond accordingly. The cash flow generated by mining activities is dependent on price levels of the metals produced. Future worldwide economic cycles may cause prices to vary outside assumed parameters in cash flow models, which include certain price assumptions.

• Ore grades vary within ore bodies. Lower grades than predicted might negatively impact cash flow since less metal may be produced from specific ore blocks.

• Our economic performance is dependent upon production of the predicted and planned tonnage and grade from the mine. Ground conditions in underground mines can cause fluctuation of tonnage production from that planned. Lower tonnage from that planned would imply less metal production, and would negatively impact cash flow.

• Economic performance of the mining operation is dependent on sales of the mine production. While both base and precious metals are commodities that are sold worldwide, they still must be sold. Failure to maintain an orderly market for the products would cause an interruption to cash flow until the production is sold.

• The regularity of cash flow is dependent upon a regular sales program that we have not finalized.

• Smelting costs fluctuate over time.

• Transportation of concentrates and final metals produced to the market is subject to weather interruption.

• The start date of mining operations may be impacted by delays in the various permits required by government agencies.

Legal, Markets and Regulatory Risks

If we fail to successfully acquire additional permits and renewals of permits to reactivate the Chloride Copper Mine, we will be unable to engage in operations.

We need to obtain additional permits, including an aquifer protection permit, renewal applications or permits that pertain to a substantial change to our operations. Should we fail to do, we may be: (i) prohibited from mining and/or processing operations; (ii) forced to reduce the scale of or all of our mining operations; or (iii) prohibited or restricted from proceeding with planned exploration or development of mineral properties.

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We are required to obtain governmental and lessor approvals and permits in order to conduct mining operations.

In the ordinary course of business, mining companies are required to seek governmental approvals and permits for our operations. Obtaining the necessary governmental permits is a complex, time-consuming and costly process. The duration and success of our efforts to obtain permits are contingent upon many variables out of our control. Obtaining environmental permits, including the approval of reclamation plans, may increase costs and cause delays depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority. There can be no assurance that all necessary approvals and permits will be obtained and, if obtained, that the costs involved will not exceed those that we previously estimated or the costs and delays associated with regulatory compliance could become such that we will be unable to proceed with our development activities or operations.

We face substantial governmental regulation and environmental risk.

Our business is subject to federal, state and local laws and regulations governing development, production, labor standards, occupational health, waste disposal, and use of toxic substances, environmental regulations, mine safety and other matters. We are not presently involved in lawsuits or disputes. In the future we could be accused of causing environmental damage, violating environmental laws, or violating environmental permits, and we may be subject to lawsuits or disputes in the future. New legislation and regulations may be adopted or permit limits reduced at any time that result in additional operating expense, capital expenditures or restrictions and delays in the mining, production or development of our properties.

From time to time, the U.S. Congress considers proposed amendments to the General Mining Law of 1872, as amended, which governs mining claims and related activities on federal lands. The extent of any future changes is not known and the potential impact on us as a result of U.S. Congressional action is difficult to predict. Although a majority of our existing U.S. mining operations occur on private or patented property, changes to the General Mining Law, if adopted, could adversely affect our ability to economically develop mineral reserves on federal lands.

Risks Pertaining to our Common Stock

Our common stock may be diluted which will reduce your percentage of ownership of our common stock.

Our common stock may be subject to substantial dilution, including dilution resulting from issuances of securities:

• in future offerings;

• to employees, consultants, joint venture partners and third party financing sources in amounts that are uncertain at this time;

• for acquisitions; and

• such as preferred stock with super voting rights, conversion rights or preferences over our common stock with respect to the payment of dividends or upon liquidation, dissolution or winding up.

We do not intend to pay dividends in the future.

We do not intend to pay dividends in the foreseeable future. Rather, we will retain earnings, if any, to fund our future growth and there is no assurance we will ever pay dividends in the future.

The provisions in our certificate of incorporation, our by-laws and Nevada law could delay or deter tender offers or takeover attempts that may offer a premium for our common stock.

The provisions in our certificate of incorporation, our by-laws and Nevada law could make it more difficult for a third party to acquire control of us, even if that transaction would be beneficial to stockholders.

Nevada law and our Articles of Incorporation protect our directors from certain types of lawsuits, which could make it difficult for us to recover damages from them in the event of a lawsuit.

Nevada law provides that our directors will not be liable to our company or to our stockholders for monetary damages for all but certain types of conduct as directors. Our Articles of Incorporation require us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require our company to use our assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

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Because we are quoted on the OTC Bulletin Board instead of an Exchange or National Quotation System, our investors may have a tougher time selling their stock or may experience negative volatility on the market price of our stock.

Our Class A common stock (referred to as “common stock” in this Report) is traded on the OTCBB. The OTCBB is often highly illiquid. There is a greater chance of volatility for securities that trade on the OTCBB as compared to a national exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. Investors in our common stock may experience high fluctuations in the market price and volume of the trading market for our securities. These fluctuations, when they occur, have a negative effect on the market price for our securities. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our common stock improves.

Trading in our common stock has been limited, and our stock price could potentially be subject to substantial fluctuations.

Trading in our common stock has been limited. Historically, our stock price has been affected substantially by a relatively modest volume of transactions and could be again so affected. If our stock price falls, our stockholders may not be able to sell their stock when desired or at desirable prices. Further, our stockholders may not be able to resell their shares at or above the public offering price.

Our common stock is subject to penny stock regulation

Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), commonly referred to as the “penny stock” rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on the NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant’s net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be “penny stock”, trading in the shares will be subject to additional sales practice requirements on broker/dealers who sell penny stock to persons other than established customers and accredited investors.

FINRA Sales Practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of The Sarbanes-Oxley Act could have a material adverse effect on our business and operating results.

It may be time consuming, difficult and costly for us to develop and implement the additional internal controls, processes and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal auditing and other finance staff in order to develop and implement appropriate additional internal controls, processes and reporting procedures. If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires of publicly traded companies.

If we fail to comply in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, beginning with our annual report on Form 10-K for our fiscal period ended December 31, 2009, we were required to prepare assessments regarding internal controls over financial reporting and beginning with our annual report on Form 10-K for our fiscal period ended December 31, 2009, furnish a report by our management on our internal control over financial reporting. Failure to achieve and maintain an effective internal control environment could have a material adverse effect on our stock price.

In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover “material weaknesses” in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

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The PCAOB defines “significant deficiency” as a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.

In the event that a material weakness is identified, we will employ qualified personnel and adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our financial process and reporting in the future.

Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we may identify or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

It is not possible to foresee all risk factors that may affect us.

There can be no assurance that we will effectively manage and develop the Chloride Copper Mine. You are encouraged to carefully analyze the risks factors discussed above.

Because we do not have an, nominating, or compensation committee, shareholders will have to rely on our board of directors, all of which are not independent, to perform these functions.

We do not have nominating, and compensation committees and our board of directors, as a whole, will perform these functions. There is a potential conflict in that board members who are management will participate in discussions concerning management compensation and audit issues that may affect management decisions, and that such decisions may favor the interest of our management over our minority shareholders or us.

Our Board of Directors has the ability to issue preferred stock and determine the rights, preferences, privileges and restrictions without shareholder approval, which may dilute your percentage of ownership of our common stock and prevent a change of our control.

We are authorized to issue ten million shares of “blank check” preferred stock. Our board may issue the shares in response to a hostile take-over attempt, the board could issue such stock to a friendly party or “white knight” or could establish conversion or other rights in the preferred stock, which would dilute the common stock and make a transaction impossible or less attractive.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for our management.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder, the Sarbanes-Oxley Act and SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the U.S. public markets. Our management team will need to devote significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

We did not sell unregistered securities during the period covered by this report, except for the following issuances:

During the three month period ended September 30, 2013 the Company issued Asher Enterprises and Tangiers Investors a total of 60,528,526 and 32,000,000 shares of the Company Common stock, respectively. The stock was issued in exchange for the conversion of note payable issued in 2012 and 2013. The conversions were transacted four (4) times during the quarter as per terms of the agreement.

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Terms of the conversion were as follows:

The holder of shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Convertible Promissory Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, to convert all or any part of the outstanding and unpaid principal amount of this Convertible Note into shares of the Company’s Common Stock at a conversion price representing a discount rate of 49% of the then going Market Price which shall be defined as the average of the lowest three (3) Trading Prices for the Company’s Common Stock during the ten (10) Trading Day period ending one Trading Day prior to the date the Conversion Notice is sent by the holder of this Convertible Note to the Company.

Item 3. Defaults Upon Senior Securities.

We are in default in the payment of principal, interest, asking or purchase fund installment or other default with respect to indebtedness (See Note 6).

Item 4. Mine Safety Disclosures

None-as the mine is not operational at this time.

Item 5. Other Information.

On April 12, 2013, the Company executed a Second Amendment to the Asset Purchase Agreement (“Second Amendment”) between the Company and Medina Property Group, LLC dated April 23, 2010, amended by the First Amendment to the Asset Purchase Agreement dated June 10, 2010. This Second Amendment provides for the acquisition of Medina’s remaining twenty (20%) percent right, title, and interest in the asset known as the Chloride Copper Mine. The execution of this transaction would increase the Company’s interests in the Chloride Copper Mine to 100%. In consideration of the 20% interest, the Company entered into a 6-month promissory note for seven hundred fifty thousand ($750,000) dollars, forty million (40,000,000) shares of Class A common stock, a 5- year convertible promissory note for four million ($4,000,000) dollars, and a 10-year-warrant purchase agreement for Medina to purchase up to twenty million (20,000,000) shares of its Class A common stock at a share price of $0.27.

Item 6. Exhibits

Number	Description
31.01*	Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
31.02*	Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
32.01*	Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code
32.02*	Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code
	101.INS – XBRL Instance Document
	101.SCH – XBRL Taxonomy Extension Schema Document
	101.CAL – XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF – XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB – XBRL Taxonomy Extension Label Linkbase Document
	101.PRE – XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

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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.

SIERRA RESOURCE GROUP, INC.

Date: November 19, 2013	By:	/s/ J. Rod Martin
			J. Rod Martin
			President, Chief Executive Officer and Director

SIERRA RESOURCE GROUP, INC.

Date: November 19, 2013	By:	/s/ Barton R. Budman
			Barton R. Budman
			Chief Financial Officer

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