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TUCANA LITHIUM CORP.
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--08-31
10-Q
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2013
Q1
No
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">  </font></div>
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">1.</font></div>
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"><font style="display: inline; font-weight: bold;">ORGANIZATION AND</font> <font style="display: inline; font-weight: bold;">NATURE OF OPERATIONS</font></font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">Tucana Lithium Corp., formerly named Oteegee Innovations Inc. and formerly named Pay By The Day Holdings Inc., (the “Company”) was incorporated in August 2007 in the State of Nevada.  On 22 March 2010, the Company filed a certificate of amendment to the Company’s articles of incorporation with the Nevada Secretary of State changing the Company’s name to Oteegee Innovations, Inc.  On 3 May 2011, the Company filed a certificate of amendment to amend the articles of incorporation with the Nevada Secretary of State changing the Company’s name to Tucana Lithium Corp.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">On 31 August 2007 the Company entered into a share exchange agreement with Pay By The Day Company Inc., an Ontario Corporation incorporated in June 2003 (“PBTD”), whereby PBTD became a wholly owned subsidiary of the Company. On 11 May 2012, the Company entered into a stock purchase agreement with Jordan Starkman, Chief Executive Officer and the sole director of the Company, pursuant to which, Mr. Starkman acquired all of the issued and outstanding common shares of the Company’s wholly-owned subsidiary Pay By The Day Company Inc. (“PBTD”).  Upon sale of PBTD, no gain or loss was recognized since PBTD is dormant with limited transactions.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">On 22 February 2011, the Company incorporated a company in the State of Wyoming named Tucana Exploration Inc. (“Tucana”).  Tucana is a wholly owned subsidiary of the Company.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company is primarily engaged in exploration for lithium deposits at the Abigail Lithium Property in the James Bay region of Quebec, Canada.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">  </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company operates under the web-site address <font style="display: inline; text-decoration: underline;">www.tucanalithium.com </font>and <font style="display: inline; text-decoration: underline;">www.tucanaexploration.com</font>. </font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt;">
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<div align="left" style="width: 100%;"><font style="display: inline; font-family: times new roman; font-size: 8pt;">  </font></div>
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div>
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">2.</font></div>
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">BASIS OF PRESENTATION</font></div>
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<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended 30 November 2012 are not necessarily indicative of the results that may be expected for the year ending 31 August 2013.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended 31 August 2012.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The accompanying consolidated financial statements of the Company include the accounts of Tucana Lithium Corp. and its wholly owned subsidiary, Tucana. Inter-company balances and transactions have been eliminated upon consolidation.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company is considered to be in the development stage as defined in Accounting Standards Codification (“ASC”) 915, <font style="font-style: italic; display: inline;">Development Stage Entities</font>. The Company has devoted substantially all of its efforts to business planning and development by means of raising capital for operations. The Company has also not realized any significant revenues. Among the disclosures required by ASC 915 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations and comprehensive loss, stockholders' equity and cash flows disclose activity since the date of the Company's inception.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"></font> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">3. </font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">GOING CONCERN</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">These consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing to provide continuation of the Company’s operations. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. The Company is actively seeking financing to fully execute the next phase of the Company’s exploration campaign and future acquisitions. Any capital raised will be through either a private placement or a convertible debenture and will result in the issuance of common shares from the Company’s authorized capital.   The Company believes it can satisfy minimum cash requirements for the next twelve months with either an equity financing, convertible debenture or if needed, a loan from our director, Jordan Starkman.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in these consolidated financial statements.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"></font> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">4.</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">SIGNIFICANT ACCOUNTING POLICIES</font></div>
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<div style="text-align: justify; text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">Recent Accounting Pronouncements</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company recently adopted an accounting standard update regarding how entities test goodwill for impairment. This accounting standard update is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This update impacts testing steps only and therefore the adoption did not have an effect on the Company’s consolidated financial statements.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"></font> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">In July 2012, an accounting standard update was issued regarding the testing of indefinite-lived intangible assets for impairment. This update is intended to reduce the cost and complexity of testing indefinite-lived intangible assets for impairment by providing entities with an option to perform a qualitative assessment to determine is not expected to have an effect on the Company’s consolidated financial statements.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"></font> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">5.</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">DISCONTINUED OPERATIONS</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">On 11 May 2012, the Company entered into a stock purchase agreement with Jordan Starkman, Chief Executive Officer and the sole director of the Company, pursuant to which, Mr. Starkman acquired all of the issued and outstanding common shares of the Company’s wholly-owned subsidiary PBTD.  Upon sale of PBTD, no gain or loss was recognized since PBTD had limited transactions.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The operating results and cash flows of PBTD are reflected as discontinued operations in the consolidated financial statements for all periods presented. Although net earnings are not affected, the Company has reclassified the results from the discontinued operations in the comparative periods presented.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">7.</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">MINERAL CLAIMS</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company's main exploration focus is the Abigail Lithium Property located in the James Bay region of Quebec, Canada. As of 30 November 2012 the property consists of 177 map-designated cells totaling approximately 9,400 hectares. In addition, the Company holds 12 map-designated cells just north of the Abigail property named Lac Kame and 25 map-designated cells named EM-1.  Combined the Lac Kame property and EM-1 total 966 hectares.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Abigail Lithium Property was initially acquired for a cost of $550,000 on December 2, 2010 and was made up of 222 map-designated cells covering 11,844 hectares and having claims which expired in May 2012. These claims are covered by NTS sheets 320/12 and 320/13. In addition, the Company is subject to a 3% net smelter returns royalty on any commercial production from mineral deposits on this property.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">In December 2011, the Company acquired an additional 83 claims which are contiguous to the initial 222 claim units. The claims are registered under the name of the Company’s wholly owned subsidiary, Tucana. The claims are made up of 83 map-designated cells totaling 4,439 hectares with 82 claims covered by NTS sheets 32O12 and 1 claim covered by NTS sheets 32N09. The cost of acquiring the claims was $8,215. The claims will expire in November 2013 and exploration work of $100,000 will be required upon renewal. The Company secured the additional claims based upon the magnetic and gradiometric airborne survey released by the Quebec Ministry of Natural Resources in September 2011. </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">In March 2012, the Company renewed 71 mineral claims on the Abigail property based upon the exploration work reported in the summer of 2011.  The cost of renewing the claims was $3,763. These claims will expire between April and May 2014 and exploration work in the amount of $84,000 will be required upon renewal. In addition, the Company has dropped 85 mineral claims located on the northern perimeter of the property. The Company's decision was based upon the results from the exploration program in the summer 2011 and a review of the airborne magnetic survey. Due to these circumstances, the Company evaluated the recoverability of the mineral claims and recognized an impairment loss of $451,870 on the mineral property claims for the year ended 31 August 2012.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">In May 2012, the Company entered into an asset purchase agreement (“Lac Kame and EM-1 Purchase Agreement”) to acquire a 100% interest in two mining properties known as the Lac Kame and EM-1 both located in the James Bay, Quebec region of Canada. The two properties are covered by NTS sheets 32O13. The properties are made up of 37 map-designated cells totaling 1,961 hectares. The claims will expire in November 2013 and exploration work in the amount of $44,000 will be required upon renewal.  In addition, pursuant to the Lac Kame and EM-1 Purchase Agreement, the Company agreed to an additional payment of $50,000 and the issuance of 1,000,000 shares to the selling group if and when the Company spends a total of $1,000,000, an additional payment of $100,000 and the issuance of 1,000,000 if and when the Company spends $2,500,000, and an additional payment of $150,000 and the issuance of 1,000,000 shares if and when the Company spends a total of $5,000,000 on the acquired properties. The amount of spending by the Company on the acquired properties is deemed as an index of any previously unidentified and additional value of the properties. The Company also agreed to pay the selling group a 3% net smelter royalty on any commercial producing mineral deposit from the acquired properties.  The Company's main interest with the newly acquired claims will be magnetic anomalies for kimberlite based upon the airborne magnetic survey released in October 2011. The Company paid $3,000 in cash and issued 2,000,000 shares of common stock at a price of $0.01 per share in connection with the acquisition of the Lac Kame and EM-1 properties.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div align="left" style="text-align: justify;">
<table style="font-size: 10pt; width: 100%; font-family: times new roman; text-align: justify;" cellspacing="0" cellpadding="0">
<tr style="text-align: justify;">
<td style="text-align: justify;" valign="top" width="4%">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">6.</font></div>
</td>
<td style="text-align: justify;" valign="top" width="96%">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">CONVERTIBLE NOTES PAYABLE</font></div>
</td>
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</table>
</div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">On 16 May 2012, the Company issued a one-year convertible note payable in the amount of $125,000.  The convertible note payable matures in twelve months, is unsecured, bears interest at 4% per annum and interest accrues and is payable in cash upon maturity or repayment of the principal prior to the date of maturity, provided that the elected conversion to common shares does not occur.  At any time or times on or before 16 May 2013, the note holder shall be entitled to convert any portion of the outstanding and unpaid amount, including accrued interest, into fully paid and non-assessable shares of common stock at a conversion price of $0.025 per common share. In accordance with ASC 470-20, <font style="font-style: italic; display: inline;">Debt with Conversions and Other Options</font>, the Company has identified a beneficial conversion feature imbedded within this convertible debenture. Accordingly, the Company recognized $6,800 which is equal to the fair value of the imbedded beneficial conversion feature and was deducted from the proceeds of issuance and was attributed to additional paid-in capital. The beneficial conversion feature will be amortized over the term to maturity. Accretion expense of $1,700 was recognized for the three months ended 30 November 2012 (three months ended 30 November 2011 – Nil) and is presented within interest expense on the consolidated statement of operations.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company paid $12,500 in commissions related to raising the above mentioned proceeds which were reduced from the liability component of the debentures and are being amortized over the term to maturity. Accretion expense of $3,125 was recognized for the three months ended 30 November 2012 (2011 – Nil) and is presented within professional fees on the consolidated statement of operations.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"></font> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div>
<div align="left" style="text-align: justify;">
<table style="font-size: 10pt; width: 100%; font-family: times new roman; text-align: justify;" cellspacing="0" cellpadding="0">
<tr style="text-align: justify;">
<td style="text-align: justify;" valign="top" width="4%">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">8.</font></div>
</td>
<td style="text-align: justify;" valign="top" width="96%">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">RELATED PARTY TRANSACTIONS</font></div>
</td>
</tr>
</table>
</div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The transactions with related parties were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the parties. Related party transactions not disclosed elsewhere in these consolidated financial statements are as follows:</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"> </font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">Advances from a related company controlled by Jordan Starkman, the sole director of the Company are non-interest bearing, unsecured and due on demand.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">Consulting fees paid to Mr. Starkman for the three months ended 30 November 2012 were $7,500 (three months ended 30 November 2011 – Nil).</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">As disclosed in note 1, on 11 May 2012, Mr. Starkman acquired all the shares of common stock of Pay By The Day Company Inc. from the Company.  Upon sale of PBTD, no gain or loss was recognized since PBTD had limited transactions.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"></font> </div>
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"> </div>
<div align="left" style="text-align: justify;">
<table style="font-size: 10pt; width: 100%; font-family: times new roman; text-align: justify;" cellspacing="0" cellpadding="0">
<tr style="text-align: justify;">
<td style="text-align: justify;" valign="top" width="2%">
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-weight: bold; font-size: 10pt; font-family: times new roman;">9.      </font></div>
</td>
<td style="text-align: justify;" valign="top" width="98%">
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-weight: bold; font-size: 10pt; font-family: times new roman;">CAPITAL STOCK</font></div>
</td>
</tr>
</table>
</div>
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">On 20 September 2012, the Company agreed to issue 1,944,080 shares of common stock at $0.025 per share in exchange for cash of $48,602.  These shares will be issued in the next quarter.  The Company paid $4,860 in commissions and $1,458 in legal expenses related to raising the above mentioned private placements and has accordingly been deducted from Shares to be issued as presented on the consolidated balance sheet.</font></font></div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div style="margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;">
<div >
<div align="right" style="width: 100%;"><font style="display: inline; font-size: 8pt; font-family: times new roman;">  </font></div>
<font style="display: inline; font-size: 10pt; font-family: times new roman;"></font></div>
</div>
<div align="left" style="text-align: justify;">
<table style="font-size: 10pt; width: 100%; font-family: times new roman; text-align: justify;" cellspacing="0" cellpadding="0">
<tr style="text-align: justify;">
<td align="left" valign="top" width="4%">
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-weight: bold; font-size: 10pt; font-family: times new roman;">10.</font></div>
</td>
<td align="left" valign="top" width="96%">
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-weight: bold; font-size: 10pt; font-family: times new roman;">CONTINGENCIES</font></div>
</td>
</tr>
</table>
</div>
<div style="display: block; text-indent: 0pt;"> </div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">In accordance with the Abigail Purchase Agreement, the Company will also owe to the selling group of the Abigail Property the following contingent payments:</font></div>
<div style="display: block; text-indent: 0pt;"> </div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">After spending a total amount of $2,500,000 on the property, $250,000 and an additional 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">After spending a total amount of $5,000,000 on the property, a further $250,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">If a feasibility study is put in place an additional $250,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">If a bankable feasibility is put in place a further $500,000 and 2,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">In accordance with the Lac Kame and EM-1 Purchase Agreement, the Company will also owe to the selling group of the properties the following contingent payments:</font></div>
<div style="display: block; text-indent: 0pt;"> </div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">After spending a total amount of $1,000,000 on the property, $50,000 and an additional 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify"
style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">After spending a total amount of $2,500,000 on the property, a further $100,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div>
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td valign="top" width="4%">
<div align="center" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: symbol, serif;"><font style="display: inline; font-family: times new roman;">●</font></font></div>
</td>
<td valign="top" width="74%">
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">After spending a total amount of $5,000,000 on the property, a further $150,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.</font></div>
</td>
</tr>
</table>
</div>
<div align="justify" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">If the Company reaches commercial production, it is also subject to a 3% net smelter returns royalty payable to the selling groups in the Abigail Purchase Agreement and the Lac Kame EM-1 Purchase Agreement.</font></div>
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-size: 10pt; font-family: times new roman;"> </font></div>
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;">
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"> </div>
<div align="left">
<table style="font-size: 10pt; width: 100%; font-family: times new roman;" cellspacing="0" cellpadding="0">
<tr>
<td align="left" valign="top" width="2%">
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-weight: bold; font-size: 10pt; font-family: times new roman;">11.      </font></div>
</td>
<td align="left" valign="top" width="98%">
<div align="left" style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt;"><font style="display: inline; font-weight: bold; font-size: 10pt; font-family: times new roman;">SUPPLEMENTAL CASH FLOW INFORMATION</font></div>
</td>
</tr>
</table>
</div>
<div style="display: block; text-indent: 0pt;"> </div>
<div style="display: block; margin-left: 0pt; text-indent: 0pt; margin-right: 0pt; text-align: justify;"><font style="display: inline; font-size: 10pt; font-family: times new roman;">During the three months ended 30 November 2012 and 2011 and for the period from inception to 30 November 2012, there was no interest or taxes paid by the Company.</font></div>
<div style="display: block; text-indent: 0pt; text-align: justify;"> </div>
</div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold;">Recent Accounting Pronouncements</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company recently adopted an accounting standard update regarding how entities test goodwill for impairment. This accounting standard update is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This update impacts testing steps only and therefore the adoption did not have an effect on the Company’s consolidated financial statements.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">In July 2012, an accounting standard update was issued regarding the testing of indefinite-lived intangible assets for impairment. This update is intended to reduce the cost and complexity of testing indefinite-lived intangible assets for impairment by providing entities with an option to perform a qualitative assessment to determine is not expected to have an effect on the Company’s consolidated financial statements.</font></div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company is considered to be in the development stage as defined in Accounting Standards Codification (“ASC”) 915, <font style="font-style: italic; display: inline;">Development Stage Entities</font>. The Company has devoted substantially all of its efforts to business planning and development by means of raising capital for operations. The Company has also not realized any significant revenues. Among the disclosures required by ASC 915 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations and comprehensive loss, stockholders' equity and cash flows disclose activity since the date of the Company's inception.</font></div>
<div><font style="display: inline; font-family: times new roman; font-size: 10pt;">In accordance with ASC 470-20, <font style="font-style: italic; display: inline;">Debt with Conversions and Other Options</font>, the Company has identified a beneficial conversion feature imbedded within this convertible debenture.</font></div>
11844
4439
1961
9400
966
83
1.00
1.00
8215
Between January 2011 and May 2012
November 2013
Between April and May 2014
November 2013
100000
84000
44000
82 claims covered by NTS sheets 32O12 and 1 claim covered by NTS sheets 32N09
71
85
Property is covered by NTS sheets 320/12 and 320/13 and is made up of 222 map-designated cells
3000
2000000
550000
0.04
0.025
0.025
222
83
37
177
12
25
0.03
0.03
222
P1Y
P12M
6800
12500
1700
3125
7500
0.025
2500000
5000000
1000000
2500000
5000000
250000
250000
250000
500000
50000
100000
150000
1000000
1000000
1000000
2000000
1000000
1000000
1000000
4860
1458
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">On 9 January 2013, the $125,000 convertible note payable, as discussed in note 6, including accrued interest of $3,274 were converted into 5,130,959 shares of common stock at price of $0.025 per share.</font></div>
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<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">On 9 January 2013, the Company issued 1,944,080 shares of common stock at $0.025 per share for the cash payment of $48,602. </font></font></div>
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3274
5130959
3763
The Company agreed to an additional payment of $50,000 and the issuance of 1,000,000 shares to the selling group if and when the Company spends a total of $1,000,000, an additional payment of $100,000 and the issuance of 1,000,000 if and when the Company spends $2,500,000, and an additional payment of $150,000 and the issuance of 1,000,000 shares if and when the Company spends a total of $5,000,000 on the acquired properties.
42284