10-Q 1 form10q.htm QUARTERLY REPORT Canyon Copper Corp.: Form 10-Q - Filed by newsfilecorp.com

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

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2012

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

For the transition period from ________ to ________

COMMISSION FILE NUMBER 000-33189

CANYON COPPER CORP.
(Exact name of registrant as specified in its charter)

NEVADA 88-0454792
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
Suite 408 - 1199 West Pender Street  
Vancouver, BC, Canada V6E 2R1
(Address of principal executive offices) (Zip Code)

(604) 331-9326
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes     [   ] 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 (s. 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 definitions 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 [   ]
(Do not check if a smaller reporting company) 		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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
As of October 31, 2012, the Registrant had 68,696,934 shares of common stock, par value of $0.00001 per share, issued and outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. 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 month period ended September 30, 2012 are not necessarily indicative of the results that can be expected for the year ending June 30, 2013.

As used in this Quarterly Report, the terms "we,” "us,” "our,” and “Canyon Copper” mean Canyon Copper Corp. unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

1

CANYON COPPER CORP.
(An Exploration Stage Company)
September 30, 2012
(Expressed in U.S. dollars)
(unaudited)

 

 

Index
Balance Sheets F–1
Statements of Operations F–2
Statements of Cash Flows F–3
Notes to the Financial Statements F–4

CANYON COPPER CORP.
(An Exploration Stage Company)
Balance Sheets
(Expressed in U.S. dollars)

    September 30,     June 30,  
    2012     2012  
  $   $  
    (unaudited)        
ASSETS            
             
Current Assets            
             
   Cash   405,441     718,907  
   Prepaid expenses and deposits   23,531     53,613  
Total Assets   428,972     772,520  
             
LIABILITIES AND STOCKHOLDERS’ DEFICIT            
             
Current Liabilities            
             
   Accounts payable and accrued liabilities   120,765     136,134  
   Due to related parties (Note 4)   645,157     586,426  
   Derivative liabilities (Note 5)   510     8,407  
Total Current Liabilities   766,432     730,967  
             
   Due to related parties (Note 4)   202,486     197,204  
             
Total Liabilities   968,918     928,171  
             
Nature of Operations and Continuance of Business (Note 1)            
Commitments (Note 3)            
             
Stockholders’ Deficit            
             
Preferred stock 
   Authorized: 100,000,000 shares, par value $0.00001 
   Issued and outstanding: nil shares 		  –     –  
             
Common stock 
   Authorized: 131,666,666 shares, par value $0.00001 
   Issued and outstanding: 68,696,934 shares 		  687     687  
             
Additional paid-in capital   22,279,275     22,279,275  
             
Deficit accumulated during the exploration stage   (22,819,908 )   (22,435,613 )
             
Total Stockholders’ Deficit   (539,946 )   (155,651 )
             
Total Liabilities and Stockholders’ Deficit   428,972     772,520  

(The accompanying notes are an integral part of these financial statements)

F-1

CANYON COPPER CORP.
(An Exploration Stage Company)
Statements of Operations
(Expressed in U.S. dollars)
(unaudited)

                Accumulated from  
    Three Months     Three Months     January 21, 2000  
    Ended     Ended     (date of inception)  
    September 30,     September 30,     to September 30,  
    2012     2011     2012  
  $   $   $  
Revenue   –     –     –  
                   
Operating Expenses                  
                   
   Depreciation   –     –     5,540  
   Foreign exchange loss   9,801     77,627     85,568  
   General and administrative (Note 4)   152,928     195,488     10,731,006  
   Impairment of mineral property costs   –     –     2,759,130  
   Impairment of property and equipment   –     –     10,811  
   Mineral exploration costs   221,875     290,760     6,030,767  
                   
Total Operating Expenses   384,604     563,875     19,622,822  
                   
Operating Loss   (384,604 )   (563,875 )   (19,622,822 )
                   
Other Income (Expense)                  
                   
   Accretion of discounts on convertible debt   –     –     (799,963 )
   Debt conversion expense   –     –     (2,010,076 )
   Gain on change in fair values of derivative liabilities   7,897     266,575     1,104,903  
   Loss on settlement of related party debt   –     –     (2,871 )
   Impairment of investment securities   –     –     (459,817 )
   Interest expense   (7,588 )   (7,676 )   (393,831 )
   Loss on extinguishment of debt   –     –     (252,454 )
   Loss on sale of investment securities   –     –     (411,430 )
   Write-off of accounts payable   –     –     28,453  
                   
Total Other Income (Expense)   309     258,899     (3,197,086 )
                   
Net Loss   (384,295 )   (304,976 )   (22,819,908 )
                   
Net Loss Per Share, Basic and Diluted   (0.01 )   –        
                   
Weighted Average Shares Outstanding   68,696,934     68,016,607        

(The accompanying notes are an integral part of these financial statements)

F-2

CANYON COPPER CORP.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)

    Three Months     Three Months  
    Ended     Ended  
    September 30,     September 30,  
    2012     2011  
  $   $  
Operating Activities            
             
   Net loss   (384,295 )   (304,976 )
             
   Adjustments to reconcile net loss to net cash used in operating activities:            
         Foreign exchange translation loss (gain) on debt   6,559     (12,276 )
         Gain on change in fair value of derivative liabilities   (7,897 )   (266,575 )
             
   Changes in operating assets and liabilities:            
       Prepaid expenses and deposits   30,082     65,664  
       Accounts payable and accrued liabilities   (15,369 )   (3,276 )
       Due to related parties   57,454     4,372  
             
Net Cash Used in Operating Activities   (313,466 )   (517,067 )
             
Financing Activities            
             
   Proceeds from share subscriptions and issuance of common stock   –     801,503  
   Stock issuance costs   –     (200,956 )
             
Net Cash Provided by Financing Activities   –     600,547  
             
Increase (Decrease) in Cash   (313,466 )   83,480  
             
Cash, Beginning of Period   718,907     1,226,964  
             
Cash, End of Period   405,441     1,310,444  
             
Supplemental Disclosures:            
             
   Interest paid   –     –  
   Income taxes paid   –     –  

(The accompanying notes are an integral part of these financial statements)

F-3

CANYON COPPER CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
September 30, 2012
(Expressed in U.S. dollars)
(unaudited)

1.

Nature of Operations and Continuance of Business

     

Canyon Copper Corp., (the “Company”), was incorporated in the State of Nevada, U.S.A. on January 21, 2000 under the name Aberdene Mines Limited. On August 7, 2006, the Company changed its name to Canyon Copper Corp. The Company is an exploration stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”. The Company’s principal business plan is to acquire, explore and develop mineral properties and ultimately seek earnings by exploiting mineral claims.

     

The Company has been in the exploration stage since its formation in January 2000 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mineral properties. Upon location of a commercial mineable reserve, the Company will actively prepare the site for extraction and enter a development stage. At present, management devotes most of its activities to raising sufficient funds to further explore and develop its mineral properties. Planned principal activities have not yet begun. The ability of the Company to emerge from the exploration stage with respect to any planned principal business activity is dependent upon its successful efforts to raise additional debt or equity financing and/or attain profitable mining operations. As at September 30, 2012, the Company has not generated any revenue, has a working capital deficiency of $337,460, and has accumulated losses of $22,819,908 since inception. The Company also has significant mineral property acquisition and exploration commitments. There is no guarantee that the Company will be able to complete any of the above objectives. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

     

Management’s plan for the next twelve months is to continue initial exploration activities on the New York Canyon Project in Nevada and the Moonlight Property in Plumas County, California. The agreements pursuant to which the Company acquired its interests in the New York Canyon Project provide for a series of cash payments and annual filing maintenance costs. If the Company fails to make such payments or expenditures in a timely fashion, it may lose its interest in those properties. As at September 30, 2012, the Company had cash of $405,441 on hand, and for the next twelve months, management anticipates that the minimum cash requirements to fund its proposed exploration program and continued operations will be $1,134,000. Accordingly, the Company does not have sufficient funds to meet planned expenditures over the next twelve months. There is no assurance that the Company will be able to raise sufficient cash to fund its future exploration programs and operational expenditures.

     
2.

Summary of Significant Accounting Policies

     
(a)

Basis of Presentation

     

These financial statements and related notes are prepared in conformity with accounting principles generally accepted in the United States and are expressed in U.S. dollars.

     
(b)

Interim Financial Statements

     

The interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended June 30, 2012, included in the Company’s Annual Report on Form 10- K filed on September 28, 2012 with the SEC.

     

The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the option of management, are necessary to present fairly the Company’s financial position at September 30, 2012, and the results of its operations and cash flows for the three months ended September 30, 2012. The results of operations for the three months ended September 30, 2012, are not necessarily indicative of the results to be expected for future quarters or the full year.

F-4

CANYON COPPER CORP.
(An Exploration Stage Company)
Notes to the Financial Statements
September 30, 2012
(Expressed in U.S. dollars)
(unaudited)

2.

Summary of Significant Accounting Policies (continued)

         
(c)

Use of Estimates

         

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets, mineral property costs, fair values of derivative liabilities, stock-based compensation, and deferred income tax asset valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

         
(d)

Comprehensive Loss

         

ASC 220, “Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As at September 30, 2012 and 2011, the Company had no items that represent comprehensive income or loss.

         
(e)

Recent Accounting Pronouncements

         

The Company has implemented all new accounting pronouncements that are in effect and that may impact its 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.

         
3.

Mineral Properties

         
(a)

On July 21, 2004, the Company entered into a fifteen-year renewable lease agreement, which gives the Company the right of exploration for and production of minerals in eighteen mineral claims owned by the lessor. The mineral claims are located within the area of the Company’s New York Canyon Copper Project. Under the terms of the agreement, the Company must make cash payments of $25,000 on execution of the agreement (paid). On the first anniversary of the execution of the agreement, the Company must make payments to the lessor of $1,000 per month, $2,000 per month after the second anniversary and $3,000 per month after the third anniversary for as long as the lease is in effect. In addition, at six and twenty-four months after the execution of the agreement, the Company will give the lessor, respectively, 10,000 shares (issued at a fair value of $3,500 in fiscal 2005) and 15,000 shares (issued at a fair value of $7,950 in fiscal 2007) of the Company’s common stock. This agreement is subject to a Net Smelter Interest payable to two parties (1.75% Net Smelter Royalty (“NSR”) + 0.5% NSR). The 1.75% is terminated upon payments of $2,000,000; then the second party will retain 1.5% NSR which will revert to 0.5% after an additional $2,000,000 is paid.

         
(b)

On November 25, 2011, the Company entered into an Assignment Agreement with Metamin Enterprises Inc., a company controlled by the President of the Company, (the “Assignor”), to acquire the Assignor’s interest in an Option Agreement between the Assignor and Metamin Enterprises USA Inc. (the “Optionor”), a wholly-owned subsidiary of the Assignor, in respect of certain mineral claims, known as the Moonlight property, located in Plumas County, California. On January 19, 2012, the Company closed the Assignment Agreement with the Assignor and Optionor. In consideration for the assignment, the Company is required to make the following payments to the Assignor:

         
(i)

Cash payments:

         
  		•

    $15,000 on the TSX Venture Exchange acceptance date (paid);

  		•

    $25,000 on or before February 18, 2012 (paid);

  		•

    $25,000 on or before February 18, 2013; and

  		•

    An annual advanced royalty, which shall be deductible from future royalty payments, of the $15,000 commencing on February 18, 2014 and payable every year thereafter.

             
    (ii)

    Share payments:

             
  		•

    75,000 shares of common stock on the TSX Venture Exchange acceptance date (issued);

  		•

    75,000 shares of common stock on or before February 18, 2012 (issued);

  		•

    150,000 shares of common stock on or before February 18, 2013; and

  		•

    200,000 shares of common stock on or before February 18, 2014.

    F-5

    CANYON COPPER CORP.
    (An Exploration Stage Company)
    Notes to the Financial Statements
    September 30, 2012
    (Expressed in U.S. dollars)
    (unaudited)

    3.

    Mineral Properties (continued)

       

    In addition, the Company agreed to reimburse the Assignor for annual maintenance and exploration expenses previously incurred on the property, which amount cannot exceed $200,000. The Assignor will retain a 1% net smelter return on metals extracted from the property, which can be repurchased for $1,000,000, and a gross overriding royalty of 2.5% on receipts from the sale of industrial minerals.

       

    Upon closing of the Assignment Agreement, the Company will assume all of the Assignor’s rights and obligations under the Option Agreement, and will be required to make the following payments to the Optionor in order to maintain and exercise the option:


      (i)

    Cash payments:

           
     

  • $25,000 on or before February 18, 2012 (paid);

     

  • $25,000 on or before February 18, 2013; and

     

  • An annual advanced royalty, which shall be deductible from future royalty payments, of the $15,000 commencing on February 18, 2014 and payable every year thereafter.

           
      (ii)

    Share payments:

           
     

  • 75,000 shares of common stock on the TSX Venture Exchange acceptance date (issued);

     

  • 75,000 shares of common stock on or before February 18, 2012 (issued);

     

  • 150,000 shares of common stock on or before February 18, 2013; and

     

  • 200,000 shares of common stock on or before February 18, 2014.

           
      (iii)

    Exploration expenditures:

           
     

  • $100,000 on or before February 18, 2013.

    The Optionor will retain a 1% net smelter return on the metals extracted from the Moonlight property, which can be repurchased for $1,000,000, and a gross overriding royalty of 2.5% on receipts from the sale of industrial minerals.

    4.

    Related Party Transactions

           
    (a)

    As at September 30, 2012, the Company was indebted to the President of the Company for $294,805 (Cdn$290,000) (June 30, 2012 - $269,872 (Cdn$275,000)). The amount due is non-interest bearing, unsecured and due on demand.

           
    (b)

    As at September 30, 2012, the Company was indebted to the Chief Executive Officer (“CEO”) of the Company for $552,838 (Cdn$543,373) (June 30, 2012 - $513,757 (Cdn$522,322)), which consists of the following amounts:

           
    (i)

    $294,805 (Cdn$290,000) (June 30, 2012 - $269,872 (Cdn$275,000)) for management fees, which is non-interest bearing, unsecured and due on demand;

           
    (ii)

    $76,243 (Cdn$75,000) (June 30, 2012 - $73,602 (Cdn$75,000)) in advances for working capital purposes which bears interest at 15% per annum, is secured by a promissory note, and was due on May 22, 2012. On May 17, 2012, the Company entered into a First Amendment to Loan Agreement with the CEO to extend the term of the loan to May 22, 2014. As at September 30, 2012, accrued interest of $21,244 (Cdn$20,897) (June 30, 2012 - $17,725 (Cdn$18,062)) is owing on this loan.

           
    (iii)

    $50,000 (June 30, 2012 - $50,000) in advances for working capital purposes which bears interest at 15% per annum, is secured by a promissory note, and was due on April 1, 2012. On May 17, 2012, the Company entered into a First Amendment to Loan Agreement with the CEO to extend the term of the loan to April 1, 2014. As at September 30, 2012, accrued interest of $14,877 (June 30, 2012 - $12,986) is owing on this loan.

           
    (iv)

    $76,243 (Cdn$75,000) (June 30, 2012 - $73,602 (Cdn$75,000)) in advances for working capital purposes which bears interest at 15% per annum, is secured by a promissory note, and is due on July 1, 2012. On May 17, 2012, the Company entered into a First Amendment to Loan Agreement with the CEO to extend the term of the loan to July 1, 2014. As at September 30, 2012, accrued interest of $19,426 (Cdn$19,110) (June 30, 2012 - $15,970 (Cdn$16,274)) is owing on this loan.

           
    (c)

    During the three months ended September 30, 2012, the Company incurred management fees of $15,069 (2011 - $15,301), $15,069 (2011 - $15,301), and $26,553 (2011 - $19,442) to the Chief Executive Officer of the Company, President of the Company, and Chief Financial Officer, respectively.

    F-6

    CANYON COPPER CORP.
    (An Exploration Stage Company)
    Notes to the Financial Statements
    September 30, 2012
    (Expressed in U.S. dollars)
    (unaudited)

    4.

    Related Party Transactions (continued)

         
    (d)

    During the three months ended September 30, 2012, the Company incurred rent of $10,478 (2011 - $4,663) to a company with common officers and directors.

         
    (e)

    During the three months ended September 30, 2012, the Company incurred interest expense of $7,588 (2011 - $7,676) to the Chief Executive Officer of the Company.

         
    5.

    Derivative Liabilities

         

    The Company has share purchase warrants that were issued in private placements which have exercise prices denominated in Canadian dollars which differs from the Company’s functional currency (U.S. dollars). As a result, these share purchase warrants cannot be considered to be indexed to the Company’s own stock and accordingly must be accounted for as derivative liabilities with changes in fair value recorded in the statement of operations.

         

    The fair value of the derivative liability for the 1,674,730 share purchase warrants exercisable at Cdn$0.50 per share issued on May 11, 2011 was $385,694. The fair value of the derivative liability for the 48,928 share purchase warrants exercisable at Cdn$0.50 per share issued on June 8, 2011 was $11,156. The fair value of the derivative liability for the 428,571 share purchase warrants exercisable at Cdn$0.50 per share issued on July 8, 2011 was $89,267. The fair value of the derivative liability for the 1,082,036 share purchase warrants exercisable at Cdn$0.50 per share issued on July 13, 2011 was $186,581.

         

    The fair values of these share purchase warrants as at September 30, 2012 and June 30, 2012 are as follows:


          September 30,     June 30,  
          2012     2012  
        $   $  
      1,674,730 warrants expiring on November 10, 2012   –     2,738  
      48,928 warrants expiring on December 7, 2012   17     135  
      428,571 warrants expiring on January 8, 2013   148     1,492  
      1,082,036 warrants expiring on January 13, 2013   345     4,042  
          510     8,407  

    During the three months ended September 30, 2012, the Company recorded a gain on the change in fair value of the derivative liabilities of $7,897.

    The Company uses the Black-Scholes option pricing model to calculate the fair values of the derivative liabilities. The following table shows the weighted average assumptions used in the calculations:

                Risk-free     Expected     Expected  
          Expected     Interest     Dividend     Life (in  
          Volatility     Rate     Yield     years)  
      As at issuance date:                        
               1,674,730 warrants expiring on November 10, 2012   175%     0.37%     0%     1.5  
               48,928 warrants expiring on December 7, 2012   172%     0.29%     0%     1.5  
               428,571 warrants expiring on January 8, 2013   173%     0.29%     0%     1.5  
               1,082,036 warrants expiring on January 13, 2013   173%     0.27%     0%     1.5  
      Weighted average as at June 30, 2012   133%     0.16%     0%     0.5  
      Weighted average as at September 30, 2012   139%     0.10%     0%     0.2  

    F-7

    CANYON COPPER CORP.
    (An Exploration Stage Company)
    Notes to the Financial Statements
    September 30, 2012
    (Expressed in U.S. dollars)
    (unaudited)

    6.

    Stock Options

       

    On August 21, 2009 (as amended on May 4, 2011), the Board of Directors of the Company adopted the Company’s 2009 Stock Option Plan (the “Plan”). The Plan is administered by the Board of Directors. Stock options granted under the Plan have a maximum term of five years. The aggregate number of shares of the Company’s common stock available for issuance under the 2009 Plan is 10% of the Company’s issued and outstanding shares. As at September 30, 2012, the Company had 3,637,276 stock options available for granting pursuant to the 2009 Plan.

       

    A summary of the Company’s stock option activity is as follows:


                Weighted        
                Average     Aggregate  
                Exercise     Intrinsic  
          Number of     Price     Value  
          Options   $   $  
      Outstanding, June 30, 2012 and September 30, 2012   3,232,418     0.27     –  

    Additional information regarding stock options outstanding as at September 30, 2012 is as follows:

              Outstanding and exercisable        
                    Weighted              
                    average     Weighted        
        Range of           remaining     average        
        exercise prices     Number of     contractual life     exercise price        
      $     shares     (years)   $        
        0.13     2,686,000     1.9     0.13        
        0.95        546,418     0.2     0.95        
              3,232,418     1.6     0.27        

    7.

    Share Purchase Warrants

       

    The following table summarizes the continuity of the Company’s share purchase warrants:


                Weighted  
                Average  
          Number of     Exercise  
          Warrants     Price  
      Balance, June 30, 2012 and September 30, 2012   3,234,265     Cdn$0.50  

    As at September 30, 2012, the following share purchase warrants were outstanding:

        Number of     Exercise              
        Warrants     Price     Expiry Date        
        1,674,730     Cdn$0.50     November 10, 2012        
             48,928     Cdn$0.50     December 7, 2012        
           428,571     Cdn$0.50     January 8, 2013        
        1,082,036     Cdn$0.50     January 13, 2013        
        3,234,265                    

    F-8


    ITEM 2.

    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

    CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    Certain statements contained in this Quarterly Report constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate,” "believe,” "estimate,” "should,” "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; changes in project parameters as plans continue to be refined; changes in labor costs; future mineral prices; equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the mining industry, including but not limited to environmental hazards, cave-ins, pit-wall failures, flooding, rock bursts and other acts of God or unfavorable operating conditions and losses; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section titled "Part II - Item 1A. Risk Factors" in this Quarterly Report.

    Forward looking statement are based on a number of material factors and assumptions, including the results of exploration and drilling activities, the availability and final receipt of required approvals, licenses and permits, that sufficient working capital is available to complete proposed exploration and drilling activities, that contracted parties provide goods and/or services on the agreed time frames, the equipment necessary for exploration is available as scheduled and does not incur unforeseen break downs, that no labor shortages or delays are incurred and that no unusual geological or technical problems occur. While we consider these assumptions may be reasonable based on information currently available to it, they may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in the section titled “Part II - Item 1A. Risk Factors” in this Quarterly Report.

    We intend to discuss in our quarterly and annual reports any events or circumstances that occurred during the period to which such documents relate that are reasonably likely to cause actual events or circumstances to differ materially from those disclosed in this Quarterly Report. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to which any factor, or combination of such factors, may cause actual results to differ materially from those contained in any forwarding looking statement.

    We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly our periodic reports filed with the SEC pursuant to the Securities Exchange Act of 1934 (the "Exchange Act").

    OVERVIEW

    We were incorporated on January 21, 2000 under the laws of the State of Nevada.

    We are an exploration stage company engaged in the acquisition, exploration and development of mineral properties. We currently hold 100% title in a major claim block totaling 661 unpatented mineral claims, covering approximately 13,220 acres located in Mineral County, Nevada (the “New York Canyon Claims”). We also hold 21 patented mineral claims covering an area of approximately 420 acres, located within the vicinity of the New York Canyon Claims area. We collectively refer to the New York Canyon Claims and the patented claims as the “New York Canyon Project.”

    We also hold an option to acquire a 100% interest in the “Moonlight Property”, which is comprised of 307 unpatented mineral claims having an area of approximately 6,300 acres. We acquired our interest in the Moonlight Property pursuant to an assignment agreement dated November 25, 2011 among Metamin Enterprises Inc. (the “Assignor”), a company controlled by Benjamin Ainsworth, our President, Secretary and director, Metamin Enterprises USA Inc., a wholly owned subsidiary of the Assignor, and the Company. The Moonlight Property is a copper porphyry project located on the northern end of the Walker Lane Belt in Plumas County, California.

    2

    We have not earned any revenues to date and do not anticipate earning revenues until such time as we enter into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that commercially viable mineral deposits exist on our mineral properties or that we will discover commercially exploitable levels of mineral resources on our properties, or if such deposits are discovered, that we will enter into further substantial exploration programs.

    PLAN OF OPERATION

    The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the three month period ended September 30, 2012 and changes in our financial condition from June 30, 2012. This discussion should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operation included in our Annual Report on Form 10-K for the year ended June 30, 2012 filed with the SEC on September 28, 2012.

    Over the next twelve months, our plan of operation is to complete following exploration programs on our mineral properties:

    New York Canyon Project

    Phase One of our exploration program on the New York Canyon Project involves the re-analysis of the 2006 Longshot Ridge drill pulps and initiating environmental base line studies, which will permit us to conduct advanced exploration, if warranted. We commenced Phase One of our exploration program in July 2011 by delivering the drill pulps from the 2006 Longshot Ridge to Sparks Laboratory in Nevada. In December 2011, we received new assay results and these results were audited by an independent consultant for quality assurance (QA) and quality control (QC). In March 2012, we engaged an independent consultant to conduct a review of the results in order to provide us with a more robust estimate of the project and assist us in identifying key targets for a drilling program at the New York Canyon Project.

    In late 2012, subject to obtaining financing, we plan to drill test the oxide mineralization found to the north and northeast of the Longshot Ridge deposit. This represents the initial stages of Phase Two of our exploration program on the New York Canyon Project.

    Moonlight Property

    In spring 2012, we conducted a preliminary assessment of the Moonlight Property, which involved a detailed review of all historical data on the Moonlight Property. Based on the results of this preliminary assessment, we have decided to commence a shallow reverse drill program at the Moonlight Property. The drill program is scheduled for late 2012 and will target the copper oxide deposit on the Moonlight Property. We anticipate that the drill program will cost approximately $250,000.

    Anticipated Expenses

    We anticipate that we will require the following funds for exploration programs and our ongoing operations:

    ITEM AND ACTIVITY   12 Month Total  
        Budget  
    LAND STATUS      
    New York Canyon Project      
    2012 - 2013 unpatented claim maintenance fees $  98,000  
    Monthly Payments – Patented Claims   36,000  
    Moonlight Property      

    3


    ITEM AND ACTIVITY   12 Month Total  
        Budget  
    Assignment and Option Payments   50,000  
    2012-2013 unpatented claim maintenance fees   48,000  
    EXPLORATION PROGRAM      
    New York Canyon Project      
    Metallurgical sampling and testing   75,000  
    Environmental base line study work   55,000  
    Geological mapping/geological survey   30,000  
    Field supplies and support   20,000  
    Contingency   25,000  
    Moonlight Property      
    Drilling   250,000  
    Metallurgical sampling and testing   50,000  
    Environmental base line study work   30,000  
    Geological mapping/geological survey   30,000  
    Field supplies and support   20,000  
    Contingency   25,000  
    GENERAL AND ADMINISTRATIVE EXPENSES      
    General and Administrative   297,000  
    TOTAL $ 1,134,000  

    As at September 30, 2012, we had cash of $405,441. For the next twelve months, management anticipates that we have sufficient funds to meet our annual claim payments, implement our geochemical sampling program on the New York Canyon Project and meet the costs associated with our ongoing reporting obligations. However, we will require additional financing in order to implement the shallow reverse drill program on the Moonlight Property and the proposed test drilling program on the New York Canyon Project. There is no assurance we will be successful in raising such funding or on terms that are acceptable to us. Since inception, we have been dependent on investment capital and debt financing from third parties as our primary source of liquidity. We anticipate continuing to rely on sales of shares of our common stock and loans in order to continue to fund our business operations. Issuances of additional shares will result in further dilution of our existing shareholders.

    RESULTS OF OPERATIONS

    Three Months Summary

        Three Months Ended September 30     Percentage  
        2012     2011     Increase / Decrease  
    Revenue $  -   $  -     n/a  
    Operating Expenses   (384,604 )   (563,875 )   (31.8 )%
    Other Income   309     258,899     (99.9 )%
    Net Loss $  (384,295 ) $  (304,976 )   26.0%  

    Revenues

    We have not earned any revenues to date and do not anticipate earning revenues until such time as we enter into commercial production of our mineral properties. There can be no assurance that we will be successful in discovering commercial quantities or that we can commercially produce metals or minerals. We are presently an exploration stage company engaged in the search for mineral reserves. We can provide no assurances that we will be able to discover any commercially exploitable levels of mineral resources on our property, or, even if such resources are discovered, that we will be able to enter into commercial production of our mineral properties.

    4

    Expenses

    Our expenses for the three month periods ended September 30, 2012 and 2011 consisted of the following:

        Three Months Ended September 30     Percentage  
                    Increase /  
        2012     2011     Decrease  
    Operating Expenses:                  
    Foreign exchange loss $  9,801   $  77,627     (87.4 )%
    General and administrative   152,928     195,488     (21.8 )%
    Mineral exploration costs   221,875     290,760     (23.7 )%
           Sub-total   (384,604 )   (563,875 )   (31.8 )%
    Other Income (Expense):                  
    Gain on change in fair values of derivative liability   7,897     266,575     (97.0 )%
    Interest expense   (7,588 )   (7,676 )   (1.1 )%
    Net Loss $  (384,295 ) $  (304,976 )   26.0%  

    Our operating expenses decreased from $563,875, during the three months ended September 30, 2011, to $384,604, during the three months ended September 30, 2012. The decrease in our operating expenses is due to a decrease in foreign exchange loss, general and administrative expenses and mineral exploration costs.

    During the three months ended September 30, 2012, general and administration expenses primarily consisted of: (i) consulting fees incurred for services provided by our executive officers; (ii) legal, accounting and filing fees in connection with our Annual Report on Form 10-K and mineral property filing requirements, (iii) corporate and shareholder communications relating to the distribution of news releases and consulting fees for website development and preparation of investor and shareholder materials, (iv) rent incurred for our corporate office, and (vi) transfer agent and filing fees to the TSX Venture Exchange.

    Additional general and administrative expenses in the three months ended September 30, 2011 primarily relate to legal, accounting and filing fees in connection with our listing on the TSX Venture Exchange.

    Mineral exploration costs consisted of annual payments to maintain the New York Canyon Project in good standing, mineral lease payments and consulting fees paid for geochemical sampling on the New York Canyon Project.

    The increase in our net loss for the three months ended September 30, 2012 is due to the fact that we recorded a gain on change in fair value of derivative liability in 2011, which relates to the issuance of share purchase warrants under our brokered and non-brokered foreign private placement offering.

    We anticipate that our expenses will increase over the next twelve months due to our ongoing planned exploration activities on the New York Canyon Project and Moonlight Property.

    LIQUIDITY AND CAPITAL RESOURCES

    Working Capital

                    Percentage  
        At September 30, 2012     At June 30, 2012     Increase / Decrease  
    Current Assets $  428,972   $  772,520     (44.9 )%
    Current Liabilities   (766,432 )   (730,967 )   4.9%  
    Working Capital Surplus (Deficit) $  (337,460 ) $  41,553     (912 )%

    5

    Cash Flows

        Three Months Ended     Three Months Ended  
        September 30, 2012     September 30, 2011  
    Cash Used in Operating Activities $  (313,466 ) $  (517,067 )
    Cash Provided by Investing Activities   -     -  
    Cash Provided by Financing Activities   -     600,547  
    Net Decrease in Cash During Period $  (313,466 ) $  83,480  

    Our working capital decreased from $41,553, as at June 30, 2012, to a deficit of $337,460, as at September 30, 2012. The decrease in working capital was primarily a result of a decrease in cash due general and administrative expenses and the fact that we had no sources of revenue or financing during the three months ended September 30, 2012.

    Future Financings

    Our plan of operation calls for significant expenses in connection with the exploration of the New York Canyon Project. For the next twelve months, management anticipates that we have sufficient funds to meet our annual claim payments, implement our geochemical sampling program on the New York Canyon Project and meet the costs associated with our ongoing reporting obligations. However, we will require additional financing in order to implement the shallow reverse drill program on the Moonlight Property and the proposed test drilling program on the New York Canyon Project.

    Obtaining financing is subject to a number of factors, including the market prices for the mineral property and copper. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. Since our inception, we have used our common stock to raise money for our operations and for our property acquisitions. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation. For these reasons, our independent auditors believe there exists a substantial doubt about our ability to continue as a going concern.

    OFF-BALANCE SHEET ARRANGEMENTS

    None.

    CRITICAL ACCOUNTING POLICIES

    We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 2 to our audited financial statements included in our Annual Report for the year ended June 30, 2012.

    Mineral Property Costs

    We have been in the exploration stage since our inception on January 21, 2000 and have not yet realized any revenues from our planned operations. We are primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized. We assess the carrying costs for impairment under ASC 360, “Property, Plant, and Equipment” at each fiscal quarter end. When we have been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

    Long-Lived Assets

    In accordance with ASC 360, “Property, Plant and Equipment”, we test long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

    6

    Stock-Based Compensation

    We record stock-based compensation in accordance with ASC 718, “Compensation – Stock Based Compensation” and ASC 505, “Equity Based Payments to Non-Employees”, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

    ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. We use the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by our stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

    All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

    ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    Not Applicable.

    ITEM 4. CONTROLS AND PROCEDURES.

    Disclosure Controls and Procedures

    We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2012 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses disclosed in our Annual Report on Form 10-K for the year ended June 30, 2012 (the “2012 Annual Report”).

    Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in our 2012 Annual Report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 fairly present our financial condition, results of operations and cash flows in all material respects.

    Changes in Internal Control Over Financial Reporting

    There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2012 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

    7

    PART II - OTHER INFORMATION

    ITEM 1. LEGAL PROCEEDINGS.

    We are not currently a party to any legal proceedings

    ITEM 1A. RISK FACTORS.

    The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

    We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease exploration activities and if we do not obtain sufficient financing, our business will fail.

    We were incorporated on January 21, 2000 and to date have been involved primarily in the acquisition of our mineral property and the exploration and development on this property. We have no exploration history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:

      (i)

    our ability to locate a profitable mineral property; and

         
      (ii)

    our ability to generate revenues.

    Our plan of operation calls for significant expenses in connection with the exploration of the New York Canyon Project, which may require us to obtain financing. We recorded a net loss of $384,295 for the three months ended September 30, 2012 and have an accumulated deficit of $22,819,908 since inception. As at September 30, 2012, we had cash of $405,441. For the next twelve months, we have sufficient funds to meet our annual claim payments, carry out our geochemical sampling program on the New York Canyon project and meet our ongoing reporting obligations. However, we will require additional financing in order to implement the proposed shallow reverse drill program on the Moonlight Property and the test drilling program on the New York Canyon Project. There is no assurance we will be successful in raising such funding or on terms that are acceptable to us. Since inception, we have been dependent on investment capital and debt financing from third parties as our primary source of liquidity. We anticipate continuing to rely on sales of shares of our common stock and loans in order to continue to fund our business operations. Issuances of additional shares will result in further dilution of our existing shareholders.

    Obtaining financing would be subject to a number of factors, including the market prices for the mineral property and base and precious metals. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. Since our inception, we have used our common stock to raise money for our operations and for our property acquisitions. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation.

    Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability.

    Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral properties and the production of minerals thereon, if any, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we may not be able to ever generate any operating revenues or achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

    8

    Because we are an exploration stage company, our business has a high risk of failure.

    As noted in the financial statements that are included with this Quarterly Report, we are an exploration stage company that has incurred net losses since inception, we have not attained profitable operations and we are dependent upon obtaining adequate financing to complete our exploration activities. The success of our business operations will depend upon our ability to obtain further financing to complete our planned exploration program and to attain profitable operations. If we are not able to complete a successful exploration program and attain sustainable profitable operations, then our business will fail.

    Because we have not commenced business operations, we face a high risk of business failure.

    We have not earned any revenues as of the date of this Quarterly Report. Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

    We have no known mineral reserves and if we cannot find any, we will have to cease operations.

    We have no mineral reserves. Mineral exploration is highly speculative. It involves many risks and is often non-productive. Even if we are able to find mineral reserves on our property our production capability is subject to further risks including:

    • Costs of bringing the property into production including exploration work, preparation of production feasibility studies, and construction of production facilities, all of which we have not budgeted for;
    • Availability and costs of financing;
    • Ongoing costs of production; and
    • Environmental compliance regulations and restraints.

    The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the lack of milling facilities and processing equipment near our mineral properties and such other factors as government regulations, including regulations relating to allowable production, exporting of minerals, and environmental protection. If we do not find a mineral reserve or define a mineral inventory containing gold, silver or copper or if we cannot explore the mineral reserve, either because we do not have the money to do it or because it will not be economically feasible to do it, we will have to cease operations and investors will lose their investment.

    In order to maintain our rights to our mineral properties, we will be required to make annual filings with federal and state regulatory agencies and/or be required to complete assessment work on our mineral properties.

    In order to maintain our rights to our mineral properties, we will be required to make annual filings with federal and state regulatory authorities. In addition, we may be required by federal and/or state legislation or regulations to complete minimum annual amounts of mineral exploration work on our mineral properties. A failure by us to meet the annual maintenance requirements under federal and state laws could cause our rights to our mineral properties to lapse.

    Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages if and when we conduct mineral exploration activities.

    The search for valuable minerals involves numerous hazards. As a result, if and when we conduct exploration activities we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

    9

    If the price of base and precious metals declines, our financial condition and ability to obtain future financings will be impaired.

    The price of base and precious metals is affected by numerous factors, all of which are beyond our control. Factors that tend to cause the price of base and precious metals to decrease include the following:

      (a)

    Sales or leasing of base and precious metals by governments and central banks;

         
      (b)

    A low rate of inflation and a strong US dollar;

         
      (c)

    Speculative trading;

         
      (d)

    Decreased demand for base and precious metals industrial, jewelry and investment uses;

         
      (e)

    High supply of base and precious metals from production, disinvestment, scrap and hedging;

         
      (f)

    Sales by base and precious metals producers and foreign transactions and other hedging transactions; and

         
      (g)

    Devaluing local currencies (relative to base and precious metals price in US dollars) leading to lower production costs and higher production in certain major base and precious metals producing regions.

    Our business is dependent on the price of base and precious metals. We have not undertaken hedging transactions in order to protect us from a decline in the price of base and precious metals. A decline in the price of base and precious metals may also decrease our ability to obtain future financings to fund our planned development and exploration programs.

    If we are unable to hire and retain key personnel, we may not be able to implement our business plan.

    Our success is dependent upon the performance of key personnel working full-time in management, supervisory and administrative capacities or as consultants. This is particularly true in highly technical businesses such as mineral exploration. These individuals are in high demand and we may not be able to attract the personnel we need. The loss of the services of senior management or key personnel could have a material and adverse effect on us, our business and results of operations. Failure to hire key personnel when needed, or on acceptable terms, would have a significant negative effect on our business.

    As we undertake exploration of our mineral properties, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.

    There are several governmental regulations that materially restrict mineral exploration. We are required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. If we enter the production phase, the cost of complying with permit and regulatory environment laws will be greater because the impact on the project area is greater. Permits and regulations will control all aspects of the production program if the project continues to that stage. Examples of regulatory requirements include:

      (a)

    Water discharge will have to meet drinking water standards;

         
      (b)

    Dust generation will have to be minimal or otherwise re-mediated;

         
      (c)

    Dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation;

         
      (d)

    An assessment of all material to be left on the surface will need to be environmentally benign;

         
      (e)

    Ground water will have to be monitored for any potential contaminants;

    10


      (f)

    The socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be re-mediated; and

         
      (g)

    There will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species.

    There is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program. We will also have to sustain the cost of reclamation and environmental remediation for all exploration work undertaken. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Other potential pollution or damage must be cleaned-up and renewed along standard guidelines outlined in the usual permits. Reclamation is the process of bringing the land back to its natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused. The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the recommended work program. If remediation costs exceed our cash reserves we may be unable to complete our exploration program and have to abandon our operations.

    If we become subject to increased environmental laws and regulation, our operating expenses may increase.

    Our exploration and development programs are regulated by both US Federal, California and Nevada state environmental laws that relate to the protection of air and water quality, hazardous waste management and mine reclamation. These regulations will impose operating costs on us. If the regulatory environment for our operations changes in a manner that increases costs of compliance and reclamation, then our operating expenses would increase with the result that our financial condition and operating results could be adversely affected.

    There has been a very limited public trading market for our securities, and the market for our securities may continue to be limited and be sporadic and highly volatile.

    There is currently a limited public market for our common stock. Our common stock trades in Canada on the TSX Venture Exchange and over the counter in the United States on the OTC Bulletin Board and OTCQB market place. We cannot assure you that an active market for our shares will be established or maintained in the future. The OTC Bulletin Board and OTCQB are not national securities exchanges, and many companies have experienced limited liquidity when traded through these quotation systems. Holders of our common stock may, therefore, have difficulty selling their shares, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares, which may be purchased, may be sold without incurring a loss. The market price of our shares, from time to time, may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the shares in the future.

    In addition, the market price of our common stock may be volatile, which could cause the value of our common stock to decline. Securities markets experience significant price and volume fluctuations. This market volatility, as well as general economic conditions, could cause the market price of our common stock to fluctuate substantially. Many factors that are beyond our control may significantly affect the market price of our shares. These factors include:

      (a)

    price and volume fluctuations in stock markets;

      (b)

    changes in our operating results;

      (c)

    any increase in losses from levels expected by securities analysts;

      (d)

    changes in regulatory policies or law;

      (e)

    operating performance of companies comparable to us; and

      (f)

    general economic trends and other external factors.

    Even if an active market for our common stock is established, stockholders may have to sell their shares at prices substantially lower than the price they paid for the shares or might otherwise receive than if an active public market existed.

    11

    If we complete a financing through the sale of additional shares of our common stock, shareholders will experience dilution.

    The most likely source of future financing presently available to us is through the issuance of our common stock. Any sale of share capital will result in dilution to existing shareholders. The only other anticipated alternative for the financing of further exploration would be the offering by us of an interest in our properties to be earned by another party or parties carrying out further exploration thereof, which is not presently contemplated.

    Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

    The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.

    Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

      1.

    contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

         
      2.

    contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

         
      3.

    contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

         
      4.

    contains a toll-free telephone number for inquiries on disciplinary actions;

         
      5.

    defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

         
      6.

    contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

    The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

    12


    ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

    None.

    ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

    None.

    ITEM 4. MINE SAFETY DISCLOSURE.

    None.

    ITEM 5. OTHER INFORMATION.

    Change in Directors and Officers

    On November 5, 2012, at our 2012 Annual General Meeting (the “AGM”) our shareholders elected three returning directors, being Benjamin Ainsworth, Bryan Wilson and James Yates, to our Board of Directors. Anthony R. Harvey, a previous member of our Board of Directors, did not stand for re-election at the AGM and resigned as our Chairman and Chief Executive Officer. To fill the vacancy caused by this resignation, Benjamin Ainsworth was appointed as our Chief Executive Officer.

    Mr. Harvey provided that his resignation as our Chairman and Chief Executive Officer was for personal reasons and was not due to, and was not caused, in whole or in party, by any disagreement with the Company, whether related to the Company’s operations, policies, practices or otherwise.

    ITEM 6. EXHIBITS.

    The following exhibits are either provided with this Quarterly Report on Form 10-Q or are incorporated herein by reference.

    Exhibit    
    Number   Description of Exhibit
    3.1  

    Amended and Restated Articles of Incorporation.(5)

    3.2

    Certificate of Change Pursuant to NRS 78.209 decreasing the authorized capital of common stock to 166,666,666 shares, par value $0.00001 per share.(7)

    3.3

    Certificate of Change Pursuant to NRS 78.209 decreasing the authorized capital of common stock to 131,666,666 shares, par value $0.00001 per share.(10)

    3.4  

    Amended and Restated Bylaws.(13)

    10.1

    Property Option Agreement dated March 18, 2004 among the Company, Robert & Sharon Weicker, Kurt & Tami Schendel, and Nevada Sunrise LLC (New York Canyon Project).Error! Reference source not found.

    10.2  

    Lease Agreement dated July 21, 2004 between the Company and Jaycor Mining, Inc.(3)

    10.3  

    Consulting Agreement dated January 6, 2006 between the Company and Kurt Bordian.(4)

    10.4  

    Quitclaim Deed for the New York Canyon Project dated March 12, 2007.(6)

    10.5

    Purchase and Sale Agreement dated August 5, 2010 between Canyon Copper Corp. and ESO Uranium Corp.(8)

    10.6

    Loan Agreement dated for reference October 7, 2010 between Canyon Copper Corp. and Anthony Harvey.(9)

    10.7

    Promissory Note dated for reference October 7, 2010 between Canyon Copper Corp. and Anthony Harvey for the loan of $50,000 (USD).(9)

    10.8

    Loan Agreement dated November 22, 2010 between Canyon Copper Corp. and Anthony Harvey.(10)

    10.9

    Promissory Note dated November 22, 2010 between Canyon Copper Corp. and Anthony Harvey for the loan of $75,000 (CDN).(10)

    10.10

    Loan Agreement dated January 19, 2011 between Canyon Copper Corp. and Anthony Harvey.(11)

    10.11

    Promissory Note dated January 19, 2011 between Canyon Copper Corp. and Anthony Harvey for the loan of $75,000 (CDN).(11)

    13


    Exhibit    
    Number   Description of Exhibit
    10.12

    Engagement letter dated January 26, 2011 between MGI Securities Inc. and Canyon Copper Corp.(12)

    10.13

    Sponsorship Engagement Letter dated January 26, 2011 between MGI Securities Inc. and Canyon Copper Corp.(12)

    10.14  

    Amended and Restated 2009 Stock Option Plan.(13)

    10.15

    Agency Agreement dated May 26, 2011 between MGI Securities Inc. and Canyon Copper Corp.(14)

    10.16

    Stock Repurchase Agreement dated October 20, 2011 between Canyon Copper Corp. and Langley Park Investment Trust plc.(15)

    10.17

    Assignment Agreement dated November 25, 2011 between Canyon Copper Corp., Metamin Enterprises Inc. and Metamin Enterprises USA Inc.(16)

    10.18

    First Amendment to Loan Agreement dated May 17, 2012 between Canyon Copper Corp. and Anthony Harvey for the loan of $50,000 (USD) due on April 1, 2014.(17)

    10.19

    Promissory Note dated May 17, 2012 between Canyon Copper Corp. and Anthony Harvey for the loan of $50,000 (USD) due on April 1, 2014.(17)

    10.20

    First Amendment to Loan Agreement dated May 17, 2012 between Canyon Copper Corp. and Anthony Harvey for the loan of $75,000 (CDN) due on July 1, 2014.(17)

    10.21

    Promissory Note dated May 17, 2012 between Canyon Copper Corp. and Anthony Harvey for the loan of $75,000 (CDN) due on July 1, 2014.(17)

    10.22

    First Amendment to Loan Agreement dated May 17, 2012 between Canyon Copper Corp. and Anthony Harvey for the loan of $75,000 (CDN) due on May 22, 2014.(17)

    10.23

    Promissory Note dated May 17, 2012 between Canyon Copper Corp. and Anthony Harvey for the loan of $75,000 (CDN) due on May 22, 2014.(17)

    10.24 Termination Agreement dated November 5, 2012 between Canyon Copper Corp. and Anthony Harvey.
    14.1  

    Code of Ethics.(1)

    31.1

    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2

    Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

    32.1

    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

    32.2

    Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

    99.1  

    Audit Committee Charter.(1)

    99.2  

    Disclosure Committee Charter.(1)

    101.INS  

    XBRL Instance Document.

    101.SCH  

    XBRL Taxonomy Extension Schema.

    101.CAL  

    XBRL Taxonomy Extension Calculation Linkbase.

    101.DEF  

    XBRL Taxonomy Extension Definition Linkbase.

    101.LAB  

    XBRL Taxonomy Extension Label Linkbase.

    101.PRE  

    XBRL Taxonomy Extension Presentation Linkbase.


    Notes:
    (1)

    Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on August 26, 2003.

    (2)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on April 8, 2004.

    (3)

    Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on October 8, 2004.

    (4)

    Filed with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on February 16, 2006.

    (5)

    Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on October 13, 2006.

    (6)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on March 26, 2007.

    (7)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on May 19, 2009.

    (8)

    Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on September 28, 2010.

    (9)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on October 13, 2010.

    (10)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on November 29, 2010.

    14


    (11)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 21, 2011.

    (12)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 31, 2011.

    (13)

    Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on May 9, 2011.

    (14)

    Filed with the SEC as an exhibit to our Registration Statement on Form S-1 filed on August 15, 2011.

    (15)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on October 26, 2011.

    (16)

    Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on November 29, 2011.

    (17)

    Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on September 28, 2012.

    15

    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.

            CANYON COPPER CORP.
             
    Dated: November 6, 2012   By: /s/ Benjamin Ainsworth
            BENJAMIN AINSWORTH
            Chief Executive Officer and President
            (Principal Executive Officer)
             
    Dated: November 6, 2012   By: /s/ Kurt Bordian
            KURT BORDIAN
            Chief Financial Officer and Treasurer
            (Principal Accounting Officer and Principal Financial
            Officer)

    16