Note 7- Capital Stock

9 Months Ended

Sep. 30, 2012

Notes

Note 7- Capital Stock

Note 7- Capital Stock

a)       Common Stock

During the nine months ended September 30, 2012, the Company issued 2,803,508 shares of common stock pursuant to private placement transactions at prices of $0.075 to $0.010 per share and for total cash proceeds of $230,500 and stock subscription receivable of $25,000.

During the nine months ended September 30, 2012, the Company issued 7,571,117 shares of common stock to directors of the Company for services rendered. These transactions have been recorded as stock-based compensation with a total value of $735,841.  Of these issuances, 600,000 shares of common stock were recorded as shares to be issued as of December 31, 2011 for $45,104.

During the nine months ended September 30, 2012, the Company issued 3,000,000 shares of common stock to 2214098 Ontario Ltd. and Firelake Resources Inc. (note 4) in relation to previous mineral rights acquisitions. As of December 31, 2011, these shares were recorded within shares to be issued for $250,576.

Included with the private placement transactions referred to above, the Company issued 400,000 flow-through units (“FT Units”) at $0.10 per FT Unit for total cash proceeds of $40,000. Each FT Unit consists of one flow-through common share (“FT Share”), and one-half of one non-flow-through share purchase warrant. Each Unit consists of one common share and one-half of one non-flow through share (“NFT Share”) purchase warrant (the “Warrants”). Each whole Warrant is exercisable into one common share at the price of $0.15 per share for one year from the issue date.

A flow-through share premium obligation of $nil was recognized which represents the difference between the FT unit price of $0.50 and NFT price of $0.50 on the announcement date. 

b)       Stock To Be Issued and Redeemed

As of September 30, 2012, the Company has yet to issue 1,000,000 shares of common stock to Shining Tree (note 4), in relation to a mineral rights acquisition, which were recorded at a value of $95,000.

As of September 30, 2012, the Company has yet to issue 695,631 shares of common stock to directors and consultants for services rendered. The Company has recorded stock to be issued of $66,085 in respect of these obligations.

As of September 30, 2012 the Company has yet to purchase 33,800,000 shares of common stock which it agreed for $26,000.

c)       Subscriptions Receivable

During the nine months ended September30, 2012, the Company has received payments of $103,247 related to subscriptions receivable, and recorded additional $25,000 subscriptions receivable for shares issued. 

d)       Warrants

The below table summarizes the Company’s activity with respect to warrants:

	Number of Warrants	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term
Balance – December 31, 2010	-	-	-
Granted	3,723,397	0.129	0.164
Cancelled	-	-	-
Exercised	-	-	-
Balance – December 31, 2011	3,723,397	0.129	0.164
Granted	2,793,245	0.106	0.135
Cancelled	-	-	-
Exercised	-	-	-
Balance – September 30, 2012	6,516,642	$       0.119	0.246

On various dates between October 18, 2011 and September 30, 2012, the Company issued 6,516,642 warrants in connection with its private placements of common stock. Each warrant entitles the holder to purchase 1 share of common stock of the Company at exercise prices ranging from $0.10 to $0.20 per share for a term of 1 year from the issue date.

e)       Stock-Based Compensation

The Company incurred stock-based compensation expense in connection with its compensation agreements for its directors, management, and employees. Under these agreements, common stock may be issued as a signing bonus or at certain benchmark dates within an individual’s period of service. Stock-based compensation is calculated as the fair value of the stock issued or to be issued to an individual and is recorded at the time the stock becomes owing to the individual. Stock issued to a director, manager, or employee is deferred in the event that their contract requires the individual to remain employed with the Company for a specified time period after issuance.

During the nine months ended September 30, 2012, the Company issued 7,571,117 shares of common stock and a further 695,631 shares became issuable in connection with stock-based compensation arrangements. These shares were valued at $0.095 per share and resulted in compensation expense of $735,841.  These fees were recorded as a component of consulting fees in the amount of $424,700 and management fees in the amount of $311,141 on the statement of operations.