Note 8- Capital Stock

12 Months Ended

Dec. 31, 2012

Notes

Note 8- Capital Stock

Note 8- Capital Stock

a)       Common Stock

For the year ended December 31, 2009, the Company issued 11,666,667 shares of common stock to founders at par value for cash proceeds of $3,500.

For the year ended December 31, 2010, the Company issued 32,183,333 shares of common stock pursuant to private placement transactions at prices between $0.0009 to $0.30 per share and for total cash proceeds of $80,173.

For the year ended December 31, 2010, the Company issued 16,666,667 shares« of common stock in exchange for notes receivable of $14,435.

For the year ended December 31, 2010, the Company issued 27,880,139 shares of common stock and 240,000 shares of preferred stock for director and consulting services rendered. These transactions were recorded as stock-based compensation having a total value of $268,631.

For the year ended December 31, 2011, the Company issued 1,976,754 shares of common stock pursuant to private placement transactions at prices between $0.075 to $0.10 per share and for total cash proceeds of $349,827.

For the year ended December 31, 2011, the Company issued 2,486,333 shares of common stock to directors and employees of the Company as signing bonuses and for services rendered. These transactions have been recorded as stock-based compensation having a total value of $565,612.

On December 14, 2012 the Company effected a reverse split of its common stock at a ratio of 1 new share for every 3 existing shares held. The also Company filed articles of amendment with the State of Nevada to increase the authorized common stock to 400,000 common shares.  All per share amounts have been retroactively restated to reflect the reverse split.

For the year ended December 31, 2012, the Company issued 2,006,001 shares of common stock pursuant to private placement transactions at prices between $0.225 to $0.30 per share and for total cash proceeds of $393,500 and subscriptions receivable of $195,000. Of these issued shares 299,999 were Flow-Through Common shares. The issuance of flow-through shares requires the renunciation of Canadian Exploration Expenditures (CEE) in the same tax year and in an amount of equal value to the shares issued for the benefit of those shareholders that purchased those flow-through shares. In accordance with the Income Tax Act (Canada), the Company must incur CEE in the year of renunciation or in the subsequent year. Part XII.6 tax is calculated monthly on any unspent balance in the subsequent year beginning January 1, 2013. Under the terms of the Company’s flow-through shares agreements, the Company is required to spend and renounce expenditures for exploration that are qualifying CEE, as defined by the Income Tax Act (Canada) in the next calendar year.

For the year ended December 31, 2012, the Company issued 2,728,712 shares of common stock and 4,975,218 shares became issuable to directors and employees of the Company as signing bonuses and for services rendered. Of the shares issued, 2,495,378 shares are for services rendered in 2012 and 2,333,334 shares are to settle shares to be issued as of December 31, 2011. Of the 4,975,218 shares to be issued to directors and employees of the Company as signing bonuses and for services rendered. These transactions have been recorded as stock-based compensation having a total value of $1,028,141.

For the year ended December 31, 2012, the Company entered into an agreement to repurchase 23,041,667 previously issued common shares for $26,000. As at December 31, 2012 payment of $22,500 remains outstanding and is reflected as an accrued liability.

For the year ended December 31, 2012, the Company issued 1,000,000 shares of common stock to 2214098 Ontario Ltd. and Firelake Resources Inc. (note 4) in relation to previous mineral property acquisitions. As of December 31, 2011, these shares were recorded within shares to be issued for $250,576.

b)       Stock To Be Issued

On February 7, 2012, the Company entered into an agreement to issue 333,333 shares of common stock to Shining Tree Resources Corp. in connection with its acquisition of the mineral rights to the Elijah Property. As of December 31, 2012, 333,333 shares remained to be issued and are shown as stock to be issued for $95,000.

On December 25, 2012, the Company entered into an agreement to issue 1,700,000 shares of common stock to Bryan McClay in connection with its acquisition of the mineral rights to the Kenty Property. As of December 31, 2012, the shares had not yet been issued, and accordingly the Company recorded stock to be issued for $476,000.

As of December 31, 2012, the Company was obligated to issue 4,975,218 shares of common stock to directors and employees for current and future services. The Company has recorded stock to be issued of $1,465,454 in respect of these obligations.

As of December 31, 2012, the Company was obligated to issue 44,444 shares of common stock in connection with a private placement. The Company has recorded stock to be issued of $10,000 in respect of this obligation.

c)       Preferred Stock

The Company has authorized Class A preferred stock available to be issued for $1.00 per share, are non-participating and non-voting and accrue cumulative dividends at the rate of 10% per annum. The Company may retract the stock at any time upon the payment of $1.00 per share plus any unpaid dividends. In the event of any wind-up of the Company, the Class A preferred stock has a priority distribution of $1.00 per share plus any unpaid dividends before any distribution to the common stockholders.

On June 4, 2011 the Company issued 240,000 shares of Class A preferred stock to directors and advisors in exchange for services rendered. Stock-based compensation of $230,952 was recorded in respect of this issuance and has been classified as consulting fees on the statement of operations.

d)       Dividends

On December 31, 2012, the Company declared dividends of $24,000 at a cumulative rate of 10% per annum on the preferred stock for the year ended December 31, 2012. As of December 31, 2012, there are no amounts remaining in arrears in respect of the preferred stock. As of December 31, 2012, the Company has dividends payable of $62,400, or $0.26 per share of preferred stock.

Preferred dividends for the years ended December 31, 2012 and 2011 had an effect of $0.00 and $0.00, respectively on loss per share available to common stockholders.

e)       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	0.387	-
Expired	-	-	-
Cancelled	-	-	-
Exercised	-	-	-
Balance – December 31, 2011	-	-	-
Granted	2,002,580	0.446	0.727
Expired	(3,723,397)	0.387	-
Cancelled	-	-	-
Exercised	-	-	-
Balance – December 31, 2012	2,002,580	$         0.446	0.727

During the year ended December 31, 2012, the Company issued 2,002,580 warrants in connection with its private placements of common stock. Each warrant entitles the holder to purchase one share of common stock of the Company at exercise prices ranging from $0.30 to $0.60 per share for a term of one year from the issue date.

The warrants described above were not included in the calculation of loss per share as they would have been antidilutive.

f)        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. For the year ended December 31, 2012, the Company issued 2,764,969 shares of common stock and a further 4,878,858 shares became issuable in the year in connection with stock-based compensation arrangements. These shares were valued at amounts ranging from $0.0003 to $0.30 per share and resulted in compensation expense of $308,360 as a component of management fees and $472,919 as a component of consulting fees on the statement of operations.