Note 6- Capital Stock

3 Months Ended

Mar. 31, 2013

Notes

Note 6- Capital Stock

Note 6- Capital Stock

a)

Common Stock

For the quarter ended March 31, 2013, the Company issued 311,111 shares of common stock pursuant to private placement transactions at a price of $0.30 per share and for total cash proceeds of $78,575. Of these issued shares 83,333 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 quarter ended March 31, 2013, the Company issued 450,000 shares of common stock in partial settlement of its obligations for acquisitions of mineral properties.

For the quarter ended March 31, 2013, the Company issued 2,695,909 shares of common stock to directors, consultants, and employees of the Company as signing bonuses and for services rendered. Of the shares issued, 613,529 shares are for services rendered in the current quarter and 2,576,825 shares are to settle shares to be issued as of December 31, 2012. These transactions have been recorded as stock-based compensation having a total value of $450,070.

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 and March 31, 2013, these shares had not yet been issued and are reported 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. For the quarter ended March 31, 2013, the Company issued 200,000 shares of common stock in relation to this obligation and as of March 31, 2013, 1,500,000 shares with a value of $420,000 remained due to be issued.

As of March 31, 2013, the Company was obligated to issue 2,213,189 shares of common stock (December 31, 2012 – 4,975,218 shares) to directors and employees for current and future services.

As of March 31, 2013 and 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 «PJJAYZ37»]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, 2010 the Company issued 240,000 «PJJAYTK4»]shares of Class A preferred stock to directors and advisors in exchange for services rendered. Stock-based compensation of $230,952 «PJJAYVJJ»]was recorded in respect of this issuance and has been classified as consulting fees on the statement of operations.

d)

Dividends

No dividends were declared in the three months ended March 31, 2013 and 2012.

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, 2011	3,723,397-«PLJASGYW»]	-	-
Granted	2,002,580«PLJFSFR9»]	0.446«PJJASZ24»]	0.727«PJJASYHF»]
Expired	(3,723,397)«PLJASF3V»]	0.387«PLJASAX9»]	-
Cancelled	-	-	-
Exercised	-	-	-
Balance – December 31, 2012	2,002,580«PLJFS940»]	$ 0.446«PJJFSZMD»]	0.727«PLJFSUV1»]
Granted	266,667«PJJAS8ZZ»]	0.50«PLJFSX1L»]	0.727«PJJFSTSS»]
Expired	-	-	-
Cancelled	-	-	-
Exercised	-	-	-
Balance – March 31, 2013	2,269,247«PLJAS828»]	$ 0.50«PJJFSW13»]	0.727«PJJFSULT»]

«PLJFTEY6»]

During the three months ended March 31, 2013, the Company issued 266,667 «PJJAVEN9»]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 «PLJAVDVC»]to $0.60 «PLJFVD8M»]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 three months ended March 31, 2013, the Company issued 2,576,825 «PLJAV9ZR»]shares of common stock and a further 323,110 «PLJFV8S4»]shares became issuable in the year in connection with stock-based compensation arrangements. These shares were valued at amounts ranging from $0.28 «PJJFVCLN»]to $0.30 «PJJAVCVV»]per share and resulted in management fees expenses of $165,989 «PJJAVACC»]and consulting fees expenses of $284,081«PLJAVX91»]. Of these expenses, $331,978 «PLJAVZPS»]resulted from a reduction of deferred stock based compensation.