XTSE:LVN Annual Report 20-F Filing - 3/31/2012

Effective Date 3/31/2012



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

FORM 20-F

o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended March 31, 2012
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ______
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report:
          
Commission file number: 000-13248
 

LEVON RESOURCES LTD.
 (Exact name of Registrant as specified in its charter)

Province of British Columbia, Canada
(Jurisdiction of incorporation or organization)

570 Granville Street, Suite 900
Vancouver, British Columbia V6C 3P1, Canada
(Address of principal executive offices)

Ron Tremblay
570 Granville Street, Suite 900
Vancouver, British Columbia V6C 3P1, Canada
Tel: 604-682-3701
Email: rontremblay@levon.com
 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:   Common Shares, no par value

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock as of the close of the period covered by the annual report:  199,754,423 common shares as at March 31, 2012

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes  No x

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. Yes x No o

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 (§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). Yes o No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one)
 
Large accelerated filer o Accelerated filer x Non-accelerated filer o
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP o International Financial Reporting Standards as issued by the International Accounting Standards Board x Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o                      Item 18  o

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o  No x
 


 
 

 
TABLE OF CONTENTS
 
INTRODUCTION      1  
           
CURRENCY      1  
           
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS      1  
           
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING RESERVE AND RESOURCE ESTIMATES      3  
           
EXPLANATORY NOTE REGARDING PRESENTATION OF FINANCIAL INFORMATION     3  
           
GLOSSARY OF MINING TERMS      4  
           
PART I      6  
           
Item 1.
Identity of Directors, Senior Management and Advisors 
    6  
Item 2.
Offer Statistics and Expected Timetable 
    6  
Item 3.
Key Information 
    6  
Item 4.
Information on the Company 
    18  
Item 5.
Operating and Financial Review and Prospects 
    42  
Item 6.
Directors, Senior Management and Employees 
    51  
Item 7.
Major Shareholders and Related Party Transactions 
    64  
Item 8.
Financial Information 
    66  
Item 9.
The Offer and Listing 
    66  
Item 10.
Additional Information 
    68  
Item 11.
Quantitative and Qualitative Disclosures about Market Risk 
    80  
Item 12.
Description of Securities Other than Equity Securities 
    81  
           
PART II      82  
           
Item 13.
Defaults, Dividend Arrearages and Delinquencies 
    82  
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds 
    82  
Item 15.
Controls and Procedures 
    82  
Item 16A.
Audit Committee Financial Expert 
    83  
Item 16B.
Code of Ethics 
    83  
Item 16C.
Principal Accountant Fees and Services 
    83  
Item 16D.
Exemptions from the Listing Standards for Audit Committees 
    84  
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers 
    84  
Item 16F.
Changes in Registrants Certifying Accountant 
    84  
Item 16G.
Corporate Governance 
    84  
Item 16H.
Mine Safety Disclosure 
    84  
           
PART III      85  
           
Item 17.
Financial Statements 
    85  
Item 18.
Financial Statements 
    85  
Item 19.
Exhibits 
    85  
 
 
 

 

Introduction

In this annual report on Form 20-F, which we refer to as the "Annual Report", except as otherwise indicated or as the context otherwise requires, the "Company", "we", “our” or "us" refers to Levon Resources Ltd.
Currency

Unless we otherwise indicate in this Annual Report, all references to "Canadian Dollars", "CDN$" or "$" are to the lawful currency of Canada and all references to "U.S. Dollars" or "US $" are to the lawful currency of the United States.

Cautionary Note Regarding Forward-Looking Statements

This Annual Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and within the meaning of applicable Canadian securities regulations. Such forward-looking statements concern the Company’s anticipated results and developments in the our operations in future periods, planned exploration and, if warranted, development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

·  
risks related to the uncertainty regarding our ability to continue as a going concern;
 
·  
risks related to our history of losses and our need to raise additional capital to continue our operations and to mine our properties;
 
·  
risks related to our lack of history of producing metals from our mineral properties;
 
·  
risks related to increased costs affecting our financial condition;
 
·  
risks related to shortages of equipment and supplies;
 
·  
risks related to mining and resource exploration being an inherently dangerous activity;
 
·  
risks related to resource estimates;
 
·  
risks related to material changes in resource estimates;
 
·  
risks related to the mining industry being highly speculative and involving substantial risks;
 
·  
risks related to our properties being in the exploration stage;
 
·  
risks related to fluctuations in the market prices of commodities, including gold;
 
·  
risks related obtaining necessary permits and licenses;
 
·  
risks related to our activities being subject to governmental, environmental and other regulations;
 
·  
risks related to pending and potential future regulations regarding climate change;
 
·  
risks related to land reclamation costs;
 
·  
risks related to our activities being subject to potential political and economic instability and unexpected regulatory change;
 
 
1

 
 
·  
risks related to our lack of insurance coverage for certain activities;
 
·  
risks related to potential litigation;
 
·  
risks related to our acquisition activities;
 
·  
risks related to competition in the mining industry;
 
·  
risks related to potential conflicts of interest of our management;
 
·  
risks related to our dependence on our management;
 
·  
risks related to our managing growth;
 
·  
risks related to foreign currency fluctuations;
 
·  
risks related to differences in US and Canadian reporting practices for mineral reserve and resource estimates;
 
·  
risks related to potential joint ventures and partnerships;
 
·  
risks related to evolving corporate governance and public disclosure standards;
 
·  
risks related to uncertainty regarding claims of title and right of aboriginal people;
 
·  
risks related to our not having paid dividends to date;
 
·  
risks related to our stock price and volume being volatile; and
 
·  
risks related to our being a foreign private issuer.

This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements.  Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section heading “Item 3. Key Information – D. Risk Factors” below.  If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected.  Forward-looking statements in this document are not a prediction of future events or circumstances, and those future events or circumstances may not occur.  Given these uncertainties, users of the information included herein, including investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements.  Investors should consult the Company’s quarterly and annual filings with Canadian securities commissions and the United States Securities and Exchange Commission (the “SEC”) for additional information on risks and uncertainties relating to forward-looking statements.  We do not assume responsibility for the accuracy and completeness of these statements.
 
Forward-looking statements are based on our beliefs, opinions and expectations at the time they are made, and the Company does not assume any obligation to update forward-looking statements if those beliefs, opinions, or expectations, or other circumstances, should change, except as required by applicable law.
 
 
2

 
 
The Company qualifies all the forward-looking statements contained in this Annual Report by the foregoing cautionary statements.

Cautionary Note to United States Investors Concerning Reserve and Resource Estimates

As used in this Annual Report, the terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101—Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”)—CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the SEC’s Industry Guide 7 (“SEC Industry Guide 7”) under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
 
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all, or any part, of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Guide 7 standards as in place tonnage and grade without reference to unit measures.
 
Accordingly, information contained in this Annual Report and the documents incorporated by reference herein contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

Explanatory Note Regarding Presentation of Financial Information
 
The annual audited consolidated financial statements contained in this annual report on Form 20-F are reported in Canadian dollars. For all periods up to and including the year ended March 31, 2012, we prepared our consolidated financial statements in accordance with International Financial Reporting Standards (‘‘IFRS’’). The annual audited consolidated financial statements for the year ended March 31, 2012 are our first annual consolidated financial statements that have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (‘‘IASB’’) and IFRS 1, First Time Adoption of International Financial Reporting Standards. See International Financial Reporting Standards — Transition from Canadian GAAP to IFRS in our ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ included in this annual report on Form 20-F under ‘‘Item 5 — Operating and Financial Review and Prospects.’’
 
We have prepared the annual audited consolidated financial statements that comply with IFRS as described in the accounting policies in Note 2 of our annual audited consolidated financial statements. In preparing the annual audited consolidated financial statements, our opening statement of financial position was prepared at April 1, 2010, our date of transition to IFRS. Note 17 of our annual audited consolidated financial statements explains the principal adjustments we made in restating our previously published Canadian GAAP statements of financial position as at April 1, 2010 and March 31, 2011 and our previously published Canadian GAAP consolidated statements of operations and comprehensive loss for the year ended March 31, 2011.
 
 
3

 
 
Glossary of Mining Terms
 
au
 
The elemental symbol for gold.
anomalous
 
A value, or values, in which the amplitude is statistically between that of a low contrast anomaly and a high contrast anomaly in a given data set.
anomaly
 
Any concentration of metal noticeably above or below the average background concentration.
assay
 
An analysis to determine the presence, absence or quantity of one or more components.
breccia
 
A rock in which angular fragments are surrounded by a mass of finer-grained material.
chert
 
A rock resembling flint and consisting essentially of crypto-crystalline quartrz or fibrous chalcedony.
cretaceous
 
The geologic period extending from 135 million to 65 million years ago.
cubic meters or m3
 
A metric measurement of volume, being a cube one meter in length on each side.
diamond drill
 
A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, two centimeters or more in diameter.
fault
 
A fracture in a rock where there has been displacement of the two sides.
grade
 
The concentration of each ore metal in a rock sample, usually given as weight percent. Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t or gpt) or ounces per ton (oz/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
hectare or ha
 
An area totaling 10,000 square meters.
highly anomalous
 
An anomaly which is 50 to 100 times average background, i.e. it is statistically much greater in amplitude.
intrusive
 
A rock mass formed below earth’s surface from magna which has intruded into a preexisting rock mass.
laterite
 
A residual product of rock decay that is red in color and has a high content in the oxides of iron and hydroxide of aluminum.
lode claim
 
A mining claim on an area containing a known vein or lode.
mineral reserve
 
The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of the reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral resources are sub-divided in order of increasing confidence into "probable" and "proven" mineral reserves. A probable mineral reserve has a lower level of confidence than a proven mineral reserve. The term "mineral reserve" does not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals.
Cautionary Note to U.S. Investors:  Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” above.
mineral resource 
 
 
The estimated quantity and grade of mineralization that is of potential economic merit. A resource estimate does not require specific mining, metallurgical, environmental, price and cost data, but the nature and continuity or mineralization must be understood. Mineral resources are sub-divided in order of increasing geological confidence into "inferred", "indicated", and "measured" categories. An inferred mineral resource has a lower level of confidence than that applied to an indicated mineral resource. An indicated mineral resource has a higher level of confidence than an inferred mineral resource, but has a lower level of confidence than a measured mineral resource. A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such grade or quality that it has reasonable prospects for economic extraction.
Cautionary Note to U.S. Investors:  Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” above.
 
 
4

 
 
mineralization
 
Usually implies minerals of value occurring in rocks.
net smelter or NSR
 
Payment of a percentage of net mining profits after deducting applicable smelter charges.
Ore
 
A natural aggregate of one or more minerals which may be mined and sold at a profit, or from which some part may be profitably separated.
outcrop
 
An exposure of rock at the earth’s surface.
porphyry
 
Rock type with mixed crystal sizes, ie. containing larger crystals of one or more minerals.
possible or inferred ore
 
 
Term used to describe ore where the mineralization is believed to exist on the basis of some geological information, but the size, shape, grade, and tonnage are a matter of speculation.
prefeasibility study and preliminary feasibility study
 
 
Each means a comprehensive study of the viability of a mineral project that has advanced to a stage where mining method, in the case of underground mining, or the pit configuration, in the case of open pit mining, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating and economic factors, and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve.
probable mineral reserve
 
The economically mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated by at least a prefeasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
Cautionary Note to U.S. Investors:  Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” above.
proven mineral reserve
 
The economically mineable part of a measured mineral resource demonstrated by at least a prefeasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified. The term should be restricted to that part of the deposit where production planning is taking place and for which any variation in the estimate would not significantly affect potential economic viability.
Cautionary Note to U.S. Investors:  Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” above.
pyrite
 
Iron sulphide mineral.
quartz
 
Silica or SiO2, a common constituent of veins, especially those containing gold and silver mineralization.
silification
 
A  process of fossilization whereby the original organic components of an organism are replaced by silica, as quartz chalcedony, or opal.
sulfidation
 
In conditioning a flotation pulp, addition of soluble alkaline sulfides in aqueous solution to produce a sulfide-metal layer on an oxidized ore surface.
ton
 
Imperial measurement of weight equivalent to 2,000 pounds.
tonne
 
Metric measurement of weight equivalent to 1,000 kilograms (or 2,204.6 pounds).
trench
 
A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure.
veins
 
The mineral deposits that are found filling openings in rocks created by faults or replacing rocks on either side of faults.
 
 
5

 

Part I

Item 1.
Identity of Directors, Senior Management and Advisors

Not applicable

Item 2.
Offer Statistics and Expected Timetable

Not applicable

Item 3.
Key Information

A. 
Selected Financial Data

The selected historical consolidated financial information set forth below has been derived from our annual audited consolidated financial statements.
 
For the years ended March 31, 2012 and 2011, we have prepared our consolidated financial statements in accordance with IFRS, as issued by the IASB. Our March 31, 2011 consolidated financial statements were initially prepared in accordance with Canadian GAAP, consistent with the prior years and the periods ended March 31, 2010, 2009, and 2008. We have adjusted our consolidated financial information at and for the year ended March 31, 2011, in accordance with IFRS 1, and therefore the financial information set forth in this annual report on Form 20-F for the year ended March 31, 2011 may differ from information previously published. We adopted IFRS with a transition date of April 1, 2010. For details regarding the adjustments made with respect to the comparative data refer to Note 17 to our annual audited consolidated financial statements contained in this annual report on Form 20-F.
 
The selected historical consolidated financial information presented below is condensed and may not contain all of the information that you should consider. This selected financial data should be read in conjunction with our annual audited consolidated financial statements, the notes thereto and the sections entitled “Item 3. Key Information – D. Risk Factors”  and ‘‘Item 5 — Operating and Financial Review and Prospects.’’

In accordance with IFRS
 
The tables below set forth selected consolidated financial data under IFRS for the years ended March 31, 2012 and 2011. The information has been derived from our annual audited consolidated financial statements set forth in ‘‘Item 17 — Financial Statements.’’

In this Annual Report all dollars are expressed in Canadian dollars unless otherwise stated.

 
March 31, 2012
(IFRS)
March 31, 2011
(IFRS)
 
Total Revenues
$
-
$
-
Loss before other items
(13,735,479)
(24,684,097)
Net Loss for the Year
(13,124,833)
(24,642,101)
Net Comprehensive Loss for the Year
(13,140,449)
(24,642,655)
Loss per Share, Basic and Diluted
(0.07)
(0.31)
Total Assets
184,859,967
145,255,935
Total Liabilities
708,372
861,595
Working Capital
58,048,017
19,608,972
Share Capital
230,608,666
169,689,837
Total Equity
184,151,595
144,394,340
Weighted Average Number of Common Shares Outstanding
194,269,099
78,689,400
 
 
6

 

Exchange Rates

The following table sets forth information as to the period end, average, the high and the low exchange rate for Canadian Dollars and U.S. Dollars for the periods indicated based on the noon buying rate in New York City for cable transfers in Canadian Dollars as certified for customs purposes by the Federal Reserve Bank of New York (Canadian dollar = US$1).

Year Ended March 31,
 
Average
   
Period End
   
High
   
Low
 
2008
    1.0327       1.0279       1.1584       0.9170  
2009
    1.1264       1.2602       1.3000       0.9844  
2010
    1.0904       1.0156       1.2643       1.0113  
2011
    1.0163       0.9718       1.0778       0.9686  
2012
    1.0172       0.9991       1.0604       0.9449  
 
The following table sets forth the high and low exchange rate for the past six months based on the noon buying rate.  As of July 5, 2012, the exchange rate was CDN$1.0191 for each US$1.00.

Month
 
High
   
Low
 
Jan 2012
    1.0014       0.9735  
Feb 2012
    1.0016       0.9866  
March 2012
    1.0153       0.9985  
April 2012
    1.0197       0.9961  
May 2012
    1.0164       0.9663  
June 2012
    0.9825       0.9599  

B.
Capitalization and Indebtedness

Not Applicable.

C.
Reasons for the Offer and Use of Proceeds

Not Applicable.

D. 
Risk Factors

In addition to the other information presented in this Annual Report, the following should be considered carefully in evaluating us and our business. This Annual Report contains forward-looking statements that involve risk and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below and elsewhere in this Annual Report.
 
 
7

 
 
Risk Related to Our Operations

There is uncertainty regarding our ability to continue as a going concern.

Our ability to continue as a going concern is uncertain and dependent upon obtaining the financing necessary to meet our financial commitments and to complete the exploration, and if warranted, development of our properties and/or realizing proceeds from the sale of one or more of our properties. Our continuation as a going concern is dependent upon continued financial support from our shareholders, our ability to obtain necessary equity financing to continue operations, confirmation of our interests in the underlying properties, and the attainment of profitable operations. As a result, there is uncertainty about our ability to continue as a going concern. There is no assurance that we will be able to raise sufficient cash to fund our future exploration programs and operational expenditures. Our financial statements do not include the adjustments that would be necessary if we were unable to continue as a going concern.
 
We have a history of losses and we will be required to raise additional capital to continue our operations and to mine our properties.

We have not been profitable since our inception. For the fiscal year ended March 31, 2012, we had a net loss of $13,124,833 and an accumulated deficit on March 31, 2012 of $62,899,323. We have not generated revenues from operations and do not expect to generate revenues from operations until one or more of our properties are placed in production. All of our properties are in the exploration stage, which means that we have known mineral reserves on our properties. We currently do not have sufficient funds to fully complete exploration and development work on any of our properties, which means that we will be required to raise additional capital, enter into joint venture relationships or find alternative means to finance placing one or more of our properties into commercial production, if warranted. If the Company fails to raise additional funds it will curtail its activities and may risk being unable to maintain its interests in its mineral properties.

Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration, and, development or production on one or more of our properties and any properties we may acquire in the future or even a loss of property interests. This includes our leases over claims covering the principal deposits on our properties, which may expire unless we expend minimum levels of expenditures over the terms of such leases. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Future financings may cause dilution to our shareholders.

We have no history of producing metals from our mineral properties.

We have no history of producing metals from any of our properties. Our properties are all exploration stage properties in various stages of exploration. Advancing properties from exploration into the development stage requires significant capital and time and successful commercial production from a property, if any, will be subject to completing feasibility studies, permitting and construction of the mine, processing plants, roads, and other related works and infrastructure. As a result, we are subject to all of the risks associated with developing and establishing new mining operations and business enterprises including:
 
·
completion of feasibility studies to verify reserves and commercial viability, including the ability to find sufficient gold reserves to support a commercial mining operation;

·
the timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing facilities;

·
the availability and costs of drill equipment, exploration personnel, skilled labor and mining and processing equipment, if required;

·
the availability and cost of appropriate smelting and/or refining arrangements, if required;

·
compliance with environmental and other governmental approval and permit requirements;
 
 
8

 

·
the availability of funds to finance exploration, development and construction activities, as warranted;

·
potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent development activities; and

·
potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies.
 
The costs, timing and complexities of exploration, development and construction activities may be increased by the location of our properties and demand by other mineral exploration and mining companies. It is common in exploration programs to experience unexpected problems and delays during drill programs and, if warranted, development, construction and mine start-up. Accordingly, our activities may not result in profitable mining operations and we may not succeed in establish mining operations or profitably producing metals at any of our properties.

Increased costs could affect our financial condition.

We anticipate that costs at our projects that we may explore or develop, will frequently be subject to variation from one year to the next due to a number of factors, such as changing ore grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location of the ore body. In addition, costs are affected by the price of commodities such as fuel, rubber and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.

A shortage of equipment and supplies could adversely affect our ability to operate our business.

We are dependent on various supplies and equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of production.

Mining and resource exploration is inherently dangerous and subject to conditions or events beyond our control, which could have a material adverse effect on our business and plans.

Mining and mineral exploration involves various types of risks and hazards, including:

·
environmental hazards;
·
power outages;
·
metallurgical and other processing problems;
·
unusual or unexpected geological formations;
·
personal injury, flooding, fire, explosions, cave-ins, landslides and rock-bursts;
·
inability to obtain suitable or adequate machinery, equipment, or labor;
·
metals losses;
·
fluctuations in exploration, development and production costs;
·
labor disputes;
·
unanticipated variations in grade;
·
mechanical equipment failure; and
·
periodic interruptions due to inclement or hazardous weather conditions .

These risks could result in damage to, or destruction of, mineral properties, production facilities or other properties, personal injury, environmental damage, delays in mining, increased production costs, monetary losses and possible legal liability. We may not be able to obtain insurance to cover these risks at economically feasible premiums. Insurance against certain environmental risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from production, is not generally available to us or to other companies within the mining industry. We may suffer a material adverse effect on our business if we incur losses related to any significant events that are not covered by our insurance policies.
 
 
9

 

The figures for our resources are estimates based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.

Unless otherwise indicated, mineralization figures presented in this Annual Report and in our filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are based upon estimates made by independent geologists and our internal geologists.  When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineral reserves and grades of mineralization on our properties.  Until ore is actually mined and processed, mineral reserves and grades of mineralization must be considered as estimates only. Whether an ore body will be commercially viable depends on a number of factors including the particular attributes of the deposit, such as size, grade and proximity to infrastructure, as well as mineral prices and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in a mineral deposit being unprofitable.

Estimates can be imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. We cannot assure you that:

·
these estimates will be accurate;
·
resource or other mineralization estimates will be accurate; or
·
this mineralization can be mined or processed profitably.

Any material changes in mineral resource estimates and grades of mineralization will affect the economic viability of placing a property into production and a property’s return on capital.

As we have not completed feasibility studies on all of our properties and have not commenced actual production, mineralization resource estimates may require adjustments or downward revisions. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by our feasibility studies and drill results. Minerals recovered in small scale tests may not be duplicated in large scale tests under on-site conditions or in production scale.
 
The resource estimates contained in this Annual Report have been determined and valued based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in market prices for gold, silver or other commodities may render portions of our mineralization and resource estimates uneconomic and result in reduced reported mineralization or adversely affect the commercial viability determinations we reach. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our share price and the value of our properties.

The mining industry is highly speculative and involves substantial risks.

The mining industry, from exploration, development and production is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits, which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by us may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection, the combination of which factors may result in us not receiving an adequate return on investment capital.
 
 
10

 

Our properties are all at the exploration stage and have no proven reserves. Our exploration activities on our properties may not be commercially successful, which could lead us to abandon our plans to develop the property and our investments in exploration.

Our long-term success depends on our ability to identify mineral deposits on our existing properties and other properties we may acquire, if any, that we can then develop into commercially viable mining operations.  Despite exploration work on our mineral claims, no known bodies of commercial ore or economic deposits have been established on any of our properties. In addition, we are at the exploration stage on all of our properties and substantial additional work will be required in order to determine if any economic deposits occur on our properties. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate machinery, equipment or labor. The success of gold, silver and other commodity exploration is determined in part by the following factors:

·
the identification of potential mineralization based on surficial analysis;
·
availability of government-granted exploration permits;
·
the quality of our management and our geological and technical expertise; and
·
the capital available for exploration and development work.

Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes to extract metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining.

Even in the event commercial quantities of minerals are discovered, the exploration properties might not be brought into a state of commercial production. Finding mineral deposits is dependent on a number of factors, including the technical skill of exploration personnel involved. Whether a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon a project may have an adverse effect on the market value of our securities and the ability to raise future financing.

Changes in the market price of gold, silver and other metals, which in the past has fluctuated widely, will affect the profitability of our operations and financial condition.

Our long-term viability and future profitability depend, in large part, upon the market price of gold and other metals and minerals produced from our mineral properties. The market price of gold and other metals is volatile and is impacted by numerous factors beyond our control, including:

·
expectations with respect to the rate of inflation;
·
the relative strength of the U.S. dollar and certain other currencies;
·
interest rates;
·
global or regional political or economic conditions;
·
supply and demand for jewelry and industrial products containing metals;
·
sales by central banks and other holders, speculators and producers of gold and other metals in response to any of the above factors; and
·
any executive order curtailing the production or sale of gold.

We cannot predict the effect of these factors on metal prices. Gold prices quoted in US dollars have fluctuated during the last several years. The price of gold (London Fix) has ranged from $1,316 to $1,896 per ounce during calendar 2011, closing at $1,574.50 on December 30, 2011; $1,058 to $1,421 per ounce during calendar 2010, closing at $1,405.50 on December 30, 2010; $810 to $1,212 per ounce during calendar 2009, closing at $1,087 on December 30, 2009; from $712 to $1,011 per ounce during calendar 2008, closing at $865 on December 31, 2008.
 
 
11

 

A decrease in the market price of gold and other metals could affect the commercial viability of our properties and our anticipated development of such properties in the future.  Lower gold prices could also adversely affect our ability to finance exploration and development of our properties.

We may not be able to obtain all required permits and licenses to place any of our properties into production.

Our operations require licenses and permits from various governmental authorities. We believe that we hold all necessary licenses and permits under applicable laws and regulations and believe that we are presently complying in all material respects with the terms of such licenses and permits. However, such licenses and permits are subject to change in various circumstances. There can be no guarantee that we will be able to obtain or maintain all necessary licenses and permits as are required to explore and develop its properties, commence construction or operation of mining facilities and properties under exploration or development or to maintain continued operations that economically justify the cost.

Our exploration activities are subject to various federal, provincial, state and local laws and regulations.

Laws and regulations govern the exploration, development, mining, production, importing and exporting of minerals; taxes; labor standards; occupational health; waste disposal; protection of the environment; mine safety; toxic substances; and other matters. In many cases, licenses and permits are required to conduct mining operations. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a substantial adverse impact on us. Applicable laws and regulations will require us to make certain capital and operating expenditures to initiate new operations. Under certain circumstances, we may be required to stop our exploration activities once we are started until a particular problem is remedied or to undertake other remedial actions.

Our activities are subject to environmental laws and regulations that may increase our costs of doing business and restrict our operations.

All phases of our operations are subject to environmental regulation in the jurisdictions in which we operate. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Compliance with environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays and may cause material changes or delays in our operations and future activities. It is possible that future changes in these laws or regulations could have a significant adverse impact on our properties or some portion of our business, causing us to re-evaluate those activities at that time.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our business.

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our venture partners and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.
 
 
12

 

Land reclamation requirements for our properties may be burdensome and expensive.

Although variable depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as well as companies with mining operations) in order to minimize long term effects of land disturbance.

Reclamation may include requirements to:

·
control dispersion of potentially deleterious effluents;
·
treat ground and surface water to drinking water standards; and
·
reasonably re-establish pre-disturbance land forms and vegetation.

In order to carry out reclamation obligations imposed on us in connection with our potential development activities, we must allocate financial resources that might otherwise be spent on further exploration and development programs. We plan to set up a provision for our reclamation obligations on our properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.
 
Our operations are subject to potential political or economic instability and unexpected regulatory change.
 
Certain of our properties are located in countries, provinces and states more likely to be subject to political and economic instability, or unexpected legislative change, than is usually the case in certain other countries, provinces and states.  Our mineral exploration activities could be adversely effected by:
 
·
political instability and violence;
 
·
war and civil disturbances;
 
·
expropriation or nationalization;
 
·
changing fiscal regimes;
 
·
fluctuations in currency exchange rates;
 
·
high rates of inflation;
 
·
underdeveloped industrial and economic infrastructure;
 
·
changes in the regulatory environment governing mineral properties; and
 
·
unenforceability of contractual rights,
 
any of which may adversely affect our business in that country.
 
 
13

 

We do not maintain insurance with respect to certain high-risk activities, which exposes us to significant risk of loss.

Mining operations generally involve a high degree of risk. Hazards such as unusual or unexpected formations or other conditions are often encountered. We may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it cannot maintain insurance at commercially reasonable premiums. Any significant claim would have a material adverse effect on our financial position and prospects. We are not currently covered by any form of environmental liability insurance, or political risk insurance, since insurance against such risks (including liability for pollution) may be prohibitively expensive. We may have to suspend operations or take cost interim compliance measures if we are unable to fully fund the cost of remedying an environmental problem, if it occurs.

We may be subject to costly litigation.

Although we are not currently subject to litigation, we may become involved in disputes with other parties in the future, which may result in litigation. Any litigation could be costly and time consuming and could divert our management from our business operations. In addition, if we are unable to resolve any litigation favorably, it may have a material adverse impact on our financial performance, cash flow and results of operations.

Our acquisition activities may expose us to additional risks in the future.

We undertake evaluations of opportunities to acquire additional mining properties.  Any resultant acquisitions may be significant in size, may change the scale of our business, and may expose us to new geographic, political, operating, financial and geological risks. Our success in its acquisition activities depends on our ability to identify suitable acquisition candidates, acquire them on acceptable terms, and integrate their operations successfully. Any acquisitions would be accompanied by risks, such as a significant decline in the price of gold or silver, the ore body proving to be below expectations, the difficulty of assimilating the operations and personnel of any acquired companies, the potential disruption of our ongoing business, the inability of management to maximize the financial and our strategic position through the successful integration of acquired assets and businesses, the maintenance of uniform standards, controls, procedures and policies, the impairment of relationships with customers and contractors as a result of any integration of new management personnel and the potential unknown liabilities associated with acquired mining properties. In addition, we may need additional capital to finance an acquisition.  Historically, we have raised funds through equity financing and the exercise of options and warrants. However, the market prices for natural resources are highly speculative and volatile. Accordingly, instability in prices may affect interest in resource properties and the development of and production from such properties that may adversely affect our ability to raise capital to acquire and explore resource properties. There can be no assurance that we would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.

We  operate in a highly competitive industry.

We compete with other developmental resource companies, which have similar operations, and many competitors have operations, financial resources, and industry experience greater than us. We may encounter increasing competition from other mining companies in our efforts to acquire mineral properties and hire experienced resource industry professionals. Increased competition in our business could adversely affect our ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.

There is a limited supply of desirable mineral lands available for acquisition, claim staking or leasing in the areas where we contemplate expanding our operations and conducting exploration activities. Many participants are engaged in the mining business, including large, established mining companies. Accordingly, there can be no assurance that we will be able to compete successfully for new mining properties.
 
Competition for recruitment and retention of qualified personnel.
 
We compete with other exploration companies, many of which have greater financial resources than us or are further in their development, for the recruitment and retention of qualified employees and other personnel.  Competition for exploration resources at all levels is currently very intense, particularly affecting the availability of manpower, drill rigs and supplies.  If we require and are unsuccessful in acquiring additional personnel or other exploration resources, we will not be able to grow at the rate we desire or at all.
 
 
14

 

Our directors and officers may have conflicts of interest as a result of their relationships with other companies.

Certain of our directors and officers are officers and/or directors of, or are associated with, other natural resource companies that acquire interests in mineral properties. Such associations may give rise to conflicts of interest from time to time. The directors are required by law, however, to act honestly and in good faith with a view to our best interests and those of our shareholders and to disclose any personal interest which they may have in any material transaction which is proposed to be entered into with us and to abstain from voting as a director for the approval of any such transaction.

We are dependent on our management.
 
We are dependent on the services of key executives including our President and Chief Executive Officer and other highly skilled and experienced executives and personnel focused on advancing our corporate objectives as well as the identification of new opportunities for growth and funding.  Due to our relatively small size, the loss of these persons or our inability to attract and retain additional highly skilled employees required for our activities may have a material adverse effect on our business and financial condition.
 
We are subject to foreign currency fluctuations.

We operate in more than one country and our functional currency is the Canadian Dollar. Our offices are located in Canada, and certain of its mining exploration properties are located in Mexico and the United States. The Company’s financial results are reported in Canadian Dollars. Any appreciation in the currency of the United States, Mexico or other countries where we may carryout exploration activities against the Canadian or U.S. Dollar will increase our costs of carrying out operations in such countries.  Fluctuations in and among the various currencies in which the Company operates could have a material effect on the Company’s operations and its financial results.

There are differences in U.S. and Canadian practices for reporting reserves and resources.

Our reserve and resource estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally report reserves and resources in accordance with Canadian practices. These practices are different from the practices used to report reserve and resource estimates in reports and other materials  filed with the SEC. It is Canadian practice to report measured, indicated and inferred resources, which are generally not permitted in disclosure filed with the SEC by United States issuers. In the United States, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves.

Further, "inferred resources" have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure of "contained ounces" is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report "resources" as in place tonnage and grade without reference to unit measures.

Accordingly, information concerning descriptions of mineralization, reserves and resources contained in this report, or in the documents incorporated herein by reference, may not be comparable to information made public by other United States companies subject to the reporting and disclosure requirements of the SEC.

Joint ventures and other partnerships may expose us to risks.

In the future, we may enter into joint ventures or other partnership arrangements with other parties in relation to the exploration, development and production of certain of the properties in which we have an interest. Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution, amendments of constating documents, and the pledge of joint venture assets, which means that each joint venture party may have a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint venture or partnership. Further, we may be unable to exert control over strategic decisions made in respect of such properties. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or their properties and therefore could have a material adverse effect on our results of operations, financial performance, cash flows and the price of our common shares.
 
 
15

 

Our business is subject to evolving corporate governance and public disclosure regulations that have increased both our compliance costs and the risk of noncompliance, which could have an adverse effect on our stock price.

We are subject to changing rules and regulations promulgated by a number of governmental and self-regulated organizations, including the SEC. These rules and regulations continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance more difficult and uncertain. For example, on July 21, 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) with increased disclosure obligations for public companies and mining companies in the United States. Our efforts to comply with the Dodd-Frank Act and other new regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Risks Related to Our Securities

Our common shares have limited and volatile trading volume.

Although our common shares are listed on the TSX Exchange, referred to as the “TSX” and the Frankfurt Stock Exchange, referred to as the “FSE”, and are occasionally traded in the United States on the “grey market”, the volume of trading has been limited and volatile in the past and is likely to continue to be so in the future, reducing the liquidity of an investment in our common shares and making it difficult for investors to readily sell their shares in the open market. Without a liquid market for our common shares, investors may be unable to sell their shares at favorable times and prices and may be required to hold their shares in declining markets or to sell them at unfavorable prices.

Our common shares have experienced volatility in  share price.

In recent years, securities markets in Canada have experienced a high level of price volatility. The market price of many resource companies, particularly those, like us, that are considered speculative exploration companies, have experienced wide fluctuations in price, resulting in substantial losses to investors who have sold their shares at a low price point. These fluctuations are based only in part on the level of progress of exploration, and can reflect general economic and market trends, world events or investor sentiment, and may sometimes bear no apparent relation to any objective factors or criteria. During the 2012 fiscal year, our common share fluctuated on the TSX between a low of $0.66 and a high of $2.38.  Subsequent to the 2012 fiscal year, our common share price has fluctuated between a low of $0.38 and a high of $0.72.  Significant fluctuations in our common share price is likely to continue, and could potentially increase in the future.

U.S. investors may experience difficulty in effecting service of process against us.

We are incorporated under the laws of the Province of British Columbia, Canada. Consequently, it will be difficult for United States investors to affect service of process in the United States upon our directors or officers, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States securities laws. The majority of our directors and officers are residents of Canada. A judgment of a United States court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the United State court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.
 
 
16

 


We believe that we may be a "passive foreign investment company" for the current taxable year which would likely result in materially adverse United States federal income tax consequences for United States investors.

 We generally will be designated as a "passive foreign investment company" under the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (a "PFIC") if, for a tax year, (a) 75% or more of our gross income for such year is "passive income" (generally, dividends, interest, rents, royalties, and gains from the disposition of assets producing passive income) or (b) if at least 50% or more of the value of our assets produce, or are held for the production of, passive income, based on the quarterly average of the far market value of such assets.  United States shareholders should be aware that we believe we were classified as a PFIC during its tax year ended March 31, 2012, and may be a PFIC for future taxable years.  If we are a PFIC for any taxable year during which a United States person holds our securities, it would likely result in materially adverse United States federal income tax consequences for such United States person. The potential consequences include, but are not limited to, re-characterization of gain from the sale of our securities as ordinary income and the imposition of an interest charge on such gain and on certain distributions received on our common shares.  Certain elections may be available under U.S. tax rules to mitigate some of the adverse consequences of holding shares in a PFIC.  See “Taxation – Certain United States Federal Income Tax Consequences – Passive Foreign Investment Company Rules” below.  Each United States shareholder should consult its own tax advisor regarding the U.S. and non-U.S. tax consequences relating to the acquisition, ownership and disposition of common shares, including the application of the PFIC rules.

We do not currently intend to pay cash dividends.

We have never declared or paid cash dividends on our common shares. We currently intend to retain future earnings to finance the operation, development and expansion of our business. We do not anticipate paying cash dividends on our common shares in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant. Accordingly, investors will only see a return on their investment if the value of our securities appreciates.

As a foreign private issuer, our shareholders may have less complete and timely data.
 
We are a “foreign private issuer” as defined in Rule 3b-4 under the United States Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”). Our equity securities are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the U.S. Exchange Act pursuant to Rule 3a12-3 of the U.S. Exchange Act. Therefore, we are not required to file a Schedule 14A proxy statement in relation to the annual meeting of shareholders. The submission of proxy and annual meeting of shareholder information on Form 6-K may result in shareholders having less complete and timely information in connection with shareholder actions. The exemption from Section 16 rules regarding reports of beneficial ownership and purchases and sales of common shares by insiders and restrictions on insider trading in our securities may result in shareholders having less data and there being fewer restrictions on insiders’ activities in our securities.
 
Penny stock rules may make it more difficult to trade our common shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks".  Generally, penny stocks are equity securities with a price of less than US$5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system).  Since our common shares are traded for less than US$5.00 per share, the shares are subject to the SEC’s penny stock rules.  Our common shares will be subject to the penny stock rules until such time as (1) the issuer's net tangible assets exceed US$5,000,000 during the issuer's first three years of continuous operations or US$2,000,000 after the issuer's first three years of continuous operations; or (2) the issuer has had average revenue of at least US$6,000,000 for three years.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prescribed by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer must obtain a written acknowledgement from the purchaser that the purchaser has received the disclosure document.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and 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 agreement to the transaction.  These requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.  Such rules and regulations may make it difficult for holders to sell our common shares, and they may be forced to hold it indefinitely.
 
 
17

 

Item 4.
Information on the Company

Cautionary Note to United States Investors
 
We describe our properties utilizing mining terminology such as "measured resources",  "indicated resources" and “inferred resources” that are recognized and required by Canadian regulations but are not recognized by the SEC.  United States investors are cautioned not to assume that any part of the mineral deposits in these categories will ever be converted into reserves.

A. 
History and Development of the Company

The Company was incorporated by Memorandum of Association under the laws of the Province of British Columbia, Canada on April 9, 1965 under the name Alice Arm Mining Ltd.  On January 13, 1975 we changed the name from Alice Arm Mining Ltd. to New Congress Resources, and on January 12, 1983 adopted the name Levon Resources Ltd. The principal executive office of the Company is located at 570 Granville Street, Suite 900, Vancouver, British Columbia, Canada, V6C 3P1 and its phone number is 604-682-3701.

The Company is a natural resource company, primarily engaged in the acquisition, exploration and development of natural resource properties. In recent years, the Company’s principal business activities have been the exploration of mineral properties located in Mexico. In this last fiscal year, the Company acquired 100% ownership in the Cordero Property in Chihuahua, Mexico. Previously, the Company held a 51% ownership in the property.

In addition, the Company has claims in British Columbia, Canada and Nevada, U.S. The Company has completed exploration on these properties but has focused its attention in Mexico in recent years.  The British Columbia properties consist of interest in three mineral properties including the Congress, Goldbridge (also known as the “BRX claims) and Wayside claims.  The Nevada properties include interest in three mineral properties, the Eagle Claims, the Norma Sass and the Ruf Claims.

The Company’s common shares are listed on the TSX Exchange under the symbol “LVN”, and the Frankfurt Stock Exchange under the symbol “L09” and are occasionally traded in the United States on the “grey market” under the symbol “LVNVF”.

B. 
Business Overview

Operations and Principal Activities

Levon is a Canadian-based “exploration stage company” focusing on silver and gold exploration. The Company’s most recent activities have been conducted on the Cordero-Sanson Property located near Hidalgo Del Parral, Chihuahua, Mexico. The Cordero mining claims were comprised of claims wholly-owned by Valley High Ventures Ltd. (“Valley High”) by agreement with small local mining companies, and certain other claims that were staked by the Company. In February 2009, the Company signed a Letter of Intent with Valley High, whereby Levon would earn a 51% interest in Valley High’s wholly owned Cordero-Sanson Property (“Cordero”). On March 25, 2011, the Company acquired all of the shares of Valley High pursuant to a court-approved plan of arrangement (the “Arrangement”) giving the Company 100% ownership in the Cordero Property.
 
 
18

 

Prior years had exploration on the Congress Property located in the Lillooet Mining Division of British Columbia, Canada, where we hold interest in two other mineral properties, more particularly the Goldbridge (also known as the BRX) claims and the Wayside claims.

The Company also holds certain interests in three mineral properties located in the Bullion Mining District, Lander County, Nevada, USA, known as the Ruf and Norma Sass claims and the Eagle claims.

The Company is an "exploration stage company", as all of its properties are currently in the exploratory stage of development. The Company has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. There is no assurance that a commercially viable mineral deposit exists on any of its properties. In order to determine if a commercially viable mineral deposit exists further geological work will need to be done and a final evaluation based upon the results obtained to conclude economic and legal feasibility.

Significant Acquisitions and Significant Dispositions
 
On March 25, 2011, the Company acquired all of the shares of Valley High pursuant to a court-approved plan of arrangement (the “Arrangement”).  Prior to the Arrangement, Valley High was a Canadian based precious and base metal exploration company with projects located in Mexico, British Columbia and Yukon. Prior to the Arrangement, Valley High owned 49% of the Cordero Property and the Company held the remaining 51% interest.
 
Under the terms of the Arrangement, each former VHV shareholder received 1.0 share of the Company and 0.125 of a share of a new exploration company, Bearing Resources Ltd. ("Bearing"), for each VHV share held. In accordance with their terms, outstanding warrants of VHV were automatically adjusted so that upon exercise, subsequent to completion of the transaction, for each VHV share that would previously have been issued, the warrant holder will receive one common share of the Company, and instead of receiving 0.125 of a Bearing share, the exercise price of the warrant will be reduced by the fair value of 0.125 of a Bearing share. As consideration for the acquisition, a total of 73,322,636 common shares were issued to VHV shareholders at a fair value of $130,514,292 based on the market price of the Company’s common shares on March 25, 2011, and 6,259,550 warrants were issued to replace the old warrants of VHV on a one-to-one basis at a fair value of $6,599,565 based on the Black-Scholes option pricing model.  This transaction has been accounted for as an acquisition of assets. The excess of the consideration given over the fair value of the assets and liabilities acquired has been allocated to exploration and evaluation assets.  The allocation of the consideration given and net assets acquired of this transaction is summarized as follows:
 
Competition

The mining industry in which we are engaged is highly competitive. Competitors include well capitalized mining companies, independent mining companies and other companies having financial and other resources far greater than those of the Company’s. The companies compete with other mining companies in connection with the acquisition of gold and other precious metal properties. In general, properties with a higher grade of recoverable mineral and/or which are more readily minable afford the owners a competitive advantage in that the cost of production of the final mineral product is lower. Thus, a degree of competition exists between those engaged in the mining industries to acquire the most valuable properties. As a result, the Company may eventually be unable to acquire attractive gold mining properties.

Dependence on Customers and Suppliers
 
The Company is not dependent upon a single or few customers or suppliers for revenues or its operations.
 
 
19

 
 
Seasonality

Certain of the Company’s operations are conducted in British Columbia.  The weather during the colder seasons in these areas can be extreme and can cause interruptions or delays in the Company’s operations.  As a result, the preferable time for activities in these regions is the spring and summer when costs are more reasonable and access to the properties is easier.  In the summer months, however, if the weather has been unusually hot and dry, access to the Company’s properties may be limited as a result of access restrictions being imposed to monitor the risks of forest fires.

Government and Environmental Regulation

The current and anticipated future operations of the Company, including development activities and commencement of production on its properties, require permits from various federal, territorial and local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.  Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.  Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental agencies.  The Company believes it is in substantial compliance with all material laws and regulations which currently apply to its activities.  There can be no assurance, however, that all permits which the Company may require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations, or that new legislation or modifications to existing legislation, would not have an adverse effect on any exploration or mining project which the Company might undertake.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions.  Parties engaged in exploration and mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violation of applicable laws or regulations.

The enactment of new laws or amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in the development of new mining properties.

C.
Organizational Structure
 
The Company’s subsidiaries include the British Columbia incorporated wholly-owned Valley High Ventures, Ltd, three wholly-owned subsidiaries incorporated under the laws of Mexico, namely Administración de Proyectos Levon en México, S.A. de C.V., Minera Titan, S.A. de C.V. and Minera El Camino, S.A. de C.V. and three wholly owned subsidiaries incorporated under the laws of British Virgin Islands, namely Aphrodite Asset Holdings Ltd., Citrine Investments Limited and Turney Assets Limited.

D. 
Property, Plants and Equipment

Presently, the Company is an “exploration stage company”, as all of the Company’s properties are currently in the exploratory stage of development. In order to determine if a commercially viable mineral deposit exists in any of the Company’s properties, further exploration  work will need to be done and a final evaluation based upon the results obtained to conclude economic and legal feasibility.
 
 
20

 

In previous years, the Company focused its exploration activities on its properties located in British Columbia, Canada. These are located on the north side of Carpenter Lake, 90 kilometers west of the town of Lillooet, British Columbia, Canada and 4 kilometers northeast of the small town of Goldbridge (population 50) in the Lillooet Mining Division, NTS 092J15W.  Exploration there has been concluded and the properties are for sale.

The Company’s current focus is on the exploration of the Cordero property located in the Chihuahua State of Mexico.  The property and region host excellent infrastructure with ample power and water plus easy road access.  The nearby town of Hidalgo Del Parral (pop. 102,000), just 35 km southwest by road, offers a rail head, supplies and skilled mining labor.
 
Cordero Project, Chihuahua State, Mexico
 

Ownership.
 
The Company owns a 100% interest in the project which includes about 20,000 hectares of staked and optioned mining claims in two separate parcels.  A single 19 hectare claim is under negotiation to consolidate the entire district.  Notarized surface access agreements are in place with all surface rights owners for all the key central mining claims.  The surface access rights agreements with local family ranches are all transferable to third parties as are all underlying mining claim agreements within the historical Cordero mining district.
 
The Cordero project staked claims are owned 100% by Minera Titan S.A. de C.V. - a wholly owned Mexican subsidiary of Levon.  Optioned claims at the Cordero project are optioned to Minera Titan.

Mining claims owned by Levon through Minera Titan are staked claims, royalty free and good in perpetuity as long as annual assessment work and filings are completed.  Minera Titan purchased the mining concession named “San Pedro”, title 215161 from Minera de Cordilleras, S.A. de C.V. on August 4, 2010.  In the purchase agreement, a royalty of 2% NSR was agreed.  The royalty is only related to this lot.  The annual assessment work is minimal and annual reporting is due in May; the Company has satisfied its assessment and reporting requirements for 2011. Underlying agreements for mining claims are notarized option to purchase agreements, are good in perpetuity as long as payments are made subject to the underlying agreement

EXPLORATION AND OPTION AGREEMENT WITH MR. ELOY HERRERA. Minera Titan shall pay to Mr. Herrera a royalty of 1% of net smelter return (NSR). The royalty will be calculated on the first hand purchaser´s payment. Minera Titan has right of first refusal to acquire to Mr. Herrera´s royalty in front of any proposal of a third bona fide third party.

EXPLORATION AND OPTION AGREEMENT WITH JANDRINA, S.R.L Minera Titan shall pay to Jandrina a royalty of 2% of net smelter return (NSR) . Minera Titan has the followings rights: (i) To acquire until the 50% of the royalty (1%) paid to Jandrina USD$500,000.00 for each 0.50%. and (ii) The right of first refusal to acquire to Jandrina´s royalty in front of any proposal of a third bona fide third party.
 
 
21

 

All option agreement payments apply to the NSR on production. All option payments to date total about $1.5 million toward the purchase option.  See the table below for option payment information.

The Cordero project mining claims are all unpatented federal lode mining claims under Mexican law, which provide mineral exploration and mining rights. The annual payments for the optioned mining claims and the annual assessment on the staked mining claims are all owned and administered and maintained by Minera Titan.

The total area of the Levon claim holdings at its Cordero project is approximately 19,884.3 hectares. The table below lists Levon’s Cordero project claims and agreement obligations:
 
 
22

 

Table 1: Levon Resources Ltd.
Mexican Cordero Properties
January 6, 2011
Project
State
Company
Claim Name
Title No.
Area (ha)
Ownership
Option Payment
Mining Taxes
Assessment Filing
Additional Notes
Cordero
Chihuahua, MX
Minera Titan S.A. de C.V.
 
Mexico: 28191*1
Sansón
230434
7,510.8325
100% Titan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
n/a
Paid to June 30, 2012
Complete to May 2011
Titan II (Formally Irmita) and Peral acquired in  lottery in October 2010.
 
Survey work filed for both Titan II and Perla.  (Perla has been titled)
Perla was title on May 31, 2012. mining taxes. The proportional part of the first semester of 2012 will be paid in July jointly  with the second semestre, 2012.
 
San Pedro purchased (100%) from Cordilleras in 2010.Underlying 2% NSR. Minera Titán has first right of refusal.
 
 
 
Sansón I
231280
950.0000
n/a
Paid to June 30, 2012
Complete to May 2011
Sansón II
231281
400.0000
n/a
Paid to June 30, 2012
Complete to May 2011
Sansón fracción 1
228104
0.0763
n/a
Paid to June 30, 2012
Complete to May 2011
Sansón fracción 2
228105
0.0906
n/a
Paid to June 30, 2012
Complete to May 2011
Titán
235089
1,700.0000
n/a
Paid to June 30, 2012
Complete to May 2011
Titán I
235090
8,150.0000
n/a
Paid to June 30, 2012
Complete to May 2011
Titán II
16/39514*
100.0000
n/a
No taxation until titled
No assessment until titled
Perla
240461
400.0000
n/a
Recently titled
Recently titled
San Pedro
215161
1.9422
n/a
Paid to June 30, 2012
Complete to May 2011
San Octavio
165481
2.0000
 
n/a
Paid to June 20, 2012.
Complete to May 2011
San Octavio Claim was acquired by Minera Titan on May,2012.
 
Related to the assessment filing, this claim is less than 10 Ha, according with the law, his owner does not had obligation to submit the proof.
 
 
23

 
 
Project
State
Company
Claim Name
Title No.
Area (ha)
Ownership
Option Payment
Mining Taxes
Assessment Filing
Additional Notes
Cordero
Chihuahua, MX
Minera Titan S.A. de C.V.
 
Mexico: 28191*1
Unif. Cordero
171994
218.8613
Held under option by Titan to acquire 100% interest from Jandrina, S. de R.L. (Fernando Rascón )
$150,000 (paid Feb. 21, 2011)
$220,000 (due Feb. 21, 2012)
$1,470,000 (due Feb. 21, 2013).
 
Once the option has been exercised, 2% NSR; up to 1% can be purchased at a rate of US$500,000 per 0.5%; (optionee retains first right of refusal on remaining NSR).
Paid to June 30, 2012
Complete to May 2011
 
Argentina
179438
3.9140
Paid to June 30, 2012
Complete to May 2011
Catas de Plateros
177836
2.0000
Paid to June 30, 2012
Complete to May 2011
Sergio
214655
9.8172
Paid to June 30, 2012
Complete to May 2011
El Santo Job
213841
155.5708
Paid to June 30, 2012
Complete to May 2011
Todos Santos
238776
2.5042
Paid to June 30, 2012
Recently titled
Josefina
172145
6.0750
Held under option by Titan to acquire 100% interest from Mr. Eloy  Herrera
$150,000 (paid Feb. 21, 2011)
$300,000 (due Feb. 21, 2012)
$1,500,000 (due Feb. 21, 2013)
Once the option has been exercised, 1% NSR (optionee retains first right of refusal on remaining 1% NSR)
Paid to June 30, 2012
Complete to May 2011
 
Berta
182264
16.5338
Paid to June 30, 2012
Complete to May 2011
La Unidad dos
212981
175.7555
Paid to June 30, 2012
Complete to May 2011
La Unidad
178498
78.2960
Paid to June 30, 2012
Complete to May 2011
                     
  TOTAL AREA (All Tenures)   19,884.2694 ha   * Application Number (title number provided when tenure granted)
 
 
24

 
 
Geological Setting

Cordero encompasses an emerging district centered on high level, Tertiary porphyry style, bulk tonnage, open pit silver, gold, zinc, lead mineralization located in rolling cattle country and accessed by state highways.  Cordero is within an emerging Chihuahua-Zactatecas regional trend of similar deposits, which includes Penasquito (GoldCorp), Camino Rojo (GoldCorp), Pitarilla (Silver Standard) and San Agustin (Silver Standard) and others that appear to be part of a transcontinental belt of similar deposits, which has yet been completely defined in the literature.  Cordero includes two porphyry belts and a third mineralized volcanic center to the south (Perla).  Cordero is projected to have discovery potential for multiple bulk tonnage, open pit deposits.  Drilling in 2009, 2010,  2011 and 2012 (112,000 m core drilling total in 250 holes) has encountered significant and consistent mineralization with discovery zones found and grid drilled in the Pozo de Plata Diatreme, Josefina Mine Zone and Cordero Porphyry Zone.  The zones combine into a large scale, bulk tonnage, open pit silver, gold, zinc, lead NI 43-101 compliant mineral resource (reported in the Mineral Resources section below).

Silver, gold, zinc, lead and locally copper and moly mineralization at Cordero is controlled by a belt of six volcanic and subvolcanic, Tertiary felsic igneous rhyolite, dacite porphyry, and granodiorite porphyry, intrusive complexes, emplaced into a sequence of interbedded Cretaceous limestone, calcareous mudstone, siltstone and sandstone.

Geologic mapping, soils and rock chip sampling, and geophysical surveys have expanded the strike length of the mineralized Cordero Porphyry Belt about 60% since 2009 at the beginning of Levon's exploration.  It appears that all six intrusives in this area are mineralized and encompass targets for bulk tonnage Ag, Au, Zn, Pb type deposits.  Recognition of three mineralized diatreme complexes to the southwest of the current resource and active and past mines in the Cordero district significantly expands the untested exploration potential of the area.  The depth of exposure of the six porphyry centers within the Cordero Porphyry Belt vary systematically, from a shallow exposed porphyry stock in the northeast to progressively deeper intrusive centers toward the southwest.  This district scale pattern accounts for the three high levels, poorly exposed diatreme complexes added to the southwest, and the more typical porphyry style mineralization exposed to the northeast.  Recognition of this geologically controlled geometry is guiding the systematic district scale exploration.

Drill results reveal five types of silver, gold, zinc and lead vein mineralization:

Type 1 – Narrow, high grade vein zone mineralization of galena, sphalertie and some tetrahedrite and wire silver.

Type 2 – Diatreme breccia  mineralization: clasts, matrix and through going veins hosted by diatreme breccia  and mineralized rhyolite and dacite breccia dikes; sphalerite, argentiferous galena, minor silver sulfosalt minerals and pyrite, with rusty weathering carbonate gangue minerals and occasionally rhodocrosite.  Diatreme mineralization crops out in the Pozo de Plata Diatreme discovery and is exposed to 500 m depths in the discovery drill grid.

Type 3 - High grade, massive sulfide replacement type mineralization (mantos) within the contact zones of porphyry intrusives; coarse grained argentiferous galena, sphalerite and lessor pyrite.  Type 3 mineralization is exposed only in drill holes in the Pozo de Plata Diatreme and was discovered in hole C10-31.  It represents a prime high grade mineralization target type.

Type 4 – Disseminated and stockwork vein mineralization typical of bulk tonnage porphyry deposits;  sphalerite, marmotite, argentiferous galena, minor, very fine grained silver sulfosalt minerals (species not known), pyrite and locally molybdenite, with associated rusty weathering carbonate and minor rhodocrosite gangue and alteration minerals;  porphyry style pervasive and stockwork controlled and zoned alteration assembledges, from  green argillic, argillic, propyllitic, phyllic and potassic  alteration  toward the center of the mineralized system, but with pervasive and vein, intergrown alteration minerals that include rusty weathering carbonate and rhodacrosite and calcite, often substituting for silica within the alteration assembledges.  The carbonate, rich alteration is displayed within the porphyry and diatreme mineralization (Types 2 and 4).  Best exposed in drill core of the Cordero Porphyry Zone and in weathered rocks at the surface in the Zone.
 
Type 5 – Younger granodiorite porphyry hosted disseminated and stockwork porphyry style copper and molyodenite mineralization beneath the porphyry silver, gold, zinc, lead mineralization of the resource in a northeast part of the resource.
 
 
25

 
 
Location and Access

The Cordero project is located 180 km south of the city of Chihuahua and 35 km north of the mining town of Hildalgo Del Parral in south central Chihuahua, Mexico.  The property is accessed by two wheel drive vehicles from Chihuahua State Highway 24 at the east ranch road turn off at highway mile post 150 km.  The property covers rolling, low relief cattle ranch land in a high desert environment.  Work within the project area can be carried out year round although 4x4 vehicles are sometimes required for transport during the “wet” season from June through August.

Surface Access Rights

        We have notarized agreements for exploration surface rights with ranch owners with lands on our central mining claims covering the mineral resource and on all outlying exploration targets on our claims.  The surface rights agreements require monthly rental payments to remain in good standing.  The surface rights agreements are of unlimited term and are transferable to any assigned third party. As of March 31, 2012, our average monthly payments were approximately $10,000 and we had promptly made all required payments.

Infrastructure

To accommodate processing, sampling and storing the drill core, the Company has built three core sheds to store the core samples, including the rehabilitation of an adobe hay barn that serves as a field office, core sampling facilities and core storage.  The Company constructed a water supply station to supply water to the core shed facilities and the core drills.  There are no modern, large scale mining facilities or equipment at the project since it is an exploration stage project.  Artisan miners who are contractors for the owners of the optioned claims, continue small scale, hand sorted ore mining operations in shallow shafts in the district under provisions of the option agreements.  Their operations can be terminated on demand under the option agreements at Levon's discretion.

Exploration Costs
 
Exploration expenditures to date total about $20 million. The Company has completed 112,000 metres of core drilling in four Phases of exploration to date.  Phase 4 exploration also includes advancing the engineering studies of the project including water and power supplies, metallurgy, preliminary mine design, and advancing the expanded exploration land use permit.

Power and Water
 
M3 Engineering and Technology (M3), Tucson, Arizona, has been contracted to guide and manage Cordero engineering studies and provide engineering scale water resource characterization and power availability studies at the project  The water and power studies are on-going.

There is a double tower, electric trunk power line corridor that crosses the southern part of the property.  There is also a new power line along State Highway 16, 10 km east of the Cordero project discoveries.  M3 is has secured written assurance from the CFE, Mexico's electrical power authority that expanded power required for the project is available from Camargo substation 70 km north of the project area.  This CFE favored study alternative 1 would require the company secure the right of way and construct a new power line along the existing power corridor.  The amount of power needed is part of the ongoing M3 analysis of the mineral resource and the possible mining alternatives and mill size. The readily available power source for the project has been established at this early stage in the exploration and will be refined as the project proceeds and the projected scale of the possible mine is better quantified.
 
 
26

 

        The water study is focusing on aquifer characterization and water rights availability. Water is now available from wells and abandoned mine shafts that, in the project area, tap a water table at a subsurface depth of about 50 meters. The Company knows the water table is shallow (50-80 m) in the mine workings and is plentiful due to the historical pumping problems the small mines in the area have had.  A first water exploration well is currently being drilled under a permit obtained by IDEAS (water supply subcontractor for M3) from CONAGUA, the Mexico water authority.

History and Exploration

Prior to 2009 Valley High Resources, Ltd had consolidated a core land position in the historic Cordero high grade silver vein mining district and staked additional contiguous claims to cover a 10,000 hectare land position.  Levon started exploration at Cordero in February through a joint venture agreement with Valley High.  By August 2009 under Levon’s direction, the property was doubled to about 20,000 hectares through claim staking, to cover the Cordero Porphyry Belt and a second belt recognized to the north.  Transferable surface access agreements are now in place with surface owners for the land package. Our exploration has been mostly in the Cordero Porphyry Belt area in the south tier of the property with some initial holes drilled in the Porfido Norte Belt 10 km to the north and the Perla Volcanic Center 5 km to the south.

In February 2009, the Company signed a Letter of Intent with Valley High, whereby Levon would earn a 51% interest from Valley High by making a cash payment of US$10,000 (CDN$12,513) (paid) and by spending CDN$1,250,000 by the end of February 2013 with a first year commitment of CDN$250,000 to explore and develop their wholly owned Cordero-Sanson Property (“Cordero”) 35 km northeast of the town of Hidalgo Del Parral, in the state of Chihuahua in north central Mexico.

In February of 2009, the Company commenced field work on the Cordero project exploring for large scale, bulk tonnage, porphyry type Ag, Au, Zn, Pb deposits, a number of which have been recently discovered in similar geologic settings in north central Mexico (Penasquito, Pitarrilla, Comino Rojo and others).  Levon geologic mapping established the Cordero Porphyry Belt trends northeast and has a 15 km strike length and is 3 to 5 km wide. The belt consists of six mineralized intrusive (porphyry) centers including three newly discovered diatreme breccia complexes that have not been explored for large scale, bulk tonnage Ag, Au, Zn, Pb deposits in the past.  The Cordero Felsic Dome and La Ceniza Stock have been explored and developed for high grade Ag, Au, Zn and Pb veins, mined to the water table by shallow underground shaft workings.  The only past bulk tonnage deposit exploration has apparently been by Penoles and confined to the northeastern most Sanson Stock intrusive center for Mo and Cu deposits  and for skarn deposits in the southwestern most stock in the northern porphyry belt.

In Phase 1 exploration by  October 2009, Levon had drilled three discovery core holes (economic grades over mineable, bulk tonnage widths), which were separated by 1.3 kilometers  The best discovery hole was in the Pozo de Plata Diatreme, which Levon first recognized early in Phase 1.  And the best intercept in the discovery holes was in C09-5 that intersected 152 metres grading 80.64 g/T Ag, 0.61 g/T Au, 1.41% Zn and 1.22% Pb in the mineralized diatreme.

Four follow up Phases of exploration grid drilling were conducted to offset the initial discovery holes.  The grid drilling revealed widespread, bulk tonnage mineralization among the discovery holes, which represents a large scale open pit, bulk tonnage discovery..  The first bulk tonnage NI 43-101 resource was calculated by June 2011 (detailed in the Mineral Resource section below) near the end of Phase 3 drilling.  M3 completed a NI Preliminary Economic Analysis (PEA) on the initial resource by January, 2012 as Phase 4 drilling continued.  A second NI43101 resource update completed on Phase 4 results by June 2012 (also detailed in the Mineral Resource section below).

Concurrently with the resource grid drilling, exploration holes were completed to initially test a series of outlying, mine-scale targets defined by geologic mapping, sampling and geophysical surveys.  The geophysics included 3D induced polarization (IP), air borne magnetic, electromagnetic (EM) and radiometric surveys, ground gravity and a high resolution magnetotellurics (MT) survey.  The drill results locally encountered mineralization that warrants some additional exploration follow up.
 
 
27

 

Proposed Exploration

Phase 4 exploration drilling was a seamless continuation of the Phase 3 program.  Phase 4 goals are to 1) Complete delineation drilling of the first resource 2) Complete exploration drilling to make additional outlying discoveries that require grid drilling and 3) To further advance engineering studies on water and power supplies, additional metallurgical testing, optimize the possible mine design, complete private land acquisition and consolidate the last remaining claim ownership to de risk the project.

Of the proposed 130,000 m of Phase 4 drilling 31,000 m have been completed and the project has shifted into advancing the engineering aspects of the project.

Levon has defined and initially tested a series of exploration targets south of Pozo de Plata Diatreme (Pasto del Sur Diatreme) and to the southwest in the Dos Mil Diez and Molina de Viento Diatremes in targets 10 km to the north in the the Porfido Norte Belt.  The Perla property  felsic dome we staked 5 km south of the Cordero claims was also initially drill tested..  The targets have been prioritized  and initially drill tested in Phase 4 with mineralization of geologic significance encountered that require follow up in the future.

Exploration Potential

Cordero geology, metal assemblages and scale of the porphyry controlled mineralized centers appear to be most analogous with the Penasquito mine of GoldCorp.  We believe Cordero geology, mineralization and exploration results to date support this analogy and point to this scale of upside discovery potential at Cordero.  Cordero is in the early discovery stage of exploration.

For further details and maps of the Cordero project, please see our website: www.levon.com

Reserves

Cordero has no known mineral reserves, as defined in SEC Industry Guide 7, and is an early-stage minerals exploration project.

Mineral Resource Estimates

Levon contracted Independent Mining Consultants (IMC) to complete the first independent NI 43-101 compliant bulk tonnage resource calculation at Cordero which they reported in June, 2011.  M3 followed up with a NI 43-101 compliant Preliminary Economic Assessment (PEA) in January, 2012 (summarized in the PEA section below).  A second independent resource update for Phase 4 drilling which continued was reported in June 2012 with the NI 43-101 compliant report now being prepared by M3 and IMC.

The  first NI 43-101 compliant bulk tonnage mineral resource for the Company's Cordero Project , Chihuahua, Mexico was completed in June  2011 The mineral resource estimate was within an entire open pit geometry  with a preliminary waste to mineral resource strip ratio of 1.7:1 using a base case USD $6/tonne (T) net smelter return (NSR) cutoff. IMC estimates the mineral resource contains:
 
·  
An indicated resource of 521.6 million tonnes (MT) containing: 310.9 million ounces (Moz) silver, 0.908 Moz gold, 5.3 billion pounds (Blbs) zinc, 2.9 Blbs lead.
 
·  
An inferred resource of 200.9 MT containing: 139.9 Moz silver, 0.229 Moz gold, 2.2 Blbs zinc, 1.2 Blbs lead.
 
Using a USD $15 NSR cutoff, a subset of the total Mineral Resource within the open pit geometry includes:
 
·  
An indicated resource of 170.7 MT containing: 173.9 Moz silver, 0.466 Moz gold, 2.7 Blbs zinc, 1.7 Blbs lead.
 
·  
An inferred resource of 65.5 MT containing: 88.4 Moz silver, 0.094 Moz Au, 1.2 Blbs zinc, 0.7 Blbs lead.
 
 
28

 
 
Table 1 provides a summary of the mineral resource at various cutoffs. The mineral resource is based on the assays from 160 core holes as of June 1, 2011. An ordinary kriged block model was developed from the drill hole assay data by IMC. The mineral resource is within a floating cone, open pit geometry. As reported previously (news release of January 13, 2011), M3 has been retained by Levon to complete a preliminary economic assessment (PEA) in Q3, 2011. IMC and M3 drew on the initial metallurgical bench scale test results, which have been completed for the PEA, to calculate the NSR cutoffs (Table 1). The NSR values reflect the value of the metals recovered after applying estimated milling and smelting recoveries, transportation, smelting, and refining charges. The base case metal prices used for NSR values are USD $25 per ounce silver, USD $1200 per ounce gold, USD $1.00 per pound zinc and USD $1.00 per pound lead. The mill recoveries, metal distribution, smelting charges, and transportation charges used by IMC are conservative estimates provided by M3 based on best available information.
 
Table 1: Cordero Mineral Resource; IMC ordinary kriged block model using core drilling through hole C11-160
 
 
NSR
 Resource
Class
Pozo de Plata Area (Includes Josefina)
Porphyry Zone
Combined Areas
Cutoff,
$/T
Million
Tonnes
Ag, g/T
Au, g/T
Zn, %
Pb, %
Million
Tonnes
Ag, g/T
Au, g/T
Zn, %
Pb, %
Million
Tonnes
Ag, g/T
Au, g/T
Zn, %
Pb, %
$6.00
Indicated
293.23
20.04
0.07
0.44
0.26
228.33
16.61
0.03
0.49
0.24
521.56
18.54
0.05
0.46
0.25
Inferred
32.44
19.54
0.05
0.56
0.27
168.41
22.07
0.03
0.47
0.27
200.85
21.66
0.04
0.49
0.27
 
                                 
$10.00
Indicated
188.89
25.59
0.09
0.54
0.33
126.21
22.13
0.03
0.64
0.33
315.11
24.20
0.07
0.58
0.33
Inferred
21.91
24.17
0.06
0.70
0.35
168.41
22.07
0.03
0.47
0.27
190.32
22.31
0.04
0.50
0.28
 
                                 
$15.00
Indicated
107.99
32.98
0.11
0.66
0.43
62.73
29.44
0.04
0.83
0.45
170.72
31.68
0.09
0.72
0.44
Inferred
12.90
30.54
0.06
0.88
0.45
52.59
44.81
0.04
0.83
0.52
65.48
42.00
0.05
0.84
0.51
 
                                 
$20.00
Indicated
65.51
39.75
0.14
0.76
0.52
34.63
36.73
0.04
1.00
0.56
100.14
38.71
0.10
0.84
0.53
Inferred
6.60
39.66
0.07
1.12
0.59
35.47
56.19
0.04
0.97
0.61
42.06
53.60
0.05
0.99
0.61
 
 
Metal Price Mill Recovery
Pb Conc. Zn Conc.
Silver $25.00/oz 60% 19%
Zinc $1.00/lb   50%
Lead $1.00/lb 70%  
Gold $1200/oz not included
 
The mineral resource (Table 1) includes the Pozo de Plata Diatreme, the Josefina Mine Zone, and the Cordero Porphyry Zone discoveries.
 
The second independent NI 43-101 compliant bulk tonnage mineral resource for the Company's Cordero Project located 35 km northeast of Hidalgo Del Parral, Chihuahua, Mexico was completed in June 2012. The resource was completed by IMC in collaboration with M3.

IMC recalculated the Cordero resource on the basis of the latest drill results and released their results on June, 9, 2012 (news release of June 19, 2012).  IMC  reports an additional 33,380m of core drilling (41 holes) were modeled along with holes of the first resource that shows an increase in the Indicated Resource of 53 million (M) ounces of silver (Ag), 37 thousand (K) ounces of gold (Au), 0.8 billion (B) pounds (lbs) of zinc (Zn) and 0.4 billion (B) lbs of lead (Pb) with improved grades in Ag, Zn and Pb. Table 1 summarizes the current mineral resource compared to the June 2011 mineral resource at a $6.00/t NSR cutoff grade. Table 2 shows the current mineral resource at higher NSR cutoff grades. The NSR inputs and calculation method used for the current Mineral Resource is the same as used for the 2011 Mineral Resource estimate.
 
 
29

 
 
Table 1: Cordero Mineral Resource - Comparison between the June 2011 Mineral Resource and the Current Mineral Resource Using a $6.00/t NSR Cutoff
 
 
Combined Areas (above cutoff)
Contained Metal
Resource
Date
Resource
Class
Million
Tonnes
Ag g/t
Au g/t
Pb %
Zn %
Silver oz's millions
Gold oz's
millions
Lead lbs
Billions
Zinc lbs Billions
June 2011
Indicated
521.56
18.54
0.054
0.25
0.46
310.9
0.908
2.9
5.3
Inferred
200.85
21 66
0.035
0.27
0.49
139.9
0.229
1.2
2.2
                   
June 2012
Indicated
547.70
20.67
0.054
0.27
0.51
363.9
0.945
3.3
6.1
Inferred
134.33
21.12
0.035
0.23
0.41
91.2
0.152
0.7
1.2
 
 
Pozo de Plata Area (above cutoff)
Porphyry Zone (above cutoff)
Resource
Date
Resource
Class
Million
Tonnes
Ag.
g/t
Au g/t
Pb
%
Zn
%
Million
Tonnes
Ag g/l
Au g/t
Pb
%
Zn
%
June 2011
Indicated
293.23
20.04
0.073
0.26
0.44
228.33
16.61
0.030
0.24
0.49
Inferred
32.44
19.54
0.048
0.27
0.56
168.41
22.07
0.033
0.27
0.47
June 2012
Indicated
276.30
21.94
0.074
0.29
0.49
271.40
19.37
0.033
0.26
0.53
Inferred
15.87
17.36
0.051
0.19
0.38
118.46
21.62
0.033
0.24
0.41
 
Metal
Price
Mill Recovery
Pb Cone
Zn Cone
Silver
25.00 /oz
60%
15%
Lead
1.00 / lb
70%
 
Zinc
1.00 / lb
 
70%
Gold
1200 / oz
No recovery included to date
 
 
30

 
 
Table 2: Cordero June 201 2 Mineral Resource Tabulated at Higher NSR Cutoff Grades
 
 
Combined Areas (above cutoff)
Contained Metal
NSR
cutoff $/t
Resource
Class
Million
Tonnes
Ag g/t
Au g/t
Pb
%
Zn
%
Silver oz's (millions)
Gold oz's (millions)
Lead lbs
(billions)
Zinc lbs (billions)
$6.00
Indicated
547.70
20.67
0.054
0.27
0.51
363.9
0.945
3.3
6.1
Inferred
134.33
21.12
0.035
0.23
0.41
91.2
0.152
0.7
1.2
 
$10.00
Indicated
337.37
27.39
0.066
0.37
0.66
297.1
0.714
2.7
4.9
Inferred
75.76
29.71
0.042
0.31
0.52
72.4
0.101
0.5
0.9
 
$15.00
Indicated
198.74
35.79
0.080
0.48
0.82
228.7
0.512
2.1
3.6
Inferred
42.16
40.83
0.047
0.39
0.64
55.3
0.064
0.4
0.6
 
$20.00
Indicated
123.05
44.46
0.095
0.59
0.98
175.9
0.375
1.6
2.7
Inferred
27.53
50.55
0.049
0.45
0.71
44.7
0.043
0.3
0.4
 
 
Pozo de Plata Area (above cutoff)
Porphyry Zone (above cutoff)
NSR
Cutoff $/t
Resource
Class
Million
Tonnes
Ag g/t
Au g/t
Pb
%
Zn
%
Million
Tonnes
Ag g/t
Au g/t
Pb
%
Zn
%
$6.00
Indicated
276.3
21.94
0.074
0.29
0.49
271.4
19.37
0.033
0.26
0.53
Inferred
15.87
17.36
0.051
0.19
0.38
118.46
21.62
0.033
0.24
0.41
 
$10.00
Indicated
176.86
28.73
0.092
0.38
0.62
160.51
25.91
0.037
0.36
0.70
Inferred
9.92
21.78
0.059
0.23
0.45
65.84
30.30
0.039
0.32
0.53
 
$15.00
Indicated
109.74
36.65
0.112
0.48
0.76
89.00
34.72
0.041
0.48
0.91
Inferred
4.29
28.28
0.073
0.29
0.55
37.87
42.25
0.044
0.40
0.65
 
$20.00
Indicated
70.56
44.36
0.132
0.59
0.90
52.49
44.60
0.045
0.59
1.09
Inferred
1.84
34.45
0.079
0.38
0.70
25.69
51.70
0.047
0.45
0.72
 
Resource tabulated on Levon mineral claims within a floating cone open pit geometry which went off the Levon mineral claims for waste stripping within the cone geometry. The floating cone geometry was defined using the following metal prices and mill recoveries to produce lead and zinc concentrates.
 
Metal
Price
Mill Recovery
Pb Cone
Zn Cone.
Silver
25.00 / oz
60%
15%
Lead
1.00 / lb
70%
 
Zinc
1.00 / lb
 
70%
Gold
1200 / oz
No recover/ included to date
 
 
31

 

The resource is tabulated wholly within a revised open pit geometry that measures 2,600 m on strike, 2,100 m wide and a maximum of 600 m deep. An inverse distance block model to the 6th power using 150m spherical search was developed from the 203 drill holes encompassing 97,769 m of core drilling. The resource remains largely open to expansion through step out delineation and infill drilling on strike and beneath the modeled open pit.

To complete the Phase 4 resource delineation program an expanded change of land use environmental permit is required for the 177 planned grid drill sites to also test the Dos Mill Diez Diatreme target. M3 has completed the required field studies and submitted the permit application for approval on behalf of Levon and the permitting is nearly complete.

Preliminary Economic Assessment

A favorable independent NI43-101 compliant PEA by M3 reported in January 30, 2012 was derived by considering the uppermost 30% portion of the first resource.   The PEA considers mining through the Stage 4 open pits.    The PEA projects a pre-tax Internal Rate of Return (IRR) of 19.5 % (at a silver price of $25.15/oz., gold price of $1,384.77/oz., zinc price of $0.91 per pound, and lead price of $0.96 per pound) over a projected 15 years to complete the first four stages of open pit mining. The potential metal production over the 15 years of mining is 131,156,000 ounces of silver, 190,000 ounces of gold, 1,373,359,000 pounds of zinc, and 1,033,407,000 pounds of lead.  Mill feed production rates are estimated at 40.0 thousand tonnes per day (Tpd) or 14.6 million tonnes per year. The capital cost of the project is estimated to be $646,800,000, with operating costs (mine, mill, process plant operating, general administration, treatment, and transportation charges) estimated at $13.82 per tonne. The PEA projects a 5.5 year payback on the base case. Sensitivity analysis by M3 projects a 3.8 year payback on the more recent $30 silver price.

Staking Acquisition

In April 2011, Levon announced the staking acquisition of an additional 9.2 square kilometers covering a newly recognized felsic volcanic dome and diatreme complex, 6 km south of the main Cordero bulk tonnage silver, gold, zinc and lead resource.

Reconnaissance geologic mapping  revealed prospects centered on vein zones in a volcanic dome complex. Some historical prospects penetrate disseminated and mineralized crackle breccias in altered country rocks around the volcanic dome and there are small areas of poorly exposed diatreme breccias in valleys.

Drill Results

Cordero Phase 3 and 4 drill results with completed assays from holes C11-161 to C12-233 were forwarded to IMC to complete an updated resource calculation. IMC  reports an additional 33,380m of core drilling (41 holes) were modeled along with holes of the first resource that shows an increase in the Indicated Resource of 53 million (M) ounces of silver (Ag), 37 thousand (K) ounces of gold (Au), 0.8 billion (B) pounds (lbs) of zinc (Zn) and 0.4 billion (B) lbs of lead (Pb) with improved grades in Ag, Zn and Pb. Table 1 summarizes the current mineral resource compared to the June 2011 mineral resource at a $6.00/t NSR cutoff grade. Table 2 shows the current mineral resource at higher NSR cutoff grades. The NSR inputs and calculation method used for the current Mineral Resource is the same as used for the 2011 Mineral Resource estimate. Full details are provided in the section below titled Overall Performance.

Since the latest resource was calculated Phase 4 resource delineation grid drilling and outlying exploration drilling has continued through hole C12-250 and these drill results are being interpreted.

Environmental Liabilities

The Company is not aware of any environmental liabilities at the Cordero Project.  M3 has been contracted to complete an environmental audit and to handle exploration permitting.
 
 
32

 
 
Norma Sass and Ruf Claims, Nevada, USA
 

 
The Company does not currently consider this property to be a material property of the Company.  This property is an exploration stage property and is without known reserves, as defined in SEC Industry Guide 7.

Ownership

In 2003, the Company acquired a 33.33% interest in 59 mineral claims known as the Norma Sass and Ruf Claims from Coral Gold Resources Ltd. (“Coral”) a public company related by common directors.  The property consists of 36 mining claims (the Norma Sass claims) and 23 claims (the Ruf claims) and is located in the state of Nevada.

Location & Access

 Access to the property from Elko, Nevada, is via Highways 80 and 306, a distance of approximately 102 kilometers to the community of Crescent Valley and then 19 kilometers south on highway 306 to the Ruf and approximately 25 kilometers south on highway 306 to Norma Sass.  A four-wheel drive vehicle is usually necessary to access all roads on the property.  There is no underground or surface plant or equipment located on the Norma Sass or the Ruf claims.

History & Exploration

During fiscal year 2005, Coral and Levon (collectively, the “Companies”) entered into an Agreement with Agnico-Eagle Mines Ltd. (“Agnico”) wherein the Companies granted Agnico an option to purchase 100% interest in the property subject to a 2.5% royalty to the Companies in consideration of minimum advance royalty payments (in US dollars) and minimum work commitments. During fiscal year 2006, Agnico completed the first 13,000 feet of drilling. The program included six vertical drill holes varying in depth from 1,665 to 1,975 feet. All six holes encountered alterations, silification and sulfidation in Lower Plate rocks, and two holes intersected gold. While the results were considered positive, in February 2007, Agnico notified the Company that it would not be continuing its option on the Company’s Norma Sass property because of other corporate priorities. The Company is continuing to seek partnership for further exploration at the property.

In September 2008, the Company and Coral’s wholly-owned U.S. subsidiary, Coral Resources, Inc. (“CRI”) entered into an exploration, development and mine operating agreement (the “Agreement”) with Barrick Gold Exploration Inc. (“Barrick”), wherein Barrick is granted the option to acquire up to a 75% interest in CRI’s and the Company’s interests in the Norma Sass Property, Nevada, consisting of 36 unpatented mining claims.
 
 
33

 

Barrick may earn a 60% interest by incurring total exploration expenditures of at least US $3 million in annual installments by December 31, 2014.  Barrick may earn an additional 10% (for an aggregate interest of 70%) by incurring an additional US $1.5 million by December 31, 2015.  Barrick may earn an additional 5% (for an aggregate interest of 75%) by carrying CRI and the Company through to commercial production. Alternatively, at the time of earning either its 60% or 70% interest, Barrick may be given the option to buy-out CRI’s and the Company’s joint interest by paying US $6 million and granting them a 2% net smelter returns royalty.
 
During 2009, Barrick announced that plans were underway to do target delineation work in the second quarter followed by deep drilling in the third quarter on the Norma Sass property.  The proposed drilling has target depths in the order of approximately 1,800 to 2,000 feet to test structural and geochemical targets in the Lower Plate carbonate sequence, with the potential to go deeper as the rock dictates.

In October 2009, Barrick commenced drilling hole NS 09-01 targeting the lower plate carbonate sequence. This hole was drilled at 70 degree dip on a northwesterly azimuth across a SW-NE striking fault which trends into Barrick’s Gold Acres pit one mile to the northeast and is thought to be related to mineralization at Gold Acres. The hole was started using a reverse circulation drill which encountered recovery problems at a depth of 1,680 feet and was replaced by a core drill which completed the hole to a final depth of 2,586 feet. The lower plate and Wenban Limestone were intersected starting at a depth of 1,330 feet and Roberts Mountain Formation was encountered from 1,830 feet to the bottom of the hole. These formations are the major host rocks for the gold deposits at the Pipeline, Gold Acres and Cortez Hills mines.

In September 2010, Barrick elected to terminate the agreement.

Mineral Reserves

As at the date of this report, the Norma Sass and Ruf Claims are without known Mineral Reserves, nor any known body of commercial ore and any activities carried out on the claims are exploration in nature.

Eagle Claims, Nevada, USA
 
 
The Company does not currently consider this property to be a material property of the Company.  This property is an exploration stage property and is without known reserves, as defined in SEC Industry Guide 7.
 
 
34

 
 
Ownership
 
The Company holds a 50% interest in the Eagle Claims, subject to a 3% net smelter royalty. The property consists of 45 lode claims (approximately 646 acres), known as the Eagle 15 to 50 and Eagle 53 to 61.
 
Location & Access
 
The Norma Sass, RUF and Eagle claims are located in Corral Canyon, in Lander County, Nevada.  Access to the property is through Elko, Nevada, a regional mining supply center, via Highways 80 and 306, a distance of approximately 90 kilometers and then an additional 13 kilometers on a gravel access road from the community of Crescent Valley.  A four-wheel drive vehicle is usually necessary to access all roads on the property.  There is no underground or surface plant or equipment on the property.
 

History & Exploration
 
The Company has not conducted exploration on the Eagle property since 1997 when a surface geophysical exploration program was conducted. In 2002, when the Company decided not to conduct further work on the property, the property was written down to a nominal value of $1 by a charge to operations of $232,170.  Although the Company has no further plans to explore the property it keeps the claims in good standing by paying its 50% of the cost (approximately US $3,500 annually) in holding fees and taxes with the intent of selling the property, if and, when the opportunity presents itself.
 
Mineral Reserves

As at the date of this report, the Eagle Claims are without known Mineral Reserves, nor any known body of commercial ore and any activities carried out on the property are exploration in nature.
 
Congress Property, British Columbia, Canada

 
The Company does not currently consider this property to be a material property of the Company.  This property is an exploration stage property and is without known reserves, as defined in SEC Industry Guide 7.
 
 
35

 
 
Ownership

The Company owns a 50% leasehold interest in 45 claims in the Lillooet Mining Division, British Columbia. The mineral claims were purchased from a company with common directors.

The Congress claims are subject to a Joint Venture Agreement dated February 25, 1983 between the Company and Veronex Resources Ltd. (“Veronex”). In 1983 Veronex earned a 50% net interest in the claims (net of a 5% net smelter royalty) held by the Company, by expending $1,000,000 on the property. Under the terms of the Joint Venture Agreement each party is equally responsible for expenses of the joint ventures. In the event that a party is unable to pay its portion of expenses, such party’s interest in the joint venture will be diluted. Exploration under the Joint Venture ceased in 1989. During recent fiscal years, with funding made available through equity financing, exploration activities have recommenced with the Company incurring 100% of expenditures. The Company is currently reviewing ownership of the Veronex 50% interest and working on updating this agreement.

The property consists of eight crown granted mineral claims, one reverted crown granted mineral claim, three mineral leases and 11 mineral claims totaling 109 cells covering approximately 2,432 hectares (6,012 acres). The crown granted mineral claims are treated like fee simple property similar to patented mineral claims in other jurisdictions. Surface, water and timber rights are attached to mineral rights and the property is held by paying annual taxes on these claims. The reverted crown granted mineral claim is treated the same as a mineral claim cell. These claims are kept in good standing by paying $200 per cell or carrying out and documenting $200 in work per cell in the claim block per year. The mineral leases are kept in good standing by paying rental fees totaling $2,110 per year. All claims and leases are contiguous and in good standing.
 
Location & Access

Located on the north side of Carpenter Lake British Columbia’s historic gold producing Bridge River region, the Congress Property is a long standing mining property that supported past high grade gold vein production from three portal entry underground workings.  The property is easily available by road.

Geological Setting

The property covers Mississippian to Middle Jurassic rocks of the Bridge River Complex, mainly submarine basalt and andesite, with minor chert, argillite and mafic intrusives. These rocks are cut by northwest trending regional scale structures, some with contained Tertiary feldspar porphyry dacite dykes, sub-parallel to the Ferguson and Cadwallader Structures, which bound the historic Bralorne/Pioneer mines. The structures on the property are roughly the same distance from the Upper Cretaceous-Tertiary granitic Bendor Intrusions as the Bralorne/Pioneer mines. The Bendor Intrusions are the same age as the mineralization in the Bralorne/Pioneer mines and are a postulated source for the gold mineralization at these mines and on the Congress Property.

Deposit Types and Mineral

The deposits on the Company’s property are members of a well-recognized group of deposits referred to as mesothermal, orogenic or greenstone hosted quartz-carbonate gold vein deposits. These deposits include the Mother Lode and Grass Valley districts in California and most of the greenstone hosted gold deposits in the Canadian shield, including the Timmins-Val d’Or, Red Lake and Hemlo camps. These deposits are quartz carbonate veins in moderately to steeply dipping brittle-ductile shear zones and, locally, in shallow dipping extensional fractures.

Mineralization in the Howard Zones consists of quartz-carbonate veins or stringer zones one to 1.5 meters wide, with altered, mineralized selvages (pyrite, siderite) up to 10 meters total width hosted in basalt and gabbro. The zones strike north to a few degrees west of north and dip steeply to the west. The Howard Zones contain the largest and highest grade resource on the property, with over 100,000 ounces of gold contained in all resource categories totaling more than 300,000 tonnes greater than 10 grams per tonne gold. These resources are refractory and would require oxidation of sulphides to recover the gold.
 
 
36

 

Mineralized areas in the Lou Zone are stockwork quartz carbonate stringers and silicified zones on the flank of a feldspar porphyry dyke hosted in mafic volcanics. The zone strikes north and dips steeply west. The better mineralized zones are 1.5 to 4.0 meters wide and grade 5 to 11 grams gold/tonne and contain abundant stibnite. The Lou Zone has been oxidized for 2 to 5 meters below surface near the decline portal where an open pit resource has been outlined.

The better mineralized areas in the Congress Zone, including the 2004 trenches, are massive stibnite veins, 1.25 to 1.5 meters wide, grading 6 to 8 grams gold per tonne hosted in argillite, chert and very sheared mafic volcanic rocks and again, striking north and dipping steeply west.

Permitting

The Company held a Free Miners Certificate (“FMC”) #115631, which expired April 8, 2009. The Company can renew this FMC at such a time when further work is planned. Claim holdings can be renewed either by filing assessment reports or paying the fees, as described above under Property Description and Location. Certain exploration work requires a permit and in some cases posting a reclamation bond. The Company currently has $32,629 in bonds with the provincial government.

The Company believes that it holds all necessary licenses and permits under applicable laws and regulations and believes that it is presently complying in all material respects with the terms of such licenses and permits. There can be no guarantee that the Company will be able to obtain or maintain all necessary licenses and permits as are required to explore and develop its properties, commence construction or operation of mining facilities and properties under exploration or development or to maintain continued operations that economically justify the cost.

History and Exploration

These mineral claims are subject to a Joint Venture Agreement dated February 25, 1983 between Levon and Veronex Resources Ltd. (“Veronex”). Exploration under the Joint Venture ceased in early 1989 when Veronex ceased to contribute to the joint venture’s expenses.  During recent fiscal years, with funding made available through equity financing, exploration activities have recommenced with the Company incurring 100% of expenditures.

The Congress Zone was discovered in 1913 and has been explored and mined intermittently since then. Significant periods of activity occurred in 1933, when a 1,000 ton bulk sample was mined for metallurgical tests, and 1945-1950, when the vein was developed on 5 underground levels and some mineralized material stopped.

The Howard Zone was discovered in 1959 and explored by Bralorne-Pioneer Mines Ltd. who put in approximately half of the Lower Howard workings between 1960 and 1964. The Company carried out surface and underground drilling and drifting between 1976 and 1988 when the rest of the Lower Howard and the Upper Howard workings were excavated.

The Lou Zone was discovered following up on soil geochemical anomalies and VLF-em geophysical anomalies in 1984. Extensive surface drilling was carried out from 1984 to 1988 and a 300 metre trackless decline was driven in the footwall of the zone in 1989. Significant work was suspended until 2004 because of low gold prices. A mechanized trenching program on the northern extensions of the Lou and Congress zones was carried out in the fall of 2004. A diamond drill program was carried out on the Howard Zone in December 2004 and January 2005.
 
 
37

 

Since May 2007, Levon has undertaken three phases of surface exploration to locate new gold bearing structures on its Congress property situated in the Bridge River Gold Camp. The three phases include prospecting, MMI soil grids, trenching by hand and with an excavator. Prospecting has been successful with the relocation of three previously known showings that have received little exploration work in the past and has also led to several other new discoveries. Most of the relocated zones and new discoveries are found along the south side of the Gun Creek Canyon, on the north central portion of the Congress Property, and are contained in an area 100m wide by 600m long. The zones found in this area have a general east west trend as opposed to the Congress, Lou and the Howard Zones, that have a north-south trend. Detailed geological mapping will be conducted to determine where diamond drill holes should be placed to test the gold bearing structures found in this area of Gun Creek.

In November 2007, the Company announced the approval of a 16-hole (5,000 metres) diamond drill program by the BC Ministry of Mines. The drill program has been designed to offset high grade surface gold showings discovered in September 2007, test the size potential of newly recognized porphyry gold controls on high grade stockwork vein zones, discovered in Gun Creek Canyon in a northern part of the property and test the northern strike projection of the high grade Lou Gold Zone toward Gun Creek.

During 2008, the Company announced that the first three holes of a 16-hole (5000 m) drill program, proposed in October, 2007 were drilled, logged, split and sampled.  The drilling campaign was designed to test the strike and dip projections of high grade gold showings discovered in 2007 by rock chip sampling and hand trenching on the north slopes of Gun Creek canyon in a north part of the property. The drill proposal is available for review at www.levon.com.

Drill holes in the campaign were laid out to test for bulk tonnage type gold deposits within the Gun Creek intrusive complex mapped in Gun Creek canyon.

The first three holes cut altered rocks of the intrusive complex and its host rocks. The intrusives, particularly in their contact zones with host rocks, are occasionally veined and contain sparse, coarse to very fine grained stibnite, an antimony sulfide mineral. Surface rock chips generally show a good correlation of Au with stibnite, but vein controlled pyrite also accounts for some of the high grade gold samples at surface. On this basis and since most of the intrusive rocks drilled are altered with abundant disseminated pyrite and at least some sparse pyrite-rich veining, the entire holes have been sampled for assay. No wide stockwork or vein zones (>10m) were cut by the early holes, but assays results are required to determine presence and geometry of gold in the holes.

In September 2008, the Company released the Congress Property, B.C. Drilling Summary Report including the 3M wide intercept grading of 0.395 ounces per ton. The drill holes tested part of the newly recognized Gun Creek dacite stock mapped in a northern part of the property for bulk tonnage gold deposits. Three angle core holes (1,048m total) confirm the presence of Au beneath gold showings prospected at the surface, which are associated with veins and veined zones. Such vein zones have been explored and mined at the Congress and Howard mines in the past. The holes confirm that the surface stockwork vein mineralized zones discovered by prospecting dacite porphyry dikes and sills, narrow down dip and along strike in the vicinity of the holes. The 2008 Program was suspended at 3 holes to allow further investigation.

Proposed Exploration

The Company has no plans to carry out exploration activities on the Congress property in the next fiscal year.

Environmental Liabilities

The Company is not aware of any environmental liabilities
 
38

 

Goldbridge Claims (also known as the BRX claims), British Columbia, Canada
 

 
The Company does not currently consider this property to be a material property of the Company.  This property is an exploration stage property and is without known reserves, as defined in SEC Industry Guide 7.

Ownership

The Company held a 100% interest in the Goldbridge Property, also known as the BRX claims, until fiscal 2002 when Mill Bay Ventures Inc. (“Mill Bay”), a public company related by common directors, earned a 50% interest in the property by incurring $300,000 in exploration expenditures on the property and issuing to Levon 300,000 common shares.

Location & Access

The BRX property lies south of Gold Bridge, centered at approximately latitude 50°50' N, longitude 122° 50' W and encompasses 77 tenures of which 73 cover reverted crown grants and four modified grids claims. These claims form one contiguous parcel and cover a nominal 1 065 ha.  The claims are accessible via Highway 99 North from Vancouver through Squamish and Whistler to Pemberton. From May to November, access can be obtained by turning left through Pemberton, then right along the Pemberton Meadows Road for 23 km to the Hurley River Road, which passes the Outdoor School and is followed for 50 km to Highway 40, approximately 0.25 km west of Goldbridge. In winter continue on Highway 99 past Pemberton to Lillooet, then 110 km west along the Carpenter Lake Road (Highway 40) to Goldbridge.

History

Between 1984, when the property was acquired, and 1986, the Company carried out a re-evaluation involving line cutting, soil sampling, geological mapping, VLF-EM surveys and back-hoe trenching followed by underground sampling and mapping at the California 2 level and Why Not adits and in 1987, drilled 518 m over six short holes on the Rand zone. In addition two holes of 307 m aggregate were drilled on a quartz vein in the Hurley river bed, about 350 m south of the Arizona portal.  In late 1994 trenching and drilling on targets located in 1985 found that the gold was generally low grade.

Levon owns a 50% interest in 74 mineral claims. During fiscal 2005, the option was satisfied and Levon’s interest in the property was reduced to 50%. During 2007 and 2008, Mill Bay incurred $67,198 and $25,016, respectively of deferred expenditures on the BRX claims, which were not proportionately funded by Levon. Mill Bay waived the requirement of proportionate funding by Levon on these specific expenditures; notwithstanding this waiver, the terms of the Joint Venture Agreement were ratified by Mill Bay and Levon to remain in effect. During 2008, the Company reopened the Arizona portal to the Goldbridge Property to sample the adit for tungsten to determine future exploration.
 
 
39

 

The Company obtained a permit number MX-4503 dated June 27, 2003 and amended March 24, 2004 for which underground development is approved for exploration on vein for a total of 60 m.  A permit issued in 1994 for trenching and drilling on the property is still extant and for which a reclamation bond of $3,500 remains with the provincial government.

Proposed Exploration

The Company has no plans to carry out exploration activities on the BRX in the next fiscal year. The claims remain in good standing until December 25, 2014.

As at the date of this report, the Goldbridge Claims (BRX) is without known Mineral Reserves, and any activities carried out on the property are exploration in nature.

Environmental Liabilities

The Company is not aware of any environmental liabilities.

Wayside Property, British Columbia, Canada
 

 
The Company does not currently consider this property to be a material property of the Company.  This property is an exploration stage property and is without known reserves, as defined in SEC Industry Guide 7.
 
 
40

 
 
Ownership

In 1997 the Company acquired a 100% interest 27 mineral claims known as the Wayside claims for for $5,000. There has been no exploration activity on the claims nor are there future plans to conduct exploration at this time.  The claims are considered of merit and we will continue to maintain them in good standing. The Company wrote the claims down in fiscal 2002 to $1 by a charge to operations of $37,079. Subsequently in 2007, the Company incurred exploration expenditures in the amount of $9,088.

Location & Access

Located on the north side of Carpenter Lake British Columbia’s historic gold producing Bridge River region. The property is easily available by road.

Proposed Exploration

As at the date of this report, the Wayside Property is without known Mineral Reserves, and any activities carried out on the property are exploration in nature.
 
 
41

 
 
Item 4A.
Unresolved Staff Comments
 
None.
 
Item 5.
Operating and Financial Review and Prospects
 
This Management’s Discussion and Analysis (“MD&A”) is intended to supplement the audited consolidated financial statements of Levon Resources Ltd.. (“Levon” or “the Company”) for the year ended March 31, 2012, and the related notes thereto, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The Company adopted IFRS on April 1, 2011 with a transition date of April 1, 2010. Full disclosure of the Company’s IFRS accounting policies and a reconciliation of the previously disclosed opening balance sheet prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) to IFRS is set out in notes 2 and 26 to the audited consolidated financial statements.
 
The Company’s 2011 comparative financial information in this MD&A have been restated and are presented in accordance with IFRS. All figures are expressed in Canadian dollars except where otherwise indicated. This MD&A has been prepared as of June 26, 2012, and should be read in conjunction with the audited consolidated financial statements for the year ended March 31, 2012. Unless otherwise stated all currency amounts are presented in Canadian dollars.
 
This Annual Report contains “forward-looking statements” that are subject to risk factors set out under the heading  “Item 3. Key Information – D. Risk Factors”. The Company uses certain non-GAAP financial measures in this Annual Report. For a description of each of the non-GAAP financial measures used in this Annual Report please see the discussion under ‘Non-GAAP Financial Measures’.
 
Some of our critical accounting policies are as follows. See Note 2 to the March 31, 2012 consolidated financial statements for a detailed description of our accounting policies.

Exploration and evaluation assets
 
The Company is in the exploration stage with respect to its mineral properties.  The Company capitalizes all costs relating to the acquisition of mineral claims, and expenses all costs relating to the exploration and evaluation of mineral claims.
 
All exploration and evaluation expenditures are expensed until properties are determined to contain economically viable reserves.  When economically viable reserves have been determined, technical feasibility has been determined and the decision to proceed with development has been approved, the subsequent costs incurred for the development of that project will be capitalized as mining properties, a component of property, plant and equipment.
 
All capitalized exploration and evaluation assets are monitored for indications of impairment. Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that an exploration expenditure and evaluation assets are not expected to be recovered, they are charged to operations.
 
 
42

 
 
Impairment
 
At each reporting date, the carrying amounts of the Company’s long-lived assets are reviewed to determine whether there is any indication that those assets are impaired.  If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.  Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
 
An asset’s recoverable amount is the higher of fair value less costs to sell and value in use.  Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period.
 
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years.  A reversal of an impairment loss is recognized immediately in profit or loss.
 
Provisions
 
Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation; and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to the passage of time is recognized as accretion expense.
 
Reclamation provision
 
The Company records the present value of estimated costs of legal and constructive obligations required to restore mineral properties in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and restoration, reclamation and re-vegetation of affected areas.
 
The fair value of the liability for a rehabilitation provision is recorded when it is incurred. When the liability is initially recognized, the present value of the estimated cost is capitalized by increasing the carrying amount of the related exploration and evaluation assets. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability, which is accreted over time through periodic charges to profit or loss. Additional disturbances or changes in rehabilitation costs will be recognized as additions or charges to the corresponding assets and rehabilitation liability when they occur.
 
 
43

 
 
Accounting for equity units
 
Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated based on their relative fair values, calculated using the Black-Scholes option pricing model for warrants and the market price for common shares.

Significant accounting judgements and estimates
 
The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period.  Actual outcomes could differ from these estimates under different assumptions and conditions.
 
Significant assumptions about the future and other sources of estimated uncertainty that management has made at the consolidated statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
 
·
the recoverability of amounts receivable;
·
the carrying value and recoverable amount of exploration and evaluation assets;
·
the recoverability and estimated useful lives of property and equipment;
·
the recognition and measurement of deferred tax assets and liabilities;
·
the provisions including the estimated reclamation provisions and environmental obligations;
·
the determination of the assumptions used in the calculation of share-based payments; and
·
the allocation of proceeds for unit offerings between share capital and warrants.
 
Share-based payments
 
The share option plan allows Company directors, employees and consultants to acquire shares of the Company.  The fair value of options granted is recognized as a share-based payments expense with a corresponding increase in equity.  An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.
 
 
44

 
 
The fair value of employee options is measured at the option’s grant date, and the fair value of non-employee options is measured at the date or over the period during which goods or services are received. The fair value of each tranche of options granted, which do not vest immediately on grant, is recognized using the graded vesting method over the period during which the options vest.  The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted.  At each reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.
 
Share-based payments is credited to the reserve for options. If the options are later exercised, their fair value is transferred from the reserve to share capital. If the options expire unexercised or are forfeited or cancelled subsequent to vesting, the initial fair value is transferred from the reserve to deficit.
 
Foreign currency translation

The functional currency of the Company is the Canadian dollar.  The Company’s foreign subsidiaries are financially and operationally dependent on the Company.  Amounts recorded in foreign currency are translated into Canadian dollars as follows:

 
(i)
Monetary assets and liabilities, at the rate of exchange in effect as at the balance sheet date;
 
(ii)
Non-monetary assets and liabilities, at the exchange rates prevailing at the time of the acquisition of the assets or assumption of liabilities; and
 
(iii)
Revenues and expenses, at the rate of exchange prevailing at the time of the transaction.

Gains and losses arising from this translation of foreign currency are included in the determination of net loss for the year.
 
 
45

 
 
A. 
Operating Results

Twelve months ended March 31, 2012 compared with the twelve months ended March 31, 2011

During the year ended March 31, 2012, the Company’s net loss decreased by $11,517,268 from a net loss of $24,642,101 for the year ended March 31, 2011 to a net loss of $13,124,833 for the year ended March 31, 2012.  The overall increase in the net loss as compared to the prior year was due to the factors discussed below:

   
2012
   
2011
 
             
Expenses
           
Consulting and management fees
  $ 1,007,640     $ 620,000  
Depreciation
    12,211       5,205  
Exploration
    10,792,719       7,641,461  
Foreign exchange loss
    154,227       61,002  
Listing and filing fees
    309,261       67,286  
Office, occupancy and miscellaneous
    182,491       142,127  
Professional fees
    338,551       271,320  
Salaries and benefits
    234,249       106,281  
Share-based payments
    251,082       15,538,692  
Shareholder relations and promotion
    249,556       114,532  
Travel
    203,492       116,191  
                 
Loss before other items
    (13,735,479 )     (24,684,097 )
                 
Other items
               
Interest income
    610,646       41,996  
                 
Net Loss for Year
    (13,124,833 )     (24,642,101 )
                 
Other Comprehensive Loss
               
Unrealized loss on investments
    (15,616 )     (554 )
                 
Total Comprehensive Loss for Year
  $ (13,140,449 )   $ (24,642,655 )
 
 
46

 

Consulting and management fees

Consulting fees of $1,007,640 include payments to the CEO and President of the Company as well as consultants providing investor relation services.  Consulting fees increased by $387,640 during the year from $620,000 for the year ended March 31, 2011 to $1,007,640 during the year ended March 31, 2012.  The current year balance includes a $500,000 bonus paid to the CEO and President of the Company compared to a bonus of $125,000 during the year ended March 31, 2011.

Exploration expenditures

Exploration expenditures of $10,792,719 include $4,260,933 in drilling and exploration and $4,345,333 in geological and management services.  Exploration expenditures increased by $3,151,258 during the year from $7,641,461 during the year ended March 31, 2011 to $10,792,719 during the year ended March 31, 2012.  Overall increase is attributed to increased exploration activities during the year.

Foreign exchange loss

Foreign exchange loss increased by $93,225 from $61,002 during the year ended March 31, 2011 to $154,227 during the year ended March 31, 2012.  The increase in foreign exchange loss is mainly attributed to the weakening of the peso on net assets held in Mexico.

Listing and filing fees

Listing and filing fees increased by $241,975 from $67,286 during the year ended March 31, 2011 to $309,261 for the year ended March 31, 2012.  The increase is mainly attributed to additional costs incurred as a result of graduating from the TSX Venture Exchange to the TSX exchange.
 
Salaries and benefits

Salaries and benefits increased by $127,968 from $106,281 during the year ended March 31, 2011 to $234,249 during the year ended March 31, 2012.  Overall increase is attributed to increased business operations during the year as a result of acquiring 100% interest in the Cordero Property.

Share-based payments

Share-based payments decreased by $15,287,610 from $15,538,692 for the year ended March 31, 2011 to $251,082 for the year ended March 31, 2012.  Prior year’s higher balance is attributed to more stock options granted and vested and each option had a higher black scholes fair value.  During the year ended March 31, 2011, 13,465,000 stock options were granted compared to 675,000 stock options during the year ended March 31, 2012.
 
 
47

 

Shareholder relations and promotion

Shareholder relations and promotion increased by $135,024 from $114,532 during the year ended March 31, 2011 to $249,556 during the year ended March 31, 2012.  Additional shareholder relations and promotion expenses were incurred as the Company acquired 100% interest in the Cordero Property and graduated from the TSX Venture Exchange to the TSX exchange.
 
Travel

Travel expense increased by $87,301 from $116,191 during the year ended March 31, 2011 to $203,492 during the year ended March 31, 2012.  The increase is attributed to more travelling to promote the Company upon acquiring 100% interest in the Cordero Property and graduation from the TSX Venture Exchange to the TSX Exchange

Interest income

Interest income increased by $568,650 from $41,996 for the year ended March 31, 2011 to $610,646 for the year ended March 31, 2012.  The increase in interest income is attributed to the investment of cash raised from current year’s short-form financing whereby the Company issued 20,600,000 common shares at $1.95 per common share for gross proceeds of $40,170,000.  Unused funds were invested in GICs and treasury bills.
 
 
48

 

B. 
Liquidity and Capital Resources
 
The Company has financed its operations to date through the issuance of common shares.  Currently the Company has sufficient capital to conduct further exploration on its existing properties.  The consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company’s ability to continue as a going concern are dependent upon the continued support from its shareholders, the discovery of economically recoverable reserves, the ability of the Company to obtain the financing necessary to complete development and achieve profitable operations in the future. The outcome of these matters cannot be predicted at this time.
 
As at March 31, 2012 the Company had working capital of $58,048,017 compared to working capital of $19,608,972 at March 31, 2011

Year Ended
March 31, 2012
(IFRS)
March 31, 2011 (IFRS)
Working Capital
58,048,017
19,608,972
Deficit
62,899,323
50,010,304

The increase in working capital from March 31, 2011 to March 31, 2012 is mainly attributed to cash raised on issuance of share capital.  On May 19, 2011, the Company completed a short-form prospectus financing issuing 20,600,000 common shares at a price of $1.95 per common share for gross proceeds of $40,170,000. Total share issue costs of $3,304,614 were incurred for the private placement, including cash commission of $2,008,500 and 1,030,000 broker warrants valued at $950,766.  The increase in cash is also attributed to the exercise of options and warrants for proceeds of $14,830,470.  A partial amount of the proceeds raised was used for ongoing exploration activities.  The remaining unused balance was invested in treasury bills and guaranteed investment certificates.

Currently the Company has sufficient capital to meet its ongoing obligations and conduct it planned exploration on its existing properties for the next twelve months.
 
The increase in deficit from March 31, 2011 to March 31, 2012 is mainly attributed to exploration expense of $10,792,719 recognized during the year.
 
The Company is in the exploration stage. The investment in and expenditures on the mineral property comprise substantially all of the Company’s assets. The recoverability of amounts shown for its mineral property interest and related deferred costs and the Company’s ability to continue as a going concern is dependent upon the continued support from its directors, the discovery of economically recoverable reserves, and the ability of the Company to obtain the financing necessary to complete development and achieve profitable operations in the future. The outcome of these matters cannot be predicted at this time.
 
Mineral exploration and development is capital intensive and in order to maintain its interest the Company will be required to raise new equity capital in the future. Based on the Company’s current financial position, its plans for equity financing and its exploration plans for the upcoming fiscal year, the Company will be able to meet its financial obligations through the next fiscal year. There is no assurance that the Company will be successful in raising additional new equity capital.
 
C. 
Research and Development, Patents and Licenses, etc.

None.
 
 
49

 

D. 
Trend Information

While the Company does not have any producing mines it is directly affected by trends in the metal industry.  At the present time global metal prices are extremely volatile.  Base metal prices and, in particular, gold prices, driven by rising global demand, climbed dramatically and  approached near historic highs over the past several years.

Overall market prices for securities in the mineral resource sector and factors affecting such prices, including base metal prices, political trends in the countries such companies operate, and general economic conditions, may have an effect on the terms on which financing is available to the Company, if at all.

Except as disclosed, the Company does not know of any trends, demand, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, its liquidity either materially increasing or decreasing at present or in the foreseeable future.  Material increases or decreases in liquidity are substantially determined by the success or failure of the Company’s exploration programs.

The Company currently does not and also does not expect to engage in currency hedging to offset any risk of currency fluctuations.

E. 
Off-balance sheet arrangements

The Company has no off-balance sheet arrangements.

F. 
Tabular disclosure of contractual obligations

As of March 31, 2012, the Company had the following contractual obligations:

   
Payment due by period
 
   
Total
   
<1 year
   
1-3 Years
   
3-5 years
   
More than 5 years
 
Consulting payments
  $ 1,080,000     $ 120,000     $ 960,000     $ -     $ -  
                                         
Operating Leases
    54,926       9,765       43,941       1,220       -  
                                         
Total
  $ 1,134,926     $ 129,765     $ 1,003,941     $ 1,220     $ -  
 
G. 
Safe Harbor

The Company seeks safe harbor for our forward-looking statements contained in Items 5.E and F.  See the heading “Cautionary Note Regarding Forward-Looking Statements” above.
 
 
50

 
 
Item 6.
Directors, Senior Management and Employees

A. 
Directors and Senior Management

The following is a list of the Company’s directors and senior management as at July 5, 2012.  The directors were elected by the Shareholders on September 23, 2011 and are elected for a term of one year, which term expires at the election of the directors at the next annual meeting of shareholders.

Name and Present Position with the Company
 
Principal Occupation
 
Director/Officer Since
         
William Glasier
Director
 
Mining executive; President of Mill Bay Ventures Inc., Director of Bralorne Gold Mines Ltd.
 
May 22, 1990
         
Gary Robertson
Director
 
Certified Financial Planner; director of Bralorne Gold Mines Ltd., Coral Gold Resources Ltd, Mill Bay Ventures Inc., Avino Silver & Gold Mines Ltd. and Sage Gold Inc.
 
August 3, 2005
 
         
Ron Tremblay
Director, Chief Executive Officer and President
 
President & CEO of Levon Resources Ltd.
 
September 7, 2006
         
David Wolfin
Director*
 
President, CEO and Director of Avino Silver & Gold Mines Ltd., Gray Rock Resources Ltd., and Coral Gold Resources Ltd.; Director of Berkley Resources Ltd., Bralorne Gold Mines; Mill Bay Ventures Ltd, and Cresval Capital Corp.
 
November 23, 2006
         
Victor Chevillon
Director and V.P. Exploration
 
Certified Professional Geologist; President of Chevillon Exploration Consulting.
 
September 6, 2007
         
Ron Barbaro
Director and Chairman
 
Member of the Order of Ontario; Director of The Brick Group, Trans Global Life Insurance Company and Trans Global Insurance.
 
July 9, 2010
         
Robert Roberts
Director
 
CEO and co-owner of Channel Control Merchants, LLC
 
September 23, 2011
         
Carlos H Fernandez Mazzi
Director
 
President and CEO of Dicon Gold Inc.
 
May 15, 2012
         
Annie Cchan
Chief Financial Officer
 
Chief Financial Officer of Bralorne Gold Mines Ltd.
 
 
March 26, 2012
         
Lisa Sharp
Former Chief Financial Officer**
 
Former Chief Financial Officer of Avino Silver & Gold Mines Ltd., Bralorne Gold Mines Ltd., Coral Gold Resources Ltd., and Venerable Ventures Ltd.
 
June 9, 2008
 
         
Dorothy Chin
Corporate Secretary
 
Corporate Secretary of Avino Silver & Gold Mines Ltd., Bralorne Gold Mines Ltd., Coral Gold Resources Ltd., and Gray Rock Resources Ltd.
 
September 25, 2008
         
*David Wolfin resigned as VP Finance on May 14, 2012
** Lisa Sharp resigned as Chief Financial Officer and Annie Chan was appointed as Chief Financial Officer on March 26, 2012
 
 
51

 

Family Relationships

There are no family relationships between any directors or executive officers of the Company.

Arrangements

There are no known arrangements or understandings with any major shareholders, customers, suppliers or others, pursuant to which any of the Company’s officers or directors was selected as an officer or director of the Company.

Conflicts of Interest

There are no existing or potential conflicts of interest among the Company, its directors, officers or promoters as a result of their outside business interests with the exception that certain of the Company’s directors, officers and promoters serve as directors, officers and promoters of other companies, as set out below, and, therefore, it is possible that a conflict may arise between their duties as a director, officer or promoter of the Company and their duties as a director or officer of such other companies.

The directors and officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and the Company will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of its directors or officers.  All such conflicts will be disclosed by such directors or officers in accordance with the BCBCA, and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

All of the Company’s directors are also directors, officers or shareholders of other companies that are engaged in the business of acquiring, developing and exploiting natural resource properties including properties in countries where the Company is conducting its operations.  Such associations may give rise to conflicts of interest from time to time.  Such a conflict poses the risk that the Company may enter into a transaction on terms which place the Company in a worse position than if no conflict existed.  The directors of the Company are required by law to act honestly and in good faith with a view to the best interest of the Company and to disclose any interest which they may have in any project or opportunity of the Company.  However, each director has a similar obligation to other companies for which such director serves as an officer or director.  The Company has no specific internal policy governing conflicts of interest.

Several of our senior officers divide their professional time between service for the Company and service for other companies in the industry.  See “Item 3. Key Information – D. Risk Factors – Conflict of Interest.”  In this regard, Ron Tremblay, the Company’s Chief Executive Officer and President, devotes approximately 98% of his professional time to the business of the Company; David Wolfin, the Company’s former V.P. Finance, devotes approximately 15% of his professional time to the business of the Company; Victor Chevillon, the Company’s V.P. Exploration, devotes approximately 95% of his professional time to the business of the Company; Lisa Sharp, the Company’s former Chief Financial Officer, devotes approximately 30% of her professional time to the business of the Company; Annie Chan, the Company’s current Chief Financial Officer, devotes approximately 50% of her professional time to the business of the Company and Dorothy Chin, the Company’s Corporate Secretary, devotes approximately 35% of her professional time to the business of the Company.
 
 
52

 
 
B. 
Compensation
 
During the last completed fiscal year of the Company, the Company had four  executive officers, namely, its Chief Executive Officer (“CEO”) and President, Ron Tremblay, its Vice President Exploration, Victor Chevillon, its Former Chief Financial Officer (“CFO”), Lisa Sharp, and its current Chief Financial Officer (“CFO”), Annie Chan.

1) 
Compensation Discussion and Analysis

The Company does not have a compensation program other than paying base salaries, incentive bonuses, and granting incentive stock options to the NEOs.  The Company recognizes the need to provide a compensation package that will attract and retain qualified and experienced executives, as well as align the compensation level of each executive to that executive’s level of responsibility.  The three components of the compensation package are included to enable the Company to meet different objectives.  The objectives of base salary are to recognize market pay, and acknowledge the competencies and skills of individuals.  The objective of incentive bonuses (paid in the form of cash payments) is to add a variable component of compensation to recognize corporate and individual performances for executive officers and employees.  The objectives of stock option awards are to reward achievement of long-term financial and operating performance and focus on key activities and achievements critical to the ongoing success of the Company.  Implementation of new incentive stock option plans and amendments to the existing stock option plan are the responsibility of the Company’s Compensation Committee.

The Company has no other forms of compensation, although payments may be made from time to time to individuals or companies they control for the provision of consulting services.  Such consulting services are paid for by the Company at competitive industry rates for work of a similar nature by reputable arm’s length services providers.

The process for determining executive compensation relies solely on Board discussions with input from and upon the recommendations of the Compensation Committee, without any formal objectives, criteria or analysis.

Actual compensation will vary based on the performance of the executives relative to the achievement of goals and the price of the Company’s securities.

Compensation Element
Description
Compensation Objectives
Annual Base Salary (all NEOs)
Salary is market-competitive, fixed level of compensation
Retain qualified leaders, motivate strong business performance
Incentive Bonuses
Discretionary cash payment
Reward individual performance in achieving corporate goals
Incentive Stock Option (all NEOs)
Equity grants are made in the form of stock options.  The amount of grant will be dependent on individual and corporate performance
Reward long-term financial and operating performance and align interests of key employees with  those of shareholders
 
 
53

 
 
2) 
Summary Compensation Table

The following table sets forth particulars concerning the compensation paid or accrued for services rendered to the Company in all capacities during the last three most recently completed financial years ended March 31, of the Company to its NEOs:

Name and
principal
position
Year
Salary
($)
Share-based awards
($)1
Option-based
awards
($) 2
Non-equity incentive plan compensation
($)3
Pension
value
($)4
All other
compensation
($)
Total
compensation
($)
Ron tremblay5
Director,
President  &
CEO
2010
2011
2012
$50,000
$165,000
$290,000
 
NIL
NIL
NIL
 
NIL
$8,367,950
NIL
NIL
$250,000
$550,000
NIL
NIL
NIL
NIL
NIL
NIL
$50,000
$8,782,950
$840,000
Annie Chan
CFO6
2012
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Lisa Sharp
Former
CFO6
2010
2011
2012
$13,567
$20,900
$32,240
NIL
NIL
NIL
$28,460
$110,640
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
$42,027
$131,540
$32,240
Victor Chevillon
Director &VP Exploration
2010
2011
2012
$117,992
$211,063
$245,676
NIL
NIL
NIL
$90,320
$3,270,150
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
$208,312
$3,481,213
$245,676

1 The Company does not currently have any share-based award plans.
2 The methodology used to calculate the grant date fair value is based on the Black-Scholes Option Pricing Model.  The Company used the following weighted average assumptions in the model to determine the award recorded above: Dividend Yield – Nil; Expected Life – 5 years; Volatility – 112.83%; Risk Free Interest Rate –1.96%.
3 The Company’s sole non-equity incentive plan is the payment of discretionary annual cash bonuses.
4 The Company does not have any pension plans.
5Ron Tremblay is a director of the Corporation, and has served as its President since November 29, 2006 and as its CEO since September 11, 2009.
6Lisa Sharp resigned as CFO and Annie was appointed as CFO on March 26, 2012.

Base Salary for the NEOs are determined by the Board upon the recommendation of the Compensation Committee and its recommendations are reached primarily by informal comparison with the remuneration paid by other reporting issuers with the same size and industry and with publicly available information on remunerationthat the Compensation Committee feels is suitable.

The Annual Base Salary paid to the NEOs is, for the purpose of establishing appropriate increases, reviewed annually by the Board upon the recommendation of the Compensation Committee thereof as part of the annual review of executive officers.  The decision on whether to grant an increase to the executive’s base salary and the amount of any such increase shall be in the sole discretion of the Board and Compensation Committee thereof.

Non-Equity Incentive Plan Compensation

One of the three components of the Company’s compensation package is a discretionary annual cash bonus, paid to recognize individual performance in attaining corporate goals and objectives.  The Company does not have a long-term incentive plan.

 
54

 
 
Option Based Award

An Option Based Award is in the form of an incentive stock option plan.  The objective of the incentive stock option is to reward NEOs, employees’ and directors’ individual performance at the discretion of the Board upon the recommendation of the Compensation Committee.  The plan currently used by the Company is 2011Stock Option Plan (the “Plan”).

The Company currently maintains a formal stock option plan, under which stock options have been granted and may be granted to purchase a number equal to 10% of the Company’s issued capital from time to time. As of July 5, 2012, there are 19,975,442 Common Shares available under the Plan, of which 14,490,000 are issued and 5,485,442 are reserved and available for issuance. For details of the option plan please refer to “Particulars of Matters to be Act Upon” in the Information Circular filed with the SEC on August 30, 2011.

The Plan is administered by the Compensation Committee. The process the Company uses to grant option-based awards to executive officers is upon the recommendations of the Compensation Committee to the Board of Directors.

 The role of the Compensation Committee is to recommend to the Board the compensation of the Company’s directors and the executive officers which the Committee feels is suitable. All previous grants of option-based awards are taken into account when considering new grants.

3) 
Incentive Plan Awards

Outstanding share-based awards and option-based awards

The following table sets forth the options granted to the NEOs to purchase or acquire securities of the Company outstanding at the end of the most recently completed financial year ended March 31, 2012:

 
Option-based Awards
Share-based Awards
Name
 
Number of securities underlying unexercised options
(#)
Option
exercise price
($)
Option
expiration date
 
Value of
unexercised in-
the-money
options
($)(1)
Number of shares
or units of shares
that have not vested
(#)
Market or
payout value of
share-based awards
that have not vested
($)(1)
Ron Tremblay
Director, President &
CEO
1,500,000
5,000,000
 
$1.00
$1.65
 
Sep 3, 2015
Mar 25, 2016
 
Nil
Nil
Nil
Nil
Nil
Nil
Lisa Sharp
Former
CFO
50,000
50,000
 
$1.00
$1.65
 
Sep 3, 2015
Mar 25, 2016
 
Nil
Nil
Nil
Nil
Nil
Nil
Annie Chan
CFO
50,000
$1.00
Jun 7, 2017
Nil
Nil
Nil
Victor Chevillon
Director &VP
Exploration
100,000
200,000
500,000
2,000,000
$0.35
$0.70
$1.00
$1.65
Sep 14 2012
Jan 28, 2015
Sep 3, 2015
Mar 25, 2016
$34,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

(1)
In-the-Money Options is the difference between the market value of the underlying securities at March 31, 2012 and the exercise price of the option. The closing market price of the Company's common shares as at March 31, 2012 was $0.69 per common share.

Incentive plan awards – value vested or earned during the year

An “incentive plan” is any plan providing compensation that depends on achieving certain performance goals or similar conditions within a specific period.  An “incentive plan award” means compensation awarded, earned, paid or payable under an incentive plan.

 
55

 
 
The following table sets forth the value vested or earned during the year of option-based awards, share-based awards and non-equity incentive plan compensation paid to NEOs during the most recently completed financial year ended March 31, 2012:

Name
Option-based
awards – Value
vested during the
year
($) (1)
Share-based awards – Value
vested during the year
($)
Non-equity incentive plan
compensation – Value
earned during the year
($)
Ron Tremblay
Director, President & CEO
Nil
Nil
Nil
Lisa Sharp
Former CFO
Nil
Nil
Nil
Annie Chan
CFO
Nil
Nil
Nil
Victor Chevillon
Director &VP Exploration
Nil
Nil
Nil

(1) The aggregate dollar value that would have been realized if the options granted during the year had been exercised on the vesting date.

4) 
Pension Plan Benefits

No pension plan or retirement benefit plans have been instituted by the Company and none are proposed at this time.

5) 
Termination and Change of Control Benefits
 
The Company entered into a separate consulting agreement between Stone’s Throw (Barbados) Ltd., a company wholly owned by Ron Tremblay, and Chevillon Exploration Consulting, a company wholly owned by Vic Chevillon, (the “NEOs”) on April 1, 2011 under which there are specified provisions for termination of employment or change of Control.
 
The agreement can be terminated at any time prior to the expiry of the term, as follows:
 
a)
by the Consultant giving the Company not less than 3 months prior notice of such termination;

b)
by the Company giving the Consultant 3 months prior notice of such termination along with a termination payment equal to 3 times the annual Consulting Fee, (the “Termination Payment”); and

c)
At any time during the term of contract, should a Change of Control (as defined below) event occur the Consultant will be entitled to a severance payment equal to 3 times the annual Consulting Fee immediately.
 
For the purpose of this clause, a Change of Control shall be deemed to have occurred when:

any person, entity or group becomes the beneficial owner of 50.1% or more of the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors; orcompletion of the sale or other disposition by the Company of all or substantially all of the Company's assets or a reorganization or merger or consolidation of the Company with any other entity or corporation, at which time the severance payment becomes due and payable on closing of the transaction, other than:

a reorganization or merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent, either by remaining outstanding or by being converted into voting securities of another entity, more than 50.1% of the combined voting power of the voting securities of the Company or such other entity outstanding immediately after such reorganization or merger or consolidation; or

a reorganization or merger or consolidation effected to implement a recapitalization or reincorporation of the Company (or similar transaction) that does not result in a material change in beneficial ownership of the voting securities of the Company or its successor.
 
 
56

 

6)
Director Compensation

The following table sets forth the value of all compensation paid to the directors in their capacity as directors during the most recently completed financial year ended March 31, 2012:

Director Compensation Table

Name
Fees
earned
($)
Share-based
awards
($)
Option-based
awards
($)
Non-equity incentive plan compensation
($)
Pension
value
($)
All other
compensation
($)
Total
($)
William Glasier(1)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Gary Robertson(1)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
David
Wolfin
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Victor Chevillon(2)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Robert Roberts(1)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
J. Trevor
Eyton(1) (3)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Robert
Cameron(1) (3)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Geoffrey
Chater(1) (3)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Ron Tremblay(2)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Ron Barbaro(1)
NIL
NIL
NIL
NIL
NIL
NIL
NIL

(1) Independent & Non-Employee Directors
(2) NEO’s, see Summary Compensation Table
(3) On April 11, 2011, Mr, Cameron, Mr. Chater and Mr. Eyton resigned as directors at the request of the Company.
 
 
No director of the Company who is not a Named Executive Officer has received compensation, during the most recently completed financial year, pursuant to:
 
(a)
any standard arrangement for the compensation of directors for their services in their capacity as Directors, including any additional amounts payable for committee participation or special assignments;

(b)
any other arrangement, in addition to, or in lieu of, any standard arrangement, for the compensation of Directors in their capacity as Directors except for the granting of stock options; or

(c)
any arrangement for the compensation of directors for services as consultants or experts.

The Company may grant incentive stock options to Directors of the Company from time to time pursuant to the stock option plan of the Company and in accordance with the policies of the TSX Exchange (the "TSX").

 
57

 

Outstanding share-based awards and option-based awards

The following table sets forth the options granted to the directors to purchase or acquire securities of the Company outstanding at the end of the most recently completed financial year ended March 31, 2012:
 
 
Option-based Awards
Share-based Awards
Name
Number of
securities underlying unexercised options
(#)
Option
exercise
price
($)
Option
expiration
date
Value of unexercised
in-the-money
options
($)(1)
Number of shares
or units of shares
that have not vested
(#)
Market or payout
value of share-based
awards that have
not vested
($)(1)
William Glasier
100,000
150,000
$1.00
$1.65
Sept 3, 2015
Mar 25, 2015
Nil
Nil
Nil
Nil
Nil
Nil
Gary Robertson
200,000
200,000
$0.65
$1.65
July 20, 2015
Mar 25, 2016
$8,000
Nil
Nil
Nil
Nil
Nil
David Wolfin
100,000
100,000
100,000
$0.25
$1.00
$1.65
Apr 28, 2014