Item
2. Management's Discussions and Analysis or Plan of
Operation
Forward-Looking
Statements
Some
of
the statements contained in this Form 10-QSB that are not historical facts
are
“forward-looking statements” which can be identified by the use of terminology
such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,”
“intends,” or the negative or other variations, or by discussions of strategy
that involve risks and uncertainties. We urge you to be cautious of the
forward-looking statements, that such statements, which are contained in this
Form 10-QSB, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting
our
operations, market growth, services, products and licenses. No assurances can
be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events. Some of the factors that may cause actual results, our
performance or achievements, or industry results, to differ materially from
those contemplated by such forward-looking statements include without limitation
the following:
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our
ability to attract and retain
management;
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anticipated
trends in our business;
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exploration
and development risks;
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the
ability of our management team to execute its plans to meet its
goals;
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general
economic conditions, whether internationally, nationally or in the
regional and local market areas in which we are doing business, that
may
be less favorable than expected;
and
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other
economic, competitive, governmental, legislative, regulatory, geopolitical
and technological factors that may negatively impact our businesses,
operations and pricing.
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All
written and oral forward-looking statements made in connection with this Form
10-QSB that are attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
Overview
Raven
Gold Corp. ("the Company", "we", "us") was incorporated in the state of Nevada
on February 9, 2005. On April 26, 2005, the Company entered into a Purchase
and
Sale Agreement with Gudmund Lovang, an individual residing in North Vancouver
British Columbia, whereby he sold to us a 100% undivided right title and
interest in one mineral claim located in the Skeena Mining Division of British
Columbia, Canada known as the Big Mike mineral property. We acquired this
interest in the Big Mike property by paying $3,000 to Mr. Lovang. During the
year ended April 30, 2006 the Company decided to discontinue exploration work
on
the Big Mike mineral project property and consequently the mineral rights were
impaired 100%.
In
August
of 2006 and effective as of June 1, 2006 we entered an agreement with Tara
Gold
Resources Corp for the "Las Minitas" property. The Las Minitas Property is
located in Sonora, Mexico, approximately 40 air kilometers northwest of the
town
of Alamos. The property lies at the western edge of the province known as the
Sierra Madre Occidental gold-silver belt where a number of successful
gold/silver exploration projects are ongoing. Historical information regarding
Las Minitas indicates three mineralized zones of interest that contain an
estimated of 13,534,398 million tonnes of ore grading 7.58 oz/t silver and
0.0089 oz/t gold. Metallurgical testing indicates that recoveries of 90% for
both silver and gold may be achievable by cyanidation alone. We plan to focus
our initial efforts on the validation of the previous exploration work that
outlined three wide, high-grade, lode-type mineralized bodies: the North,
Central, and El Negro zones, with postulated strike lengths of 400, 500, and
700
meters respectively. These three zones are considered to be outstanding precious
metal exploration targets and Tara Gold is currently developing a plan to
confirm previous findings and conduct a focused sampling and drilling
program.
In
addition, in August of 2006 and effective as of May 30, 2006 we entered an
agreement with Tara Gold Resources Corp for the "La Currita" property. In this
agreement Raven Gold Corp. has the option to earn up to 60% interest in the
La
Currita Groupings by making certain payments to Tara Gold, issuing 750,000
shares, making all remaining property payments and by spending a minimum of
$3.5
million over the next 36 months. In addition to the capital investment on
exploration and mill expansion, we are required to expand the La Currita Mill
to
a minimum of 4,000 tons per month before earning 40% and a minimum of 8,000
tons
per month before earning 60% interest. The property includes 4 mines, a 150
ton/day operating floatation mill and stockpiled ore. The La Currita mine was
in
steady production from 1983 until 1998. A diamond drilling exploration program
conducted in 1998 indicated 109,000 tons of 2.59 g/t Au and 200 g/t Ag. La
Currita Groupings are located in the Sierra Madre Gold-Silver belt.
On
February 23, 2007, we filed a Certificate of
Amendment to our Articles of Incorporation, as amended, (the “Amendment”) with
the Secretary of State of the State of Nevada that was effective as of March
5,
2007, to increase our authorized common stock from 69,000,000 shares to
500,000,000 shares (the “Increase”). In addition, we filed the Amendment to
effect a forward split (the “Forward Split”) of all of our shares of common
stock issued and outstanding as of the close of business on March 5, 2007 (the
“Split Date”), whereby we issued for every 1 share of our common stock issued
and outstanding as of the close of business on the Split Date, 1 additional
share of our common stock.
Effective
as of March 6, 2007, in connection with the Forward Split, our Common Stock
commenced trading under the new ticker symbol “RVNG.OB”.
On
May 3,
2007, we entered into the La Currita Groupings Agreement (the "Groupings
Agreement") with Tara Gold Resources Corp. ("Tara") setting forth the agreements
reached by our company and Tara to amend and replace in its entirety the Joint
Venture Agreement (the "JV Agreement") dated August 23, 2006, entered into
by
and among our company, Tara and Corporacion Amermin S.A. de C.V., a 97% owned
subsidiary of Tara ("Amermin"), as amended by Amendment No. 1 to JV Agreement
dated March 30, 2007, pursuant to which we agreed to acquire certain rights,
including but not limited to, the following: (1) to earn an initial 25%
undivided interest in La Currita Groupings ("La Currita"), conditional on our
company making certain payments to Tara; (2) acquiring the right to increase
our
interest in La Currita to 40%, by meeting certain notice and payment terms
of
the Agreement; and (3) acquiring the right to increase our interest in La
Currita to 60%, by meeting certain notice and payment terms of the Agreement,
all as more fully set forth in the Agreement, a copy of which was filed as
Exhibit 10.1 to our Current Report on Form 8-K filed with the United States
Securities and Exchange Commission (the "SEC") on May 9, 2007.
Our
financial results depend upon many factors, particularly the price of gold
and
silver and our ability to market our production. Commodity prices are affected
by changes in market demands, which are impacted by overall economic activity,
basis differentials and other factors. As a result, we cannot accurately predict
future gold and silver prices, and therefore, we cannot determine what effect
increases or decreases will have on our capital program, production volumes
and
future revenues. In addition to production volumes and commodity prices, finding
and developing sufficient amounts of gold and silver reserves at economical
costs are critical to our long-term success.
Results
of Operations
Three
Months Ended October 31, 2007 Compared to Three Months Ended October 31,
2006
Revenues
were $0 for the three months ended October 31, 2007 compared to $0 for the
three
months ended October 31, 2006. There was no increase or decrease in
revenues.
We
did
not incur any exploration expenses during the three months ended October 31,
2007 and 2006, as we have not commenced the exploration stage of our business.
As we did not earn any revenues for three months ended October 31, 2007, our
cost of revenues for three months ended October 31, 2007 was $0.
Our
professional fees, including legal, accounting and public relations fees, were
$44,016 for the three months ended October 31, 2007, as compared to $6,812
during the three months ended October 31, 2006. The primary reason for the
increase of $37,204 or 546% was due to having to pay legal retainer fees and
legal costs incurred in relation to the mineral properties.
Our
general and administrative expenses were $54,390 for the three months ended
October 31, 2007, as compared to $337 during the three months ended October
31,
2006. This is mainly due to an increase in salaries paid for administrative
staff and office rental.
Our
listing and filings fees expenses during the three months ended October 31,
2007
decreased approximately 61% from $19,165 to $7,297 during the three months
ended
October 31, 2006. The primary reasons for the decrease were due to a lesser
number of transactions during the period.
Our
interest expense during the three months ended October 31, 2007 increased by
$45,496 as compared to $0 for the three months ended October 31, 2006. This
increase is due to promissory notes issued by the Company for loans which
started accruing interest effective May 1, 2007.
Total
expenses for the three months ended October 31, 2007 were $150,358 as compared
to $27,607 for the three months ended October 31, 2006, representing an increase
in total expenses of $122,751 or 444%.
Our
net
loss for the three months ended October 31, 2007 was $150,358 compared to a
net
loss of $27,607 for three months ended October 31, 2006, an increase of
$122,751, or 444%. The net loss increase was primarily due to an increase in
total expenses as explained above.
Six
Months Ended October 31, 2007 Compared to Six Months Ended October 31,
2006
Revenues
were $0 for the six months ended October 31, 2007 compared to $0 for the six
months ended October 31, 2006. There was no increase or decrease in
revenues.
We
did
not incur any exploration expenses during the six months ended October 31,
2007
and 2006, as we have not commenced the exploration stage of our business. As
we
did not earn any revenues for six months ended October 31, 2007, our cost of
revenues for six months ended October 31, 2007 were $0.
Our
professional fees, including legal, accounting and public relations fees, were
$55,920 for the six months ended October 31, 2007, as compared to $13,039 during
the six months ended October 31, 2006. The primary reason for the increase
of
$42,881 or 329% was due to having to pay legal retainer fees and legal costs
incurred in relation to the mineral properties.
Our
general and administrative expenses were $65,102 for the three months ended
October 31, 2007, as compared to $368 during the six months ended October 31,
2006. This is mainly due to an increase in salaries paid for administrative
staff and office rental.
Our
listing and filings fees expenses during the three months ended October 31,
2007
decreased approximately 34.6% from $19,585 to $12,806 during the six months
ended October 31, 2006. The primary reasons for the decrease were due to a
lesser number of transactions during the period.
Our
interest expense during the six months ended October 31, 2007 increased by
$102,073 as compared to $0 for the six months ended October 31, 2006. This
increase is due to promissory notes issued by the Company for loans which
started accruing interest effective May 1, 2007.
Total
expenses for the six months ended October 31, 2007 were $246,428 as compared
to
$34,285 for the six months ended October 31, 2006, representing an increase
in
total expenses of $212,143 or 618%.
Our
net
loss for the six months ended October 31, 2007 was $246,428 compared to a net
loss of $34,285 for six months ended October 31, 2006, an increase of $212,143,
or 618%. The net loss increase was primarily due to an increase in total
expenses as explained above.
Liquidity
and Capital Resources
Our
total
current assets as of October 31, 2007 were $1,536, including $1,536 in cash
as
compared with $321,671 in total current assets as of April 30, 2007, which
included cash of $321,671. Additionally, we had a shareholders deficiency in
the
amount of $459,216 as of October 31, 2007 as compared to shareholders’
deficiency of $212,788 as of April 30, 2007. We have historically incurred
losses and have financed our operations through loans and from the proceeds
of
the corporation selling shares of our common stock privately.
We
had
$239,208 of negative cashflow (cash outflow) from operating
activities for the six months ended on October 31, 2007, compared to a negative
cash flow of $23,678 for the six months ended October 31, 2006, an increase
in
cash outflow of approximately 910 % or $215,530.
We
had
$519,071 of cash inflow from financing activities during the six months ended
October 31, 2007, as compared to $1,778,100 of cash flow from financing
activities for the six months ended October 31, 2006, attributable to
issuance of promissory notes for loans.
We
had
$600,000 cash outflow from investing activities for the six months ended on
October 31, 2007, as compared to $1,575,000 cash outflow from investing
activities during the six months ended on October 31, 2006.
The
on-going negative cash flow from operations raises substantial doubt about
the
Company's ability to continue as a going concern. The ability of the Company
to
continue as a going concern is dependent on the Company's ability to raise
additional capital and implement its business plan.
The
Company has not realized any revenues since inception, and for the six month
period ended October 31, 2007, and it is presently operating at an ongoing
deficit.
We
have
not attained profitable operations and will require additional funding in order
to cover the anticipated professional fees and general administrative expenses
and to proceed with the anticipated investigation to identify and purchase
new
mineral properties worthy of exploration or any other business opportunities
that may become available to the company. The Company anticipates that
additional funding will be required in the form of equity financing from the
sale of the company's common stock. However, the Company cannot provide
investors with any assurance that it will be able to raise sufficient funding
from the sale of its common stock to fund the purchase and the development
of
any future projects. The Company believes that debt financing will not be an
alternative for funding future corporate programs. The Company does not have
any
arrangements in place for any future equity financings.
Off
Balance Sheet Arrangements
We
do not
have any off balance sheet arrangements that are reasonably likely to have
a
current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.
CRITICAL
ACCOUNTING POLICIES
We
have
identified the policies outlined below as critical to our business operations.
The list is not intended to be a comprehensive list of all of our accounting
policies. In many cases, the accounting treatment of a particular transaction
is
specifically dictated by accounting principles generally accepted in the United
States, with no need for management's judgment in their application. The impact
and any associated risks related to these policies on our business operations
are discussed throughout Management's Plan of Operations where such policies
affect our reported and expected financial results. Note that our preparation
of
the financial statements requires us to make estimates and assumptions that
affect the reported amount of assets and liabilities, disclosure of contingent
assets and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting period. There can be no
assurance that actual results will not differ from those estimates.
Mineral
Interest
Pursuant
to SFAS No. 141 and SFAS No. 142, as amended by EITF 04-02, mineral interest
associated with other than owned properties are classified as tangible assets.
The mineral rights will be amortized using the units-of-production method when
production at each project commences.
Long-lived
Assets
The
Company accounts for long-lived assets under the statements of Financial
Accounting Standards Nos. 142 and 144 “Accounting for Goodwill and Other
Intangible Assets” and “Accounting for Impairment or Disposal of Long-lived
Assets” (“SFAS No. 142 and 144”). In accordance with SFAS No. 142 and 144,
long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of
an asset may not be recoverable. For purposes of evaluating the recoverability
of long-lived assets, goodwill and intangible assets, the recoverability test
is
performed using undiscounted net cash flows related to the long-lived
assets.
Income
Taxes
The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under
Statement 109, deferred tax assets and liabilities are recognized for future
tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
Going
Concern
As
reflected in the accompanying financial statements, the Company is in the
exploration stage and has not commenced the exploration stage of its business
and has a negative cash flow from operations of $80,255 from inception. This
raises substantial doubt about its ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on the
Company's ability to raise additional capital and implement its business plan.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Management
believes that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.
We
currently do not have enough cash to satisfy our minimum cash requirements
for
the next twelve months. In addition, we will require additional funds to expand
operations.
Recent
Accounting Pronouncements
Statement
of Financial Accounting Standards ("SFAS") No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4"" SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67,"
SFAS
No. 153, "Exchanges of Non-monetary Assets - an amendment of APB Opinion No.
29," and SFAS No. 123 (revised 2004), "Share-Based Payment," were recently
issued. SFAS No. 151, 152, 153 and 123 (revised 2004) have no current
applicability to the Company and have no effect on the financial
statements.
SFAS
155,
Accounting for certain Hybrid Financial Instruments and SFAS 156, Accounting
for
servicing of Financial Assets were recently issued. SFAS 155 and 156 have no
current applicability to the Company and have no effect on the financial
statements.
In
May
2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections. This
Statement replaces APB Opinion No. 20, Accounting Changes, and FASB statement
No
3, Reporting Accounting Changes in Interim Financial Statements, and changes
the
requirements for the accounting for and reporting of a change in accounting
principle. This (Expressed in U.S. Dollars) Statement applies to all voluntary
changes in accounting principle. It also applies to changes required by an
accounting pronouncement in the usual instance that the pronouncement does
not
include specific transition provisions. SFAS 154 also requires that a change
in
depreciation, amortization or depletion method for long-lived, non-financial
assets be accounted for as a change in accounting estimate effected by a change
in accounting principle. This Statement is effective in fiscal years beginning
after December 15, 2005. The Company has not yet determined the effect of
implementing this standard.