As used in this report, unless otherwise indicated, “we”, “us”, “our”, “Canyon Gold” and the “company” refer to Canyon Gold Corp.
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Item 1. Business
Canyon Gold Corp. was incorporated in the State of Delaware on May 27, 1998. Our present holdings of mining claims and leases are located in the State of Nevada. According to SEC Industry Guide No. 7, we are classified or considered an exploration stage mining company, which is defined as a company engaged in the search for mineral deposits or reserves of precious and base metal targets, which are not in either the development or production stage.
In July 2011, we acquired 100% of the outstanding capital stock of Long Canyon Gold Resources Corp. of North Vancouver BC, Canada (“Long Canyon”), whereby Long Canyon became our wholly owned subsidiary. The acquisition of Long Canyon was accounted for as a reverse acquisition and recapitalization, with Canyon Gold being the legal acquirer and Long Canyon being the accounting acquirer.
Canyon Gold and Long Canyon own and control a 100% interest in approximately 640 acres of mineral lease properties and/or approximately 30 BLM mineral lease claims, situated in the west section of the new Long Canyon Gold Trend area of east central Nevada. The properties, located in Range 64E., Township 33N., Meridian MDB&M, are held for the purpose of exploration for gold and silver mineralization deposits and are located near existing exploration projects by other mining companies.
Additionally, in May 2011 Long Canyon entered into an option agreement with EMAC Handels AG (“EMAC”) of Pfaeffikon, Switzerland. Upon exercise of the option, Long Canyon will acquire a 100% interest in approximately 6,250 acres of mineral lease properties and/or 275 BLM mineral lease claims, located adjacent to Canyon Gold and Long Canyon’s 30 claims.
We have engaged the services of Development Resources LLC of American Fork, Utah (“DRLLC”) to conduct preliminary studies of claims. We intend to conduct exploration activities on the properties in phases. We plan to explore for gold, silver and other minerals on the property covering an area of approximately 6,890 acres, which includes the acres subject to the option. There can be no assurance that a commercially viable mineral deposit exists on our property. Extensive exploration will be required before we can make a final evaluation as to the economic and legal feasibility of any potential deposit.
Our principal executive office is located at 101 Convention Center Dr, Suite. 700 Las Vegas, Nevada 89109 telephone (1-888) 788-0986. Additional office space is subleased from EMAC a 641 West 3rd Street, North Vancouver BC, Canada. The office of DRLLC that is responsible for management of exploration program is located at 125 East Main Street # 307, American Fork, Utah 84003.
Corporate Name changes
The company was originally incorporated in the State of Delaware on May 27, 1998 as Mayne International, Inc. The corporate name was changed to Black Dragon Entertainment, Inc. on September 5, 2000, then to Vita Biotech Corporation on July 31, 2002, and to August Energy Corp. on May 27, 2004. We changed our corporate name to the current Canyon Gold Corp. on March 21, 2011.
Our Strategy
Canyon Gold and Long Canyon have assembled a portfolio of exploration and potential exploitation projects in the Long Canyon Gold Trend of the State of Nevada. The Long Canyon Gold Trend Area is situated in a mining friendly jurisdiction. Our goal is to secure sufficient capital to conduct the business of exploration and mineral project development. We continue to examine viable mineral leases that could potentially enhance our portfolio.
Current Business
We are an exploration stage mineral company and, in July 2011, we acquired 100% of the issued and outstanding shares of Long Canyon Gold Resources Corp. of North Vancouver BC, Canada (formerly Ferguson Holdings Ltd.). As a result of the acquisition, Long Canyon became our wholly owned subsidiary. We own and control a 100% interest in approximately 30 BLM mineral lease claims situated on approximately 640 acres of mineral lease properties.
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On May 15, 2011, Long Canyon entered into an option agreement with EMAC Handels AG (“EMAC”) of Pfaeffikon, Switzerland. EMAC owns and controls a 100% interest in 275 mineral lease claims situated on approximately 6,250 acres of mineral lease properties adjoining the 640 acres owned by Long Canyon. EMAC initially acquired these claims from DRLLC. The option agreement allows Long Canyon to earn a 100% interest in the 6,250 acres for the exercise price of $350,000 and 425,000 shares of Canyon Gold Series B preferred stock. The agreement also provided to EMAC a 2% Net Smelter Royalty on the 275 claims subject to the option agreement. Long Canyon , as our wholly owned subsidiary, retains all rights under the option agreement, but has no obligations regarding the optioned claims until the option is exercised. On March 28, 2012 pursuant to an extension of the option agreement, the exercise period of the option agreement was extended to December 31, 2013.
In exchange for the acquisition of Long Canyon, we issued to the stockholders of Long Canyon 27,998,699 shares of our common stock and 500,000 Series B preferred shares, which are convertible into a total of 5.0 million of our common shares. The Series B preferred shares were assigned to DRLLC as consideration for the 30 BLM mineral lease claims previously acquired by Long Canyon from DRLLC. On July 22, 2011, we issued to EMAC, 600,000 Series A preferred shares, convertible into 6.0 million shares of common stock. The Series A preferred shares satisfied certain payables to EMAC in connection with Long Canyon’s acquisition of mineral claims and certain related party payables. The payables refer to certain executive and administrative services provided to Canyon Gold and Long Canyon. Also, at the time of the Long Canyon acquisition, Long Canyon and Canyon Gold agreed that the 600,000 Series A preferred shares would be transferred to EMAC in consideration for a payable to EMAC. The preferred shares are only convertible into common stock starting 12 months after the first day that our common stock is traded on the on the OTC-Bulletin Board.
All of the acquired claims and the claims subject to the option are located in the west section of the new Long Canyon Gold Trend area of Nevada. We intend to explore the claims for gold and silver mineralization deposits. These properties are located next to other exploration projects owned by other mining companies in the Long Canyon Gold Trend. All of the claims are located in Range 64E, Township 33N., Meridian MDB&M.
We have engaged the services of DRLLC to conduct preliminary studies of our claims. DRLLC prepared the preliminary geological report on our properties in January 2012. Alex Burton of Burton Consulting Inc., was the consulting geologist for DRLLC and conducted additional fieldwork from May 19 to May 29, 2012 as part of the requirements for dissemination of his final geology report. Mr. Burton, an exploration geologist and geochemist, has become a member of our advisory board. Titles to the first 30 claims (approximately 640 acres), owned and controlled by us, and the 275 claims subject to the option agreement, have been recorded in the name of DRLLC. DRLLC initially held title to the 305 claims and, pursuant to the agreements with Long Canyon and DRLLC and the option agreement between Long Canyon and EMAC, titles to the claims are to be transferred and registered in the name of Canyon Gold Corp. The title to the first 30 claims has been transferred to Canyon Gold. As per the terms of the option agreement and extension, title to the remaining 275 claims will be transferred to Canyon Gold within 30 days of the option being exercised. Upon exercise of the option agreement, of which there can be no assurance, we would own and control approximately 6,890 acres and 305 claims.
The agreement with DRLLC provided that Long Canyon pay to DRLLC $30,000, which funds were to used to complete full staking and acquisition of mineral lease claims. DRLLC would then assign to Long Canyon a 100% interest in the claims, subject to DRLLC holding a 3% Net Smelter Royalty on the claims. Long Canyon is obligated to pay all BLM and State of Nevada registration fees and to perform initial exploration work on the claims. Also, DRLLC will retain a first right of refusal to buy back the claims in the event Long Canyon / Canyon Gold intends to sell the claims.
We are conducting exploration activities on the properties in phases. As we proceed, we will record and transfer to the company all title to the property upon which we are conducting exploration activities, which titles are presently being registered in the name of EMAC. We intend to explore for gold, silver and other minerals on the property covering an area of approximately 6,890 acres. There is no assurance that a commercially viable mineral deposit exists on our property. Extensive exploration will be required before we can make a final evaluation as to the economic and legal feasibility of any potential deposit.
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Exploration Properties
Our mineral lease properties are located in the Long Canyon Gold Trend in the Spruce Mountain Mining District, Nevada. The area is generally characterized by an average elevation of approximately 5,600 feet and is made up of gentle rising hills and ridges to about 6,000 feet to the west and 5,800 feet to the east. The ridges and elevation increase to the south to an elevation of 6,800 feet at Ventosa Peak. The highest elevation in the district is Spruce Mountain at an elevation of just over 10,000 feet, located approximately 16 miles due south of our claims. The trees on these properties are small Spruce, Pine and scrub brush, not densely covered with many open areas on the higher ridges and side slopes with open areas in the small valleys at lower elevations.
All of our claims are located in one block in a semi-remote area with no infrastructure in place. The only access to the properties is by historic gravel or dirt roads and trails. There is no current access to water or power, although we do not foresee a need during the first phases of exploration. Typically, all contract personnel carry their own water and have portable generators for their operations, including phase two drill programs. Drilling operators supply tanker trucks for their water needs.
In the event an ore body is discovered as a result of our exploration programs, significant additional funding would be necessary to proceed. In order to satisfy this need, we anticipate seeking a strategic partnership or joint venture with a much larger mining company in order to fund additional heavy exploration drilling, feasibility studies and establishing mining operations. A feasibility study would detail the costs to provide all infrastructure including, but not limited to, pumping water from underground sources or building lakes to hold such water needs, building electrical lines to the area for needed power or using stand alone large generator systems to provide necessary power. It is our intent to remain an exploration company and to seek a partner to further develop and operate our properties. Presently, there can be no assurance that we will discover minerals in a commercially viable amount or that we would be able to secure a strategic partner to provide necessary funding to become operational.
Regulatory Requirements
In order to maintain the company’s claims and/or leases, we must make annual payments to the Bureau Land Management (“BLM”) and State of Nevada, due in September of each year. Payment to the BLM is $145 per claim and the State of Nevada is $70 per claim.
We currently own the 30 BLM mineral leases from our acquisition of Long Canyon. Thus, on August 31, 2012, we paid the BLM $4,350 and the State of Nevada $2,100. The 275 claims under option with EMAC are 100% owned by EMAC who on August 31, 2012 paid $39,875 to the BLM and $19,250 to the State of Nevada. Requisite fees for all claims are fully paid to September 2013. Upon exercise of the option, Canyon Gold will be responsible for these payments.
Phase one of our exploration program, completing a preliminary geological report on our four sections of BLM mineral lease claims, required no permits or bonding, provided there was no surface land disturbance of more than one-third acre. Phase two, provided preliminary geological reports are favorable, will proceed with a drill program to confirm mineralization on these target areas from the surface to depth. If initial core samples show evidence of gold mineralization, a geological, grid maps will be produced to lay out an extensive drill program to define a potential mineable ore body. Phase two will require an “Access and Land Use Permit” from the BLM and State of Nevada. Generally, this will require about 30 days for the filing process and cost approximately $12,000 for a bond to assure the reclamation of the subject areas. We anticipate that processing the paperwork for the permit and securing the requisite bond will be completed during the first quarter of calendar 2013 so that the permits can be in place to begin phase two during the second quarter of calendar 2013.