Item
2. Management's Discussions and Analysis or Plan of Operation
Forward-Looking
Statements
Some of
the statements contained in this Quarterly Report on Form 10-QSB (the “Quarterly
Report”) 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 Quarterly Report, 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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our
growth strategies;
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anticipated
trends in our business;
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environmental
risks;
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exploration
and development risks;
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competition;
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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
Quarterly Report 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, we 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, i n 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”.
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.
Plan
of Operation
Our plan
of operation for the next twelve months is to complete our efforts on the
validation of the previous exploration work with respect to the “Las Minitas”
and “La Currita” properties.
We have
not earned any revenues from the date of our incorporation on February 9, 2005
to January 31, 2008. We do not anticipate earning revenues unless we achieve net
operating revenues from our “Las Minitas” and “La Currita” properties, which is
questionable pending the exploration and mill expansion results. We have
not commenced the exploration stage of our business and can provide no assurance
that we will discover gold or mineral findings on the properties, or if such
findings are discovered, or that we will enter into commercial
production.
Results
of Operations
Three
Months Ended January 31, 2008 Compared to Three Months Ended January 31,
2007
We did
not have any revenues for the three months ended January 31, 2008.
We did
not incur any exploration expenses during the three months ended January 31,
2008 and 2007, as we have not commenced the exploration stage of our business.
As we did not earn any revenues for three months ended January 31, 2008, our
cost of revenues for three months ended January 31, 2008 was 0.
Total
expenses for the three months ended January 31, 2008 were $59,457 as compared to
$60,493 for the three months ended January 31, 2007, representing a decrease in
total expenses of $1,036 or 1.7%.
Our net
loss for the three months ended January 31, 2008 was $59,457 compared to a net
loss of 60,493 for three months ended January 31, 2007, a decrease of $1,036, or
1.7%.
Nine
Months Ended January 31, 2008 Compared to Nine Months Ended January 31,
2007
We did
not have any revenues for the nine months ended January 31, 2008.
We did
not incur any exploration expenses during the nine months ended January 31, 2008
and 2007, as we have not commenced the exploration stage of our business. As we
did not earn any revenues for nine months ended January 31, 2008, our cost of
revenues for nine months ended January 31, 2008 was NIL.
Total
expenses for the nine months ended January 31, 2008 were $305,885 as compared to
$94,778 for the nine months ended January 31, 2007, representing an increase in
total expenses of $211,107 or 222%. The increase was due to higher listing,
filing and investor relations costs, setting up infra-structure for the company
and accrual of interest on loans effective May 1, 2007
Our net
loss for the nine months ended January 31, 2008 was $305,885 compared to a net
loss of $94,778 for nine months ended January 31, 2007, an increase of
$211,107-, or 222%. The substantial net loss was due to higher listing, filing
and investor relations costs, setting up infra-structure for the company and
accrual of interest on loans effective May 1, 2007
Liquidity
and Capital Resources
Our total
current assets as of January 31, 2008 were $1,869, including $1,869 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 $518,673 as of January 31, 2008 as compared to shareholders’
deficiency of $212,788 as of April 30, 2007. The shareholders’ deficit is as a
result of costs incurred as above. 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.
The
number of common shares outstanding increased from 37,620,000 to 75,240,000
effective as of March 6, 2007. This increase was a direct result of a 2-for-1
forward stock split of our common stock which we effected in March of
2007.
We had
$296,806 of negative cash outflow from operating activities for the nine months
ended on January 31, 2008, compared to a negative cash flow of $78,327 for the
nine months ended January 31, 2007, an increase in cash outflow of approximately
279% or $218,479. The substantial increase in cash outflow was primarily
attributable to loss incurred by the Company in connection with the increased
filing and investor relations costs, setting up infra-structure for the company
and accrual of interest on loans effective May 1, 2007.
We had
$577,004 of cash inflow from financing activities during the nine months ended
January 31, 2008, as compared to $1,828,100 cash flow from financing activities
for the nine months ended January 31, 2007, attributable to issuance of
promissory notes payable.
We had no
cash flow from investing activities for the nine months ended on January 31,
2008, and we did not have any cash flow from investing activities during the
nine months ended on January 31, 2007.
The
on-going negative cash flow from operations raises substantial doubt about our
ability to continue as a going concern. Our ability to continue as a going
concern is dependent on our ability to raise additional capital and implement
its business plan.
We have
not realized any revenues since inception, and for the nine month period ended
January 31, 2008, and we are 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 us. We anticipate that additional funding will be
required in the form of equity financing from the sale of our common stock.
However, we cannot provide investors with any assurance that we will be able to
raise sufficient funding from the sale of our common stock to fund the purchase
and the development of any future projects. We believe that debt financing will
not be an alternative for funding future corporate programs. We do 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
We
account 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 us 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
We
account 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, we are in the exploration
stage and have not commenced the exploration stage of our business and have a
negative cash flow from operations of $559,904 from inception. This raises
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern is dependent on our ability to raise additional
capital and implement our business plan. The financial statements do not include
any adjustments that might be necessary if we are 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 us 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 us 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 us 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. We have not yet determined the effect of implementing
this standard.
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