Business Context and Reporting Period
Company: Source Gold Corp. (formerly Ibex Resources Corp.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: October 31, 2009
Business Stage: Exploration stage mineral company.
Operations: The Company holds options to acquire mineral claims in British Columbia ("Queen" claim) and Ontario ("KRK West" or "Thunder Bay" claims). It has no revenue and is dependent on financing to continue operations.
Key Financial Metrics
| Metric | Three Months Ended Oct 31, 2009 | Three Months Ended Oct 31, 2008 | Cumulative (Inception to Oct 31, 2009) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(83,420) | $(48,323) | $(195,313) |
| Cash Balance (End of Period) | $53,517 | $62,189 | $53,517 |
| Working Capital | $17,062 | N/A | N/A |
| Total Current Liabilities | $36,455 | N/A | N/A |
| Cash Flow from Operations | $(56,497) | $(52,911) | $(161,858) |
| Cash Flow from Financing | $102,000 | $(1,200) | $215,375 |
Capital Structure: 44,800,000 common shares issued and outstanding as of October 31, 2009 (44,900,000 as of Dec 14, 2009).
Material Changes vs. Prior Period
- Increased Expenses: Operating expenses rose to $83,420 from $48,323 in the prior year quarter. This increase was primarily driven by $46,640 in mineral property option costs related to the new Thunder Bay claims.
- Financing Activity: The Company raised $100,000 in cash during the quarter through the issuance of 400,000 common shares at $0.25 per share. This contrasts with the prior year period which saw no equity financing.
- Asset Acquisition: Entered into a new property option agreement for 19 mineral claims in Ontario (KRK West) in October 2009.
- Corporate Changes: Changed name from Ibex Resources Corp. to Source Gold Corp. in August 2009 and executed a 4-for-1 forward stock split.
Outlook, Risks, and Management Commentary
- Going Concern: Management and auditors express substantial doubt about the Company's ability to continue as a going concern. Working capital is insufficient to sustain operations for the next 12 months without additional financing.
- Exploration Plans:
- Queen Claim (BC): Phase I exploration completed. Phase II (approx. $16,000) planned for Spring 2010. Phase III (approx. $210,000) is tentative pending Phase II results.
- KRK West Claim (Ontario): Initial sampling yielded high-grade gold (9.55 oz/ton) and copper (15.5%) in the "Little Brother" area. Further assay results expected shortly.
- Commitments: Significant future cash and exploration expenditures are required to earn interests in both the Queen and KRK West claims. A 3% Net Smelter Return royalty applies to the KRK West claims upon production.
- Internal Controls: Management concluded that disclosure controls and procedures were ineffective as of October 31, 2009.
- Subsequent Events: A new Corporate Management Services Agreement was signed on November 1, 2009, with a $7,500 signing bonus and $5,000 monthly fees.
Investor Verification Checklist
- Financing Needs: Verify the Company's ability to secure the capital required to meet option payments (e.g., $60,000 CDN due Dec 1, 2009 for KRK West) and fund exploration phases.
- Exploration Results: Confirm the validity of the high-grade assay results (9.55 oz/ton gold) from the KRK West property and the status of the Phase I report for the Queen claim.
- Share Issuance: Verify the issuance of the 2,000,000 shares promised to Thunder Bay Minerals as part of the option agreement.
- Management Stability: Note the resignation of the former president and the new management agreement terms effective November 2009.
- Going Concern Status: Assess the risk of liquidation if equity financing is not obtained in the near term.