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| SLGLF.OB > SEC Filings for SLGLF.OB > Form 10KSB on 16-Mar-2009 | All Recent SEC Filings |
16-Mar-2009
Annual Report
PLAN OF OPERATION
Certain forward-looking statements are discussed in this plan of operation with respect to the Company's activities and future financial results, which are made based upon management's current expectations and beliefs. These are subject to risks and uncertainties that may cause projected results or events to differ materially from actual results or events. There can be no assurance that future developments affecting the Company will be those anticipated by management. All currency references are in US dollar, the Company's reporting currency, unless otherwise noted.
Our plan of operation for the next twelve months is as follows:
The Nolan Gold Project
The plan of operation for the Nolan Gold Project for the 2009 fiscal year is the advancement toward the development and mining stage of our Nolan Gold and Antimony Project, especially along the southwestern end of the Solomon Shear Zone in the Workman's Bench Area. The Company is in a transitional phase between exploration and development. The recent preliminary feasibility study effective January 1, 2009, supported a mineral reserve of antimony and gold underlying the southwestern portion of the Solomon Shear Zone, an area referred to by the Company as Workman's Bench. The study by Bundtzen (2008 QP) concluded that the Nolan Gold and Antimony Project in the Workman's Bench area is economically viable.
Our plan of operations involves collecting a 1,000 cu yd bulk sample of the stibnite-gold vein material from the mineralized zones referred to as the 'A' Zone and possibly 'B' and West Zones. The bulk sample will be for larger scale milling and processing tests, and a more accurate mineralogical determination of the gold, especially what the Company has termed 'nugget effect' of the gold found in the massive stibnite veins. The Company believes that the grade of gold will increase upon the extraction of the larger scale bulk sample due to the 'nugget effect' which is not represented during the drilling effort. The successful extraction of a 1,000 cu yd sample will give a better indication of the special and physical relationships between the gold and the antimony. The bulk sample is also
Also, the plan of operations for 2009 involves performing a variety of characterization studies in preparation for the development stage and for permitting requirements necessary for the future production of the antimony-gold deposit underlying the Workman's Bench. These studies include but are not limited to additional hydrologic studies proximal to our planned underground workings, as well as environmental baseline studies of the flora and fauna and the baseline chemical and physical parameters of the creek water, and acid-base accounting (ABA) studies of the ore-hosting rock determining an appropriate, effective and safe disposal of acid mine waste rock.
Much of the work planned for 2009 is seasonal dependent. During the summer months we plan to use our diamond core drill for infill drilling for additional reserve estimates and structural interpretation. We plan to drill a minimum of 35 shallow (200 to 500 ft) NQ diamond core drill holes. During the summer months we plan to do a variety of surveying work which includes topographic surveys and establishment of more local survey control monuments for engineering purposes. Also, many of the formerly mentioned characterization studies will be continued through the summer months. Also, during the summer, we plan the procurement of necessary facility and system upgrades, as well as the acquisition of necessary equipment and the construction of a pilot mill facility. Currently we have a fully functioning all season enclosed 23 man camp with three functioning offices with computers and internet access. The camp has a STW treatment plant for sewage and graywater treatment. The camp site also has a large mechanics shop for working on heavy equipment such as backhoes and bulldozers. The camp also has multiple ADEC approved containments with tanks capable of storing 30,000 gallons of diesel fuel, and a peripheral explosives storage area. The camp also has an abundance of heavy equipment for excavating and road maintenance.
During the late fall of 2009, we plan to open our portal and begin the excavation of a decline to begin the extraction of the bulk sample. We plan to extract the majority of vein material from the 'A' Zone since more than 70% of the current reserve is in this zone. We plan to use a cut-and-fill stoping method. Once a stope is driven, the vein structure will be shot off the rib at an estimated width of 2 feet and mucked out for storage and processing at the surface. Waste rock will be temporarily stored on lined pads along the left limit Bench of Nolan Creek Valley, an area used previously by the Company for seasonal storage of bulk samples.
Currently, at the time of this writing, the Company's engineers and geologists have designed the subsurface routes for an access decline and egress routes for the extraction of the bulk sample material, as well as located sites for temporary tailings storage and additional layout sites and mill design. The geologists have finished their geotechnical studies for engineering purposes. However, depending on various characterization studies and additional infill drilling results during 2009, the subsurface plan may be amended.
Readers and investors need to take caution, in that much of the work planned in 2009 is contingent upon available funding and the success and speed of the permitting process.
Our proposed drilling program for 2009 will be aimed at lode gold and antimony exploration. Lode drilling will focus on Pringle Bench, Workman's Bench and the Hillside along the Solomon's Shear trend, and is designed to provide a better three dimensional understanding of the mineralized sections of the structure and how it is related to the placer gold deposits of the Nolan Creek area. Since the Project is advancing into the development stage, exploration drilling will not be conducted in the Fortress area which is part of a gold bearing east-west trending deformation zone. The Company plans to drill a minimum of 35 shallow (200-500 ft) diamond core drill holes. Placer drilling will be dependent on funding for the extraction of the Workman's Bench 1,000 cu yd bulk sample.
Workman's Bench - The Company plans to infill drill a minimum of 20 holes along the portion of Solomon Shear Zone that was drilled in 2008, to further define and increase reserves.
Pringle South - The Company plans to infill drill a minimum of 10 holes along the Solomon Shear Zone on the north side of Smith Creek in the area between the Pringle and Workman's Benches for a check of the continuity of the northeast striking zone.
Hillside Area - The bedrock underlying the Hillside Area was drilled in previous years with an RC drill, but the drilling locations were based on only limited bedrock trenching data. Since then, geophysical surveys and geochemical soil sampling surveys have indicated that the drill collars were too far west. The Company plans to select a minimum of 5 sites approximately 300 to 800 feet further to the east and drill back toward the west to intercept the zone. The Company plans to take advantage of the historic trails and use a backhoe to dig additional test trenches in the area further to the east.
The Total Cost for the Drilling Exploration Program is expected to be US $1,000,000.
We have been working on interpreting the geology of the Nolan area since 1979, when we first acquired the project. Our latest and most extensive exploration program began in early 2007 and was directed at improving our placer deposit definition and discovering potential lode sources of the placer gold. Our exploration geologists and mining engineers have worked to move this objective forward. Our exploration efforts have included the analysis of geophysical data, geochemical sampling results, Company records and analysis provided by government mineral investigation efforts and publications as well as the trenching and exploration drilling of target areas.
We plan to spend up to$10,000,000 in the next twelve months in carrying out our exploration, permitting and development activities for the Nolan Gold Project. Of this amount, $1,000,000 is projected for lode drilling and trenching on the Solomon Shear Zone. The actual amount that we spend on exploration will depend on the actual amount of funds that we have available for exploration. We are presently seeking to obtain sufficient financing to enable us to proceed with these plans.
Effective January 1, 2009, we have economically viable reserves on our properties that comprise the Nolan Gold Project.. We plan to carry out activities on the Nolan Gold Project. The objective of the activities on the Nolan Gold Project is to complete permitting, drill, and continue underground development and bulk sampling and processing.
Ester Dome Property
During 2009, we plan to complete the closure of the Grant Mill Tailings Pond. This pond is filled to capacity, and will be capped and decommissioned after a final approval of the tailings pond closure plan is received from State of Alaska regulatory agencies. A meaningful exploration program may be completed during the summer months to explore for and identify small high-grade gold anomalies as well as larger low-grade gold anomalies.
Completing the 2009 exploration work plan will be contingent on available funding.
Hammond Property
The encouraging drill results to date, the potential of extending the Slisco Channel to the southeast plus the possibility of discovering gold bearing tributary channels, make this a prospect for additional discoveries. This project will require additional funding. Even if funding is acquired, there is no assurance that a commercial gold bearing placer deposit will be developed. Even if a gold bearing deposit is developed, additional funding will be required to mine the deposit, and until a feasibility study is completed, there is no assurance that the deposit will be profitable to mine.
Eagle Creek Property
During 2009, annual assessment work will be completed on the Eagle Creek property to keep the mining claims in good standing. Assessment work will be focused on the northwest part of the claim block, where drilling and trenching has defined an intrusive host rock, thought to be a sill, containing low grade gold, silver and antimony mineralization. If funding permits, the Company will design a drilling program to further investigate the gold and by-product mineral distribution of the intrusive. Additional work which includes trenching and drilling will also be completed on the Number One. The Number One Vein was the lode quartz structure which has been mined commercially for antimony.
A commercially viable economic mineral deposit has not been defined on the property, and there is no assurance that a commercially viable economic mineral deposit exists on the property.
Low-Rank Coal-Water Fuel Project
During late May of 2007 Silverado environmental staff met in a "pre-permitting" meeting with representatives of the Mississippi Department of Environmental Quality ("MDEQ"). At that meeting all the various sections of MDEQ that would be involved in the permitting of the Green Fuel industrial process were present, representatives of these sections were assigned to our project, and the lead MDEQ regulator that will serve as our point-of-contact was designated.
Silverado is currently having a $150,000 study conducted on the chemical and physical characteristics of Mississippi Red Hills Lignite Coal at the Mineral Industry Research Laboratory at the University of Alaska (Fairbanks) and expects results by late 2009.
During the year ended November 30, 2008, we have spent approximately $300,000 to fund the research into lignite coal conversion in conjunction with the University of Fairbanks, Alaska, referred to above, and the preparation of a Phase I feasibility study and cost estimate for the Mississippi Commercial Low Rank Coal Water Fuel plant.
Cash Requirements and Additional Financings
At November 30, 2008, the Company had a deficit working capital of $1,293,886 as compared to working capital of $1,741,698 as at November 30, 2007. During the first quarter of 2009 we raised $147,000 in additional share capital and received $135,000 subscription through private placements.. Our plan of mining operations in Alaska anticipates that we will expend $10,000,000 during fiscal year 2009. In addition, we expect to spend $100,000 on research and development for the Green Fuel project and approximately $2,000,000 on general and administrative costs in the Company's Vancouver head office.
Our management is confident that they will be able to raise additional capital during the second, third and fourth quarters of Fiscal 2009 to cover the resulting anticipated shortfall of approximately $13,100,000. However, there is no assurance that we will be able to raise the financing necessary to enable us to implement our business plan.
Planned operations as described above could be curtailed if funding were not available.
CRITICAL ACCOUNTING POLICIES
Exploration Stage Company
The Securities and Exchange Commission's Exchange Act Guide 7 "Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations" requires that mining companies in the exploration stage should not refer to themselves as development stage companies in their financial statements, even though such companies should comply with Financial Accounting Board Statement No. 7, if applicable. We are an exploration stage company under the SEC's Guide 7 and accordingly, we have not been referred to as a development stage company in our financial statements. Accumulated results of operations are presented from December 1, 2001, the date we re-entered the exploration stage.
Mineral rights payments and exploration costs
Pursuant to EITF 04-02, "Whether Mineral Rights are Tangible or Intangible
Assets and Related Issues", the Company has modified its accounting policy with
respect to mineral claim payments, retroactively effective to June 1, 2004, to
capitalize the direct costs to acquire or lease mineral properties and mineral
rights as tangible assets. The direct costs include the costs of signature
(lease) bonuses, options to purchase or lease properties, and brokers' and legal
fees. If the acquired mineral rights relate to unproven properties, the Company
does not amortize the capitalized mineral costs, but evaluates the capitalized
mineral costs periodically for impairment. The Company expenses all costs
related to the exploration of mineral claims in which it had secured exploration
rights prior to establishment of proven and probable reserves.
Asset retirement obligation
Effective December 1, 2002, we adopted SFAS 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.
SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, we will recognize a gain or loss on settlement.
Effective December 1, 2006, the Company adopted the provisions of SFAS 123(R) (Share-based Compensation) requiring equity awards granted under its stock option plan to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award. Prior to December 1, 2006, the Company accounted for awards granted under its stock option plans utilizing the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS 123, "Accounting for Stock-Based Compensation" (SFAS 123), as amended. Under the existing stock option plans, all options vest entirely on the grant date. Therefore, there were no partially vested options outstanding as of the SFAS 123(R) adoption date.
OFF-BALANCE SHEET ARRANGEMENTS
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, and that would be considered material to investors.
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