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TFER > SEC Filings for TFER > Form 10-Q on 15-May-2013All Recent SEC Filings

Show all filings for TITAN IRON ORE CORP. | Request a Trial to NEW EDGAR Online Pro



Quarterly Report


Forward-Looking Information

This report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for future operations. In some cases, you can identify forward-looking statements by the use of terminology such as "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or "continue" or the negative of these terms or other comparable terminology. Examples of forward-looking statements made in this report include statements about:

our future exploration programs and results;
our future capital expenditures; and
our future investments in and acquisitions of mineral resource properties.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:
risks and uncertainties relating to the interpretation of sampling results, the geology, grade and continuity of mineral deposits;
risks and uncertainties that results of initial sampling and mapping will not be consistent with our expectations;
risks and uncertainties that the mineral deposits will never constitute proven and probable reserves which can be developed and mined economically;
mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes, permitting, or other unanticipated difficulties with or interruptions and delays in development and production;
the potential for delays in exploration activities;
risks related to the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses in exploration, development and production which are beyond the capacity of our company to manage;
risks related to commodity price fluctuations;
the uncertainty of an unproven business plan and lack of revenue generation and profitability based upon our limited history;
substantial risks inherent in the establishment of a new business venture since our company is at a very early stage;
risks and uncertainties inherent in mineral exploration ventures which by their very nature face a high risk of business failure;
risks related to intense competition in the mineral exploration and exploitation industry which causes our company to have to compete with our company's competitors for financing and for qualified managerial and technical employees;
risks related to the engagement of our company's directors and officers and key consultants in other business activities whereby they may not have sufficient time to attend to our company's business affairs;
risks related to failure to obtain adequate financing and additional capital on a timely basis and on acceptable terms for our planned exploration and development;
risks related to environmental regulation and liability, and the ability to secure necessary governmental permits, consents and approvals;
risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
risks related to tax assessments;
political, community, regulatory and permitting risks associated with mining exploration, development and production ; and
the risks in the section entitled "Risk Factors".

OF OPERATIONS - continued

Any of these risks could cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements contained in this report.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock.

As used in this report, the terms "we", "us", "our" and "our company" mean Titan Iron Ore Corp. unless the context clearly indicates otherwise.

Corporate Overview

We were incorporated in the State of Nevada on June 5, 2007. Our plan after our inception on June 5, 2007 was to produce user-friendly software that creates interactive digital yearbook software for schools and allows them to create and burn their own interactive digital yearbooks on CD/DVD.

Effective June 15, 2011, we completed a merger with our subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name from "Digital Yearbook Inc." to "Titan Iron Ore Corp."

Also effective June 15, 2011, we effected a 37 to one forward stock split of our authorized and issued and outstanding common and preferred stock. As a result, our authorized capital increased from 100,000,000 shares of common stock with a par value of $0.0001 to 3,700,000,000 shares of common stock with a par value of $0.0001 of which 5,151,000 shares of common stock outstanding increased to 190,587,000 shares of common stock. Subsequently, on June 20, 2011, we issued 2,100,000 common shares pursuant to a private placement unit offering, increasing the number of shares of common stock outstanding to 192,687,000.

Effective June 30, 2011 and in connection with the closing of the Acquisition Agreement, as defined below under the heading "Acquisition Agreement", Ohad David, Ruth Navon and Service Merchant Corp. (the "Vendors"), entered into an affiliate stock purchase agreement, whereby, among other things, the Vendors surrendered 142,950,000 common shares for cancellation.

On October 18, 2012 we entered into agreements to secure up to $10 million in equity line financing. Separately on the same date, we also received $200,000 in funding from convertible debentures. On April 2, 2013, we received another $260,000 in convertible note financings and retired 51% of the previous convertible debentures.

Acquisition Agreement for Wyoming Iron Complex

Effective June 30, 2011 and in connection with the entry into an agreement (the "Acquisition Agreement") with J2 Mining Ventures Ltd. ("J2 Mining") dated June 13, 2011 and attached as Exhibit 10.1 to our Current Report on Form 8-K filed June 16, 2011, we completed the acquisition of a 100% right, title and interest in and to a properties option agreement (the "Option Agreement") from J2 Mining with respect to iron ore mineral properties located in Albany County, Wyoming, by way of entering an assignment of mineral property option agreement with J2 Mining and Wyomex LLC (the "Assignment Agreement"), whereby our company was assigned 100% of the right, title and interest in and to the Option Agreement from J2 Mining.

The Option Agreement assigned to us from J2 Mining on September 30, 2011 was entered into on May 26, 2011 between J2 Mining and Wyomex LLC, pursuant to which Wyomex LLC, as optionor, granted to J2 Mining, as optionee, an exclusive right and option to acquire 100% undivided legal and beneficial interests in and to certain unpatented lode mining claims, fee lands, leased lands, and other interests in real property situated in Albany County, Wyoming (the "Wyoming Iron Complex"). Pursuant to the Assignment Agreement, J2 Mining agreed to assign all its rights and interests in the property and the Option Agreement, and transfer all of its obligations under the Option Agreement, to our company, and our company accepted and agreed to be bound by the terms of the Option Agreement.

OF OPERATIONS - continued

The term of the option commenced on May 26, 2011 and was extended for a total of six successive one-month periods, up through and including December 26, 2011, by providing notice to Wyomex LLC and payment of $5,000 for each of the first three additional months and $15,000 for the last three additional months (for a total payment of $60,000). Our company elected to exercise the option on December 21, 2011 by giving Wyomex LLC written notice of such election.

On April 10, 2012, we entered into and closed an asset purchase agreement (the "Asset Purchase Agreement") with Wyomex LLC whereby we purchased the Wyoming Iron Complex mineral project located in Albany County, Wyoming.

The purchase price for the Wyoming Iron Complex is $7,000,000 payable as follows:

Acknowledgement by Wyomex and credit to us of the sum of US$60,000, previously received by Wyomex for expenses and option payments related to the Wyoming Iron Complex.

Immediate payment by us to Wyomex of US$85,000, which payment was received by Wyomex on April 1, 2012.

A promissory note (the "Note") in the principal amount of US$6,855,000 was executed by us and delivered to Wyomex on April 10, 2012. The Note is interest-free. All Advance Production Payments and Production Payments (defined below) paid to Wyomex will be credited against any outstanding balance of or amounts due under the Note. The Note is secured by a purchase money mortgage (the "Mortgage").

Commencing six months from the date of closing and every six months thereafter, we will pay Wyomex, as an advance production payment, the initial amount of $62,500 (the "Advance Production Payment"), as adjusted for inflation, until Commencement of Commercial Production from the Property, which is defined as the first quarter of production in which 4.5 percent of the metal values or gross proceeds from the sales of mineral materials derived from the Wyoming Iron Complex exceeds the amount of the Advance Production Payment.

We assumed all liabilities of Wyomex to make all lease or other payments required following the closing under the mineral lease agreement between Wyomex and Chugwater Iron Company (the "Mineral Lease Agreement") relating to certain leased real property (the "Leased Real Property"), including payment of real property taxes and payment of the sum of $1,000 per month to be paid as an advance production payment under the Mineral Lease Agreement. We also assumed the responsibility of Wyomex to make the payments to maintain the federal unpatented lode mining claims described below, in the approximate yearly amount of $3,200.

At the Commencement of Commercial Production, the Advance Production Payment is converted to a 4.5% gross metal value payment ("GMP") on iron ore, concentrates, and/or other mineral materials produced and sold from the Wyoming Iron Complex by us to unrelated third parties (the "Production Payment"), provided, that for the Leased Real Property, the GMP payable to Wyomex is reduced by 50% such that Wyomex receives a 2.25% GMP on production from such lands, and the owner of the Leased Real Property shall receive the balance or a 2.25% GMP. Except for events of force majeure (including non-operation of the facilities after startup) in no event shall the total Production Payment paid by us to Wyomex and the owner of the Leased Real Property be less than US$150,000 in any given calendar year. All Advance Production Payments and Production Payments, as they relate to Leased Real Property, shall be reduced to Wyomex by the amounts of such payments that must be transmitted to the lessor of the Leased Real Property in accordance with the terms and obligations of the Mineral Lease for the Leased Real Property.

OF OPERATIONS - continued

Subsequent to the payment by us of the full amount of $7 million, the Purchase Price is deemed to be satisfied, and the Production Payment is reduced such that we pay to Wyomex, and the owner of the Leased Real Property, a total GMP royalty of 1.5% for all iron product and/or other mineral materials produced and sold from the Wyoming Iron Complex during the previous month. The Production Payments due to Wyomex and the owner of Leased Real Property shall be similarly reduced, as provided above, such that Wyomex receives a 0.75% GMP on such assets, and the owner of Leased Real Property shall receive a 0.75% GMP.

The Wyoming Iron Complex consist of certain unpatented lode mining claims situated in an unorganized mining district, Albany County, Wyoming, in Sections 14 and 24, Township 19 North, Range 72 West, 6th Principal Meridian, the names of which and the place of record of the location notices thereof in the official records of the county recorder and the authorized office of the Bureau of Land Management.

Our Current Business

With the entry into the Asset Purchase Agreement with respect to the Wyoming Iron Complex, we abandoned our efforts as an interactive software developer, and we are focusing our efforts in mineral exploration. Our business plan is to proceed with the exploration of the Wyoming Iron Complex consisting of mineral leases on 320 acres and 23 unpatented mining claims aggregating approximately 463 acres located in the county of Albany, Wyoming, USA, and performing due diligence for the possible acquisition of the Sunrise Mine described below.

Initial Work Program at Wyoming Iron Complex

The initial two phases lasted six to seven months and entailed expenditures of approximately $258,000.

The initial phase lasted three months and included:

Compilation of all existing geological data into one comprehensive data base for each of the Strong Creek and Iron Mountain Deposits; and

Development of an additional work program for the properties.

The second phase took a further three to four months. The specific work undertaken included confirmation drilling of existing drill targets to validate historic data (2000 feet).

The third phase will involve expansion and infill drilling to expand the resource on the Strong Creek deposit to upgrade and enhance the quality of the resource data base, bulk testing of Iron Mountain Ores to confirm the validity of the Krupp Renn or other pyrometallurgical process as applied to Strong Creek and Iron Mountain ores, bench scale tests on the Strong Creek ores to validate the Hazen /USBM separation results, and the initiation of a prefeasibility study based on historic and current data. This work program, subject to the receipt of adequate funding, is expected to take at least one year and entail an aggregate expenditure of up to $8 million.

Once we complete each phase of exploration, we will make a decision as to whether or not and how we proceed with each successive phase based upon the analysis of the results of that program.


On October 13, 2011, we announced a targeted first phase drilling program of 1700 feet at the Strong Creek Property in the Wyoming Iron Complex. A total of three HQ (2.5 inch diameter) diamond drill holes were completed to duplicate and verify drilling results obtained by Union Pacific Resources [c. 1955], the State of Wyoming [1995], and Radar Acquisitions Limited (2005). One hole was extended to a depth of 700 feet to explore the vertical potential of the mineralized zone. All work during this phase was done on the Strong Creek Project, the larger of Titan's two projects within the Wyoming Iron Complex. All samples were collected by drill crews with onsite supervision and placed in standard core boxes then transported to the facilities of Wyoming Analytical Laboratories Inc. in Laramie Wyoming. There, the core samples were cut in half lengthwise, then logged as to rock type, mineralization and structure. Samples were then taken consisting of one half of the cut core over a five foot interval, bagged and transported to the staff of the laboratory. There, samples were catalogued in the laboratory's management system and then taken to their preparation lab where they were crushed, screened and split to obtain a representative sample for analysis. These representative samples were then sent to Wyoming Analytical Laboratories' satellite lab in Golden Colorado where they were analyzed using X-Ray Fluorescence [XRF] methodology for Iron, Titanium, and Vanadium. The results of the Phase 1 drilling program are summarized as follows:

OF OPERATIONS - continued

Hole SC - 2011 - 01            From To   Interval
                               feet feet feet     Fe2O3   TiO2    V2O5
Total weighted average         0    700  700      19.719% 6.129%  0.117%
 Including 430 ft              70   500  430      19.950% 6.225%  0.119%
 Which itself included 5 ft    350  355  5        26.720% 12.560% 0.155%

Including an additional 196 ft 504 700 196 19.617% 6.110% 0.114%

Hole SC - 2011 - 02                From To   Interval
                                   feet feet feet     Fe2O3   TiO2   V2O5
Total weighted average             0    652  652      16.184% 5.049% 0.090%
 Including 410 ft                  0    410  410      17.511% 5.606% 0.433%
 Which itself included             0    258  258      17.839% 5.925% 0.107%
And 65 ft of                       340  405  65       18.945% 5.822% 0.118%

Including an additional 30 feet of 550 580 30 21.408% 6.490% 0.104%

Hole SC - 2011 - 03 From To Interval feet feet feet Fe2O3 TiO2 V2O5 Total weighted average 22 597 575 16.947% 4.690% 0.111% Including 137 ft of Lower grade 22 137 115 13.559% 2.098% 0.074% Including 460 ft Higher Grade 137 597 460 17.745% 5.335% 0.120%

All three holes were collared in iron-titanium-vanadium mineralization and were terminated in iron mineralization higher than hole averages, suggesting that mineralization extends to greater depth. Holes 1 and 2 were in higher grade material from the surface to the bottom of the hole. Hole 3 encountered weaker iron grades near the surface but strengthened for the last 3/4 of the hole. All values expressed here are weighted average grades over the core length specified.

In the case of the Strong Creek Property the prospect is without known reserves and our program of work has been and remains exploratory in nature. There are no existing facilities or historic mining or mineral processing facilities on this site.

Quality assurance and control (QA/QC) measures consisted of the analysis of duplicate samples which were taken at 50 foot intervals and tested in the same manner and a random series of samples from rejects were sent to SGS Lakefield Laboratories in Lakefield Ontario, Canada which acted as an umpire laboratory. SGS also performed Davis tube tests on selected random samples as a preliminary test for magnetic iron recovery.

All sample rejects were retained for a period of 90 days in the event any retesting was considered necessary. All remaining core was retained for future reference and analysis and sent to a secure and locked storage facility.

All work conducted during this program is under the direct control of the independent consulting geologist who managed the activities of the drilling contractor, civil contractor, and laboratory personnel. Water for drilling was provided by the rancher who holds the surface and water rights. All other supplies, fuel and power were provided by the drilling contractor.

OF OPERATIONS - continued

All permits were obtained through the Land Division of the Wyoming Department of Environmental Quality, (WDEQ), the lead agency in Wyoming for permitting and reclamation matters. All holes were abandoned and reclaimed in accordance with the policies and procedures of WDEQ and included capping of the holes, re-contouring the surface and reseeding with an approved seed mix vegetation. In November 2012, the drill sites were re-contoured and reseeded to the satisfaction of the surface rights owner.

Titan also has the Iron Mountain property under lease at the Wyoming Iron Complex. This is an historic mining operation, located approximately 6 miles to the east of Strong Creek, which has a small, existing open pit and iron ore stockpile, estimated by visual inspection at 50,000 tons, on the property. This stockpile has not been professionally surveyed as we do not currently have access to the site, as described below in Part II, Item 1, "Legal Proceedings.". Four representative samples from this stockpile were taken by Mountain Cement Company in 2009 and tested in their Laramie laboratory using X- Ray Fluorescence methods which yielded the following results:

                         Sample Name        TiO2%  Fe2O3%
                         Surface Material   18.62  56.63
                         North Side Pile    16.43  53.24
                         South Pile 1       14.55  52.66
                         South Pile 2       13.88  48.26
                         South Pile 3       13.75  49.99

                         Average            15.446 52.156

This range of values is consistent with the grades found in historic drill holes which were completed in the 1950's and 1960's.

The Iron Mountain Project is situated on private fee property, and the lease held by Titan includes all surface, mineral, and water rights on the 160 acre parcel. When this property was operating it was served by a dedicated power line connecting to the grid which can be reconnected should the project be reactivated. There are no other existing facilities on this site, but there are internal pit roads. Some 100 drill holes were drilled on this property in the 1950's and 1960's defining an iron-titanium mining resource which underpinned internal feasibility work undertaken by previous operators. As explained below, we do not currently have access to Iron Mountain.

Physical access to the site is obtained over county and state public roads, and private roads. The site lies 40.2 miles by road northeast of the city of Laramie, Wyoming. Access from Laramie is as follows:

staring in Laramie go north on US 287/State Road (SR) 30 (paved) for 18.1 miles to the Junction with SR 34,

turn Northeast on SR 34 (paved) and proceed for 10.8 miles to the junction with County Road 12 (Sybille Rd),

proceed 10.8 miles along County road 12 (asphalt) to the intersection with Wayside Rd, veer left and continue on County Rd 12 (dirt) for another 1.3 miles, and

turn East (Left) on a private dirt road and continue for 4.3 miles until arriving at the Iron Mountain Project.

Planned Work Program

Currently our work at Iron Mountain remains exploratory in nature. We have not performed any feasibility level work to ascertain whether Iron Mountain ores are economically viable in terms of processing and shipping to potential customers. At this time we maintain an environmental bond with the WDEQ covering historic reclamation liabilities at Iron Mountain and an operating permit for Limited Mining Operations under a 10 acre exemption pursuant to W.S. Section 35-11-401 (c)(vi).

OF OPERATIONS - continued

Our planned work program is focused on proving up a viable reserve at Iron Mountain. There is considerable information available from past work programs which can potentially be incorporated into a modern mine plan and plan of operations if substantiated by confirming drill data.

This work program, when access is granted, will involve:

1. The twinning of several of the historic drill holes to confirm the grades of Fe, Ti and other elements, followed by a more extensive drilling program.

2. The testing and evaluation of the Iron Mountain ores by potential customers as well as Titan's use of independent third party laboratories.

3. Benchmark environmental and archeological studies to satisfy the requirements of permitting with the WDEQ.

4. Establishing cost and scheduling parameters for a feasibility study/operations plan that along with funding will permit the initiation of production.

Much of the above work can be done contemporaneously and can be completed in such a manner that the operating plan and feasibility study can for the basis for a production decision.

Letter of Intent for Sunrise Mine

On April 15, 2013, we entered into a binding letter of intent with New Sunrise LLC, a limited liability company, whereby, following entry into a formal agreement and the closing thereof, we propose to acquire certain patented lode mining claims and other interests in real property and facilities located in Platte County, Wyoming for the purchase price of $12,000,000. An initial deposit of $25,000 is payable within 10 days. We will have 180 days to conduct due diligence investigations of the property, following which agreements will be prepared provided due diligence and other conditions have been met. We have the right to terminate the LOl any time during our due diligence investigations. Closing is dependent on satisfactory due diligence results, securing of sufficient financing to pay the purchase price, and other conditions.

The Sunrise Mine area lies within the Hartville Uplift, a N-NE trending Laramide anticline containing pre-Cambrian units. A series of flat-lying or gently dipping sediments were deposited unconformably on the pre-Cambrian complex and may be up to 300 feet thick. The iron ore bodies at the Sunrise mine occur as replacement deposits of specular hematite found in irregularly-shaped pods and lenses in steeply dipping, pre-Cambrian schists, and are limited by contact with a metadolomite unit. Only minor amounts of magnetite have been encountered, and apart from iron, no other commercially exploitable minerals have been produced from the property.

The Sunrise Mine consists entirely of patented lode mining claims totaling approximately 1400 acres, , water rights and other real property interests in Platte County, Wyoming. Sunrise was owned and operated between the late 1890's and 1980 by Colorado Fuel and Iron ("CF&I"), and iron ore and concentrates from Sunrise were shipped via rail to CF&I's blast furnace in Pueblo, Colorado to make steel. The historic mining operations utilized both open pit, and underground block caving and sublevel stoping methods. Ore was originally shipped directly to Pueblo without concentration, and commencing in 1964, ore was upgraded through a beneficiation plant to produce iron concentrates. Rail access still may be possible, but transport of iron materials from the mine site today is by truck. Currently, New Sunrise operates the property by mining and screening low grade iron dumps and tailings which are sold under contract to area cement producers.

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