I have been quietly sitting on the sidelines and watching/reading. I have been long since 2008. I just read the 10k and here is the synthesis from that report (Pasted below my GLTA) which provides me the information that I need to determine my next move. It answers many of the questions being asked on this site and in paticular for me sheds light onto the impact (negatively) that the former CEO Hennis has had on moving forward. IMO I am going to put this on my low lever radar until spring, watching only for signs that financing has been secured or formal Toll based Milling contracts have been signed. Staying long.
GLTA
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion provides information that management believes is relevant to an assessment and understanding of the financial condition and results of operations of Colorado Goldfields Inc. (the “Company”).
This discussion addresses matters we consider important for an understanding of our financial condition and results of operations as of and for the two years ended August 31, 2009, as well as our future results. It consists of the following subsections:
• “Introduction and Plan of Operation” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for fiscal 2010;
• “Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations, and critical obligations;
• “Results of Operations and Comparison”,” which sets forth an analysis of the operating results for the last two years;
• “Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our consolidated financial statements and/or because they require difficult, subjective or complex judgments by our management;
• “Recent Accounting Pronouncements and Developments,” which summarizes recently published authoritative accounting guidance, how it might apply to us and how it might affect our future results.
This item should be read in conjunction with our financial statements and the notes thereto included in this annual report.
Introduction and Plan of Operation
The following discussion updates our plan of operation for the foreseeable future. The discussion also summarizes the results of our operations for the year ended August 31, 2009 and compares those results to the year ended August 31, 2008.
Fiscal 2009 was a pivotal year for Colorado Goldfields. We continued to experience the negative effects of the financial markets upheaval, which made capital acquisition extremely difficult. The litigation commenced by our former president, Todd C. Hennis necessarily caused all work relating to the Gold King Mine to be suspended, including the N.I. 43-101 report which was originally expected to be completed in the spring of 2009. We can not now predict when (if ever), the N. I. 43-101 report will be completed for the Gold King Mine pending the results of the litigation.
Therefore, in fiscal 2009 we turned away from concentrating only on the Hennis-owned Gold King Mine, and focused primarily on re-activation of the Pride of the West Mill, securing agreements for “custom” or “toll” milling, and seeking out new properties to explore and develop. In that regard, we were generally successful. We entered into two new lease/option agreements for properties located near our Mill facility, and completed the first major milestone regarding mill re-activation.
In 2007, our former management predicted profitability by end of calendar year 2009. Given the events described above, we are now targeting profits from operations by November 2010. Weather conditions in San Juan County, Colorado vary by season. During the winter season our activities are concentrated on analysis, planning, and development of properties in more temperate climates. Surface drilling and property exploration in San Juan County can reasonably take place between May and late October. Of course underground operations continue year-round.
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Our plan of operation for fiscal 2010 is to continue seeking funding for our operations and mining exploration program.
We will be primarily focused on three areas in fiscal 2010, 1) Re-activation of the Pride of the West Mill, 2) Exploration and development of the Brooklyn and King Solomon Mine, 3) Potential acquisition of other suitable mining properties.
In October 2009, we signed a letter of intent to purchase all the mining assets of Gemini Explorations Inc. (GMXS.OB) in exchange for 100 million restricted Class A common shares of Colorado Goldfields Inc.
Among the properties this transaction would bring into Colorado Goldfields is Los Chorros. This property is located in the municipality of Zaragoza in the department of Antiochia, Colombia. It lies in the El Bagre — Zaragoza mining district in the midst of Colombia’s most prolific gold producing region. This area has been the site of extensive placer mining for several decades along the Nechi River at the western foot of the Serrania de San Lucas. Exploration of the lode gold source areas of these placers in the vein deposits of these upland areas has resulted in a number of recent discoveries presently being developed into producing mines. The acquisition is subject to mutual due diligence. The due diligence period extends to November 30, 2009.
Liquidity and Capital Resources
We were formed in early 2004 and have primarily had limited activity until our acquisition of the option to acquire interests in the San Juan Properties. Since we have received no revenue from the production of gold or other metals, we have relied on funds received in connection with our equity and debt offerings to finance our ongoing operations. We have experienced net losses since inception, and we expect we will continue to incur losses for the next year. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.
Our financial statements have been prepared assuming that we will continue as a going concern. Since our inception in February 2004, we have not generated revenue and have incurred net losses. We have a working capital deficit of $1,083,785 at August 31, 2009, incurred net losses of $5,281,857 and $3,721,021 for the years ended August 31, 2009 and 2008 respectively, and have a deficit accumulated during the exploration stage of $9,380,436 for the period from February 11, 2004 (inception) through August 31, 2009. Accordingly, we have not generated cash flow from operations and have primarily relied upon loans from officers, promissory notes and advances from unrelated parties, sale of assets, and equity financing to fund its operations. These conditions (as indicated in the 2009 audit report of our Independent Registered Public Accounting Firm) raise substantial doubt about the Company’s ability to continue as a going concern
We currently have minimal cash on hand. Accordingly, we do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for goods and services. Considering the foregoing, we are dependent on additional financing to continue our operations and exploration efforts and, if warranted, to develop and commence mining operations. Our capital requirements for the foreseeable future include exploration of our mining properties, payment on a $650,000 promissory note which is collateralized by the Pride of the West Mill and accrued interest of $79,895, payment on notes payable including accrued interest to related parties totaling $100,774, payment on a promissory note payable, including interest of $143,009 to one of our vendors, re-activation expenses at the Mill, and our corporate overhead expenses.
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We are actively seeking additional equity or debt financing. However, there can be no assurance that funds required during the next twelve months or thereafter will be available from external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on our existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.
As of August 31, 2009, we had cash of approximately $600 and other current assets of approximately $262,500 and current liabilities of approximately $1,346,900. We used cash and cash equivalents of $615,377 in operating activities for the year ended August 31, 2009. Investing activities for the year ended August 31, 2009 consisted of the purchase of property, plant and equipment of $4,120, offset by the proceeds from the sale of property, plant and equipment of $109,500. Financing activities consisted of cash proceeds from loans made by officers during the year of $375,700.
Contractual Obligations
The table below summarizes contractual obligations as of August 31, 2009 due in the future.
Contractual Obligations Total Less than 1
Year 2 and 3 4 and 5
Principal payment on Pride of the West Mill(1) $ 650,000 $ 650,000
Note payable to vendor(2) $ 138,005 $ 138,005
Notes payable to officers(3) $ 100,774 $ 100,774
(1) This amount is due on June 29, 2010, along with any unpaid interest. The note is secured by the Mill; thus, a default on this obligation could result in foreclosure on our Mill.
(2) This amount was ordered by judgment of the court on October 16, 2009 payable to our former law firm Jackson Kelly PLLC. We continue to explore structured alternatives for satisfaction of this judgment; however a definitive agreement has not been reached.
(3) This amount is due to our Chief Executive Officer and Chief Financial Officer. While historically these officers have either forgiven or extended our indebtedness to them, there is no assurance that they will continue to do so.
Results of Operations
We are presently in the exploration stage of our business and have not earned any revenues to date, and we do not anticipate earning revenues until we acquire and develop mining properties with proven reserves or perform milling for other mining companies.
