Form 10-Q for ELRAY RESOURCES, INC.
9-Sep-2010
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-looking statements
This quarterly report on Form 10-Q contains "forward-looking statements" relating to the registrant which represent the registrant's current expectations or beliefs, including statements concerning registrant's operations, performance, financial condition and growth. For this purpose, any statement contained in this quarterly report on Form 10-Q that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "anticipation", "intend", "could", "estimate", or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel and variability of quarterly results, ability of registrant to continue its growth strategy and competition, certain of which are beyond the registrant's control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements.
The following discussion and analysis should be read in conjunction with the information set forth in the Company's audited financial statements for the year ended December 31, 2009.
Overview
Elray Resource, Inc. was incorporated in Nevada on December 13, 2006. Its wholly owned subsidiary, Angkor Wat Minerals Ltd. was incorporated in Cambodia on June 26, 2006.
The Company is in the business of base metal and energy exploration and development and currently owns a 100% interest in Porphyry Creek, a 90 square kilometer gold and copper claim located in Cambodia and a Letter of Intent to acquire 99% of Minera Monteverde SA, comprising a 99% interest in the assets of Monteverde's "Picacho" gold property code 300869 located in the El Oro Province, Canton Atahualpa, Ecuador.
Plan of Operation
The Company has commenced a two year program to run from August 2010 to August 2012 with the aim of advancing the projects to a stage where they are ready for early resource definition drilling. Porphyry Creek is slated to be progressed to early completion of initial exploration drilling of defined drill targets.
The Works Program is divided into two stages as follows:
Stage 1
? data compilation and assessment
? surface and underground geological mapping
? surface and underground geochemical sampling
? geophysics
? definition of drill targets
? Sinking of an exploration shaft
Stage 2
? exploration drilling (selective)
? preliminary metallurgical test work
? scoping studies (comprehensive)
The Porphyry Creek project is being worked with geological mapping and surface geochemical sampling continuing to locate the hydrothermal system that is indicated from previous reconnaissance mapping. After the Stage 1 program is well advanced, plans are for 1,500 meters of diamond core and reverse circulation exploration drilling to follow the sinking of an exploration shaft.
With the Picacho concession, prospecting work being done during the due diligence process included geological recognition and sampling of the current sediment and litogeochemical sampling. Samples were collected and tagged and will be tested for gold by way of fire assay testing, with AA or final gravimetric testing. In addition, other elements will be analysed in series for 35 elements by induced plasma gathered (ICP-MS) to determine the presence of sulphide, hallo effects, standards of alteration and indicating elements.
Prospecting works to be done include air photographs to be examined to draft the outline of structures and to project the continuity of known mineralized zones. The present and past underground mining work has to be projected, examined and sampled (material of the walls from the vein) in order to have an idea of the zones of enrichment of gold. Samples will be taken every 3m along each of the cuttings where there are veins. The testing of these samples for gold is through fire assay and other elements by ICP-MS.
Results of Operations
Three Months Ended June 30, 2010 compared to the Three Months Ended June 30, 2009
Revenues
We did not generate any revenues during the reporting periods.
Expenses
During the three months ended June 30, 2010 and 2009, general and administrative expenses were $21,000 and $31,000, respectively, and exploration expenses were $2,000 and $61,000, respectively. The decrease in exploration expenses was a result of the early arrival of the southwest monsoon and concentration of due diligence on the Ecuador concession.
Net Loss
We incurred net losses from operations of $30,000 and $99,000 for the three months ended June 30, 2010 and 2009, respectively.
Six Months Ended June 30, 2010 compared to the Six Months Ended June 30, 2009
Revenues
We did not generate any revenues during the reporting periods.
Expenses
During the six months ended June 30, 2010 and 2009, general and administrative expenses were $36,000 and $48,000, respectively, and exploration expenses were $8,000 and $82,000, respectively. Expenditure was reduced due to a concentration on due diligence on the Ecuador concession opportunity.
Net Loss
We incurred net losses from operations of $58,000 and $144,000 for the six months ended June 30, 2010 and 2009, respectively.
Liquidity and Capital Resources
Since its inception, the Company has financed its cash requirements from the sale of common stock and shareholder loans. Uses of funds have included activities to establish our business, professional fees, exploration expenses and other general and administrative expenses.
Due to our lack of operating history and present inability to generate revenues, there is substantial doubt about our ability to continue as a going concern.
Material Events and Uncertainties
Our operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties commonly encountered by comparable exploration stage companies.
There can be no assurance that we will successfully address such risks, expenses and difficulties.
