ENTREE GOLD INC, 6-K filed on 8/8/2013
Report of Foreign Issuer
Document and Entity Information
6 Months Ended
Jun. 30, 2013
Cancelled
 
Entity Registrant Name
ENTREE GOLD INC 
Entity Central Index Key
0001271554 
Document Type
6-K 
Document Period End Date
Jun. 30, 2013 
Amendment Flag
false 
Current Fiscal Year End Date
--12-31 
Is Entity a Well-known Seasoned Issuer?
No 
Is Entity a Voluntary Filer?
No 
Is Entity's Reporting Status Current?
Yes 
Entity Filer Category
Smaller Reporting Company 
Document Fiscal Period Focus
Q2 
Document Fiscal Year Focus
2013 
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
Jun. 30, 2013
Dec. 31, 2012
ASSETS
 
 
Cash and cash equivalents (Note 4)
$ 52,051,940 
$ 4,255,508 
Receivables
215,202 
223,722 
Prepaid expenses
371,273 
779,605 
Total current assets
52,638,415 
5,258,835 
Equipment (Note 6)
459,039 
539,567 
Mineral property interests (Note 7)
49,382,291 
57,616,924 
Reclamation deposits
491,037 
606,155 
Other assets
81,320 
152,049 
Total assets
103,052,102 
64,173,530 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
Accounts payable and accrued liabilities
1,000,923 
559,579 
Loans payable to Oyu Tolgoi LLC (Note 8)
5,729,721 
5,563,657 
Deferred revenue (Note 9)
38,082,193 
Deferred income tax liabilities
8,913,131 
9,722,384 
Total liabilities
53,725,968 
15,845,620 
Stockholders' equity
 
 
Common stock, no par value, unlimited number authorized, (Note 10) 146,734,385 (December 31, 2012 - 128,877,243) issued and outstanding
177,065,075 
167,428,814 
Additional paid-in capital
19,725,501 
18,672,864 
Accumulated other comprehensive income (Note 13)
929,806 
3,253,019 
Accumulated deficit during the exploration stage
(148,394,248)
(141,026,787)
Total stockholders' equity
49,326,134 
48,327,910 
Total liabilities and stockholders' equity
$ 103,052,102 
$ 64,173,530 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Stockholders equity:
 
 
Common stock, par value
$ 0 
$ 0 
Common stock, Unlimited authorized shares
   
   
Common stock, issued shares
146,734,385 
128,877,243 
Common stock, outstanding shares
146,734,385 
128,877,243 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (USD $)
3 Months Ended 6 Months Ended 213 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
EXPENSES
 
 
 
 
 
Exploration (Note 7)
$ 1,904,636 
$ 2,402,084 
$ 3,508,426 
$ 6,018,071 
$ 96,498,103 
General and administration
1,190,851 
1,068,765 
3,964,347 
3,138,367 
57,311,596 
Consultancy and advisory fees
324,175 
1,311,101 
1,311,101 
Depreciation
26,704 
39,172 
55,540 
80,327 
1,482,607 
Foreign exchange loss (gain)
(892,725)
79,550 
(1,010,409)
104,888 
(928,684)
Impairment of mineral property interests
437,732 
437,732 
1,455,483 
Gain on sale of mineral property interests
(104,914)
(1,679,437)
Loss from operations
(2,991,373)
(3,589,571)
(8,266,737)
(9,236,739)
(155,450,769)
Gain on sale of investments
3,326,275 
Interest income
100,948 
50,710 
164,514 
138,828 
5,667,782 
Interest expense (Note 5)
(64,553)
(55,344)
(128,809)
(107,520)
(583,127)
Gain (loss) from equity investee (Note 5)
19,683 
(189,507)
(93,246)
(492,113)
(5,024,031)
Fair value adjustment of asset backed commercial paper
147,564 
147,564 
(2,184,967)
Loss from operations before income taxes
(2,787,731)
(3,783,712)
(8,176,714)
(9,697,544)
(154,248,837)
Current income tax recovery (expense)
(152,190)
Deferred income tax recovery
512,114 
539,007 
809,253 
1,378,007 
6,006,779 
Net loss
(2,275,617)
(3,244,705)
(7,367,461)
(8,319,537)
(148,394,248)
Comprehensive income (loss):
 
 
 
 
 
Net loss
(2,275,617)
(3,244,705)
(7,367,461)
(8,319,537)
(148,394,248)
Foreign currency translation adjustment (Note 13)
(1,740,015)
(1,107,276)
(2,323,213)
38,195 
929,806 
Comprehensive loss
$ (4,015,632)
$ (4,351,981)
$ (9,690,674)
$ (8,281,342)
$ (147,464,442)
Basic and diluted net loss per share
$ (0.02)
$ (0.03)
$ (0.05)
$ (0.06)
 
Weighted average number of common shares outstanding
146,734,385 
128,520,100 
140,913,549 
128,421,851 
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (USD $)
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income
Accumulated Deficit During Development Stage
Total
Beginning Balance - Amount at Jun. 30, 2012
$ 167,428,814 
$ 18,655,473 
$ 1,939,546 
$ (134,150,195)
$ 53,873,638 
Beginning Balance - Shares at Jun. 30, 2012
128,877,243 
 
 
 
 
Stock-based compensation
 
10,235 
   
   
10,235 
Foreign currency translation adjustment
 
 
1,921,720 
   
1,921,720 
Net loss
 
 
 
(1,899,158)
(1,899,158)
Ending Balance, Amount at Sep. 30, 2012
167,428,814 
18,665,708 
3,861,266 
(136,049,353)
53,906,435 
Ending Balance, Shares at Sep. 30, 2012
128,877,243 
 
 
 
 
Stock-based compensation
 
7,156 
   
   
7,156 
Foreign currency translation adjustment
 
 
(608,247)
   
(608,247)
Net loss
 
 
   
(4,977,434)
(4,977,434)
Ending Balance, Amount at Dec. 31, 2012
167,428,814 
18,672,864 
3,253,019 
(141,026,787)
48,327,910 
Beginning Balance - Shares at Dec. 31, 2012
128,877,243 
 
 
 
 
Private placement, Shares
17,857,142 
 
 
 
 
Private placement, Amount
9,722,897 
   
   
   
9,722,897 
Stock-based compensation
 
1,010,380 
   
   
1,010,380 
Share issuance costs
(86,636)
   
   
   
(86,636)
Foreign currency translation adjustment
 
 
(583,198)
   
(583,198)
Net loss
 
 
   
(5,091,844)
(5,091,844)
Ending Balance, Amount at Mar. 31, 2013
177,065,075 
19,683,244 
2,669,821 
(146,118,631)
53,299,509 
Ending Balance, Shares at Mar. 31, 2013
146,734,385 
 
 
 
 
Stock-based compensation
 
42,257 
   
   
42,257 
Share issuance costs
 
 
 
 
Foreign currency translation adjustment
 
 
(1,740,015)
 
(1,740,015)
Net loss
 
 
 
(2,275,617)
(2,275,617)
Ending Balance, Amount at Jun. 30, 2013
$ 177,065,075 
$ 19,725,501 
$ 929,806 
$ (148,394,248)
$ 49,326,134 
Ending Balance, Shares at Jun. 30, 2013
146,734,385 
 
 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
3 Months Ended 6 Months Ended 213 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net loss
$ (2,275,617)
$ (3,244,705)
$ (7,367,461)
$ (8,319,537)
$ (148,394,248)
Items not affecting cash:
 
 
 
 
 
Depreciation
26,704 
39,172 
55,540 
80,327 
1,482,607 
Stock-based compensation
42,257 
41,053 
1,052,637 
1,190,487 
23,806,397 
Fair value adjustment of asset backed commercial paper
2,332,531 
Escrow shares compensation
 
 
2,001,832 
Mineral property interest paid in stock and warrants
4,052,698 
Loss from equity investee
(19,683)
189,507 
93,246 
492,113 
5,024,031 
Interest expense
64,553 
55,344 
128,809 
107,520 
583,127 
Deferred income tax expense (recovery)
(512,114)
(539,007)
(809,253)
(1,378,007)
(6,006,779)
Gain on sale of mineral property interest
(104,914)
(1,679,437)
Impairment of mineral property interests
437,732 
437,732 
1,455,483 
Gain on sale of investments
(3,326,275)
Other items not affecting cash
(892,987)
155,371 
(736,099)
105,420 
(802,300)
Changes in assets and liabilities:
 
 
 
 
 
Receivables
(28,098)
(30,793)
(3,576)
261,657 
(124,531)
Prepaid expenses
248,707 
136,115 
378,568 
339,681 
(274,672)
Other assets
(240)
(32,502)
7,711 
(32,502)
30,624 
Accounts payable and accrued liabilities
215,810 
(1,245,880)
486,729 
(1,193,830)
764,133 
Deposit on metal credit delivering obligation
40,000,000 
40,000,000 
Net cash provided by (used in) operating activities
(2,692,976)
(4,476,325)
33,724,583 
(8,451,585)
(79,074,779)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Proceeds from issuance of capital stock
9,722,897 
1,628,583 
140,726,891 
Share issue costs
(86,636)
(108,058)
(4,952,907)
Net cash provided by financing activities
9,636,261 
1,520,525 
135,773,984 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Cash acquired on acquisition
837,263 
Mineral property interest
(50,000)
(100,000)
(50,000)
(2,210,000)
(4,954,610)
Reclamation deposits
115,180 
32,502 
115,180 
(303,970)
Short-term investments
5,076,271 
5,076,271 
Purchase of asset backed commercial paper
(4,031,122)
Acquisition of PacMag Metals Limited
(7,465,495)
Acquisition of equipment
(1,323)
(2,453)
(17,307)
(2,126,065)
Proceeds from sale of royalty interest
5,000,000 
5,000,000 
Proceeds from sale of mineral property interest
104,914 
1,596,305 
Proceeds from sale of investments
5,734,895 
Net cash provided by (used in) investing activities
63,857 
5,008,773 
5,062,727 
2,953,878 
(5,712,799)
Effect of foreign currency translation on cash and cash equivalents
(426,882)
(288,263)
(627,139)
(14,754)
1,065,534 
Change in cash and cash equivalents during the period
(3,056,001)
244,185 
47,796,432 
(3,991,936)
52,051,940 
Cash and cash equivalents, beginning of period
55,107,941 
10,276,077 
4,255,508 
14,512,198 
 
Cash and cash equivalents, end of period
52,051,940 
10,520,262 
52,051,940 
10,520,262 
52,051,940 
Cash paid for interest during the period
Cash paid for income taxes during the period
$ 0 
$ 0 
$ 0 
$ 0 
$ (152,190)
1. NATURE AND CONTINUANCE OF OPERATIONS
Note 1. NATURE AND CONTINUANCE OF OPERATIONS

1.           NATURE AND CONTINUANCE OF OPERATIONS

 

Entrée Gold Inc. was incorporated under the laws of the Province of British Columbia on July 19, 1995 and continued under the laws of the Yukon Territory on January 22, 2003. On May 27, 2005, Entrée Gold Inc. changed its governing jurisdiction from the Yukon Territory to British Columbia by continuing into British Columbia under the Business Corporations Act (British Columbia). The principal business activity of Entrée Gold Inc., together with its subsidiaries (collectively referred to as “the Company”), is the exploration of mineral property interests. To date, the Company has not generated significant revenues from its operations and is considered to be in the exploration stage.

 

All amounts are expressed in United States dollars, except for certain amounts denoted in Canadian dollars ("C$"), and Australian dollars ("A$").

 

These consolidated financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company currently earns no operating revenues. Continued operations of the Company are dependent upon the Company’s ability to secure additional equity capital or receive other financial support, and in the longer term to generate profits from business operations. Management believes that the Company has sufficient working capital to maintain its operations for the next fiscal year.

2. BASIS OF PRESENTATION
Note 2. BASIS OF PRESENTATION

2.           BASIS OF PRESENTATION

 

The interim period financial statements have been prepared by the Company in conformity with generally accepted accounting principles in the United States of America. The preparation of financial data is based on accounting principles and practices consistent with those used in the preparation of annual financial statements, and in the opinion of management these financial statements contain all adjustments necessary (consisting of normally recurring adjustments) to present fairly the financial information contained therein. Certain information and footnote disclosure normally included in the financial statements prepared in conformity with generally accepted accounting principles in the United States of America have been condensed or omitted. These interim period statements should be read together with the most recent audited financial statements and the accompanying notes for the year ended December 31, 2012. The results of operations for the six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013.

3. SIGNIFICANT ACCOUNTING POLICIES
Note 3. SIGNIFICANT ACCOUNTING POLICIES

3.           SIGNIFICANT ACCOUNTING POLICIES

 

These consolidated financial statements follow the same significant accounting principles as those outlined in the notes to the audited consolidated financial statements for the year ended December 31, 2012.

4. CASH, CASH EQUIVALENTS
Note 4. CASH, CASH EQUIVALENTS

4.           CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents consist of cash at bank and in hand of $52,051,940 as at June 30, 2013 (December 31, 2012 - $4,255,508).

5. LONG-TERM INVESTMENTS
Note 5. LONG-TERM INVESTMENTS

5.           LONG-TERM INVESTMENTS

 

Equity Method Investment

 

The Company has a 20% interest in a joint venture with Oyu Tolgoi LLC (“OTLLC”), a company owned 66% by Turquoise Hill Resources Ltd. (formerly Ivanhoe Mines Ltd.) (“Turquoise Hill”) and 34% by the Government of Mongolia (Note 7). The Company’s share of the loss of the joint venture is $93,246 for the six months ended June 30, 2013 (June 30, 2012 - $492,113) plus accrued interest expense of $128,809 for the six months ended June 30, 2013 (June 30, 2012 - $107,520).

6. EQUIPMENT
Note 6. EQUIPMENT

6.           EQUIPMENT

 

                                     
          June 30, 2013           December 31, 2012  
    Cost    

Accumulated

Depreciation

   

Net Book

Value

    Cost    

Accumulated

Depreciation

   

Net Book

Value

 
                                     
Office equipment   $ 116,347     $ 89,669     $ 26,678     $ 122,931     $ 90,900     $ 32,031  
Computer equipment     496,940       360,412       136,528       523,893       353,944       169,949  
Field equipment     512,761       279,138       233,623       540,422       274,694       265,728  
Buildings     265,890       203,680       62,210       280,936       209,077       71,859  
    $ 1,391,938     $ 932,899     $ 459,039     $ 1,468,182     $ 928,615     $ 539,567  
7. MINERAL PROPERTY INTERESTS
Note 7. MINERAL PROPERTY INTERESTS

7.           MINERAL PROPERTY INTERESTS

 

Title to mineral property interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral property interests. The Company has investigated title to its mineral property interests and, except as otherwise disclosed below, to the best of its knowledge, title to the mineral property interests is in good standing.

 

Material Properties

 

The Company’s two principal assets are its interest in the Lookout Hill property in Mongolia, and the Ann Mason project (the “Ann Mason Project”) in Nevada.

 

Lookout Hill, Mongolia

 

The Lookout Hill property in the South Gobi region of Mongolia is comprised of two mining licences, Shivee Tolgoi and Javhlant, granted by the Mineral Resources Authority of Mongolia ("MRAM")  in October 2009. Title to the two licences is held by the Company.

 

In October 2004, the Company entered into an arm’s-length Equity Participation and Earn-In Agreement (the "Earn-In Agreement") with Turquoise Hill. Under the Earn-In Agreement, Turquoise Hill agreed to purchase equity securities of the Company, and was granted the right to earn an interest in what is now the eastern portion of the Shivee Tolgoi mining licence and all of the Javhlant mining licence (together the "Joint Venture Property"). Most of Turquoise Hill’s rights and obligations under the Earn-In Agreement were subsequently assigned by Turquoise Hill to what was then its wholly-owned subsidiary, OTLLC. The Government of Mongolia subsequently acquired a 34% interest in OTLLC from Turquoise Hill.

 

On June 30, 2008, OTLLC gave notice that it had completed its earn-in obligations by expending a total of $35 million on exploration of the Joint Venture Property. OTLLC earned an 80% interest in all minerals extracted below a sub-surface depth of 560 metres from the Joint Venture Property and a 70% interest in all minerals extracted from surface to a depth of 560 metres from the Joint Venture Property. In accordance with the Earn-In Agreement, the Company and OTLLC formed a joint venture (the "Entrée-OTLLC Joint Venture") on terms annexed to the Earn-In Agreement.

 

The portion of the Shivee Tolgoi mining licence outside of the Joint Venture Property ("Shivee West") is 100% owned by the Company, but is subject to a right of first refusal by OTLLC.

 

The conversion of the original Shivee Tolgoi and Javhlant exploration licences into mining licences was a condition precedent to the Investment Agreement (the "Investment Agreement") between Turquoise Hill, OTLLC, the Government of Mongolia and Rio Tinto International Holdings Limited.  The licences are part of the contract area covered by the Investment Agreement, although the Company is not a party to the Investment Agreement.  The Shivee Tolgoi and Javhlant mining licences were each issued for a 30 year term and have rights of renewal for two further 20 year terms.

 

On February 27, 2013, notice (the "Notice") was delivered to the Company by MRAM that by Order No. 43 dated February 22, 2013, the Ministry of Mining had cancelled the July 10, 2009 Order of the Ministry of Mineral Resources and Energy (the "2009 Order") registering the Hugo Dummett (including the Hugo North Extension) and Heruga reserves.  The registration of reserves is a pre-condition to applying for the conversion of an exploration licence into a mining licence.  The Notice stated that the 2009 Order breached Clause 48.4 of the Minerals Law of Mongolia and Clause 9 of the Charter of the Minerals Resource Counsel.  The Notice, which was not concerned with the issuance of the mining licences, further advised that the Company is temporarily restricted from transfering, selling or leasing the Shivee Tolgoi and Javhlant mining licences.  The mining licences have not been revoked or cancelled, and the Company is currently working to resolve the temporary restriction.

 

As of June 30, 2013, the Entrée-OTLLC Joint Venture had expended approximately $25.7 million to advance the Joint Venture Property. Under the terms of the Entrée-OTLLC Joint Venture, OTLLC contributed on behalf of the Company its required participation amount charging interest at prime plus 2% (Note 8).

 

Ann Mason, Nevada, United States

 

The Ann Mason Project is defined by a series of both unpatented lode claims on public land administered by the Bureau of Land Management, and title to patented lode claims. The Company assembled this package of claims through a combination of staking and a series of transactions undertaken since August 2009, including the June 30, 2010 acquisition of PacMag Metals Limited (now PacMag Metals Pty Ltd.) ("PacMag"). The project area includes the Ann Mason and the Blue Hill deposits, and several early-stage copper porphyry targets including the Blackjack IP, Blackjack Oxide, Roulette and Minnesota targets. 

 

Certain of the unpatented lode claims (part of the area formerly known as the Blackjack property) are leased to the Company pursuant to a mining lease and option to purchase agreement ("MLOPA") with two individuals. Under the MLOPA, the Company is granted the option to purchase the claims for $500,000. If the Company exercises its option, the claims will be subject to a 3% net smelter returns ("NSR") royalty (which may be bought down to a 1% NSR royalty for $2 million). The MLOPA also provides for annual advance minimum royalty payments of $27,500 which commenced in June 2011 and will continue until the commencement of sustained commercial production. The advance payments will be credited against future royalty payments or the buy down of the royalty.

 

In September 2009, the Company entered into an agreement with Bronco Creek Exploration Inc. ("Bronco Creek"), a wholly-owned subsidiary of Eurasian Minerals Inc., whereby the Company may acquire an 80% interest in certain unpatented lode claims formerly known as the Roulette property. In order to acquire its interest, the Company must: (a) incur expenditures of $1,000,000, make cash payments of $140,000 and issue 85,000 common shares of the Company within three years (completed); (b) make aggregate advance royalty payments totalling $375,000 between the fifth and tenth anniversaries of the agreement; and (c) deliver a bankable feasibility study before the tenth anniversary of the agreement.

 

Certain of the patented lode claims are subject to a 2% NSR royalty in favour of AngloGold Ashanti (Nevada) Corp.  In February 2013, the Company entered into an agreement with Sandstorm Gold Ltd. ("Sandstorm") whereby the Company granted Sandstorm a 0.4% NSR royalty over certain of the unpatented lode claims, including the claims covering the Ann Mason and Blue Hill deposits, in return for an upfront payment of $5 million (the "Sandstorm NSR Payment") which was recorded as a recovery to acquisition costs.

 

Other Properties

 

During the six months ended June 30, 2013, the Company also had interests in non-material properties in Australia, United States, and Peru. Non-material properties include the following:

 

Australia Properties

 

The Company has mineral property interests in Australia which it acquired in conjunction with the PacMag acquisition, including the Blue Rose joint venture. The Company holds a 53.7% interest in the Blue Rose copper-iron-gold-molybdenum joint venture property, with Giralia Resources Pty Ltd., now a subsidiary of Atlas Iron Limited (ASX:AGO - "Atlas"), retaining the remaining 46.3% interest.

 

Lordsburg and Oak Grove

 

During the year ended December 31, 2012, the Company entered into an agreement with Empirical Discovery, LLC ("Empirical") to purchase a 100% interest in the Lordsburg and Oak Grove properties, New Mexico, subject to a 2% NSR royalty.  Pursuant to the agreement, the Company paid $100,000 to Empirical  and issued 500,000 common shares valued at $326,483. Subsequent to the end of the quarter, the Company informed Empirical of its intention to abandon the unpatented lode claims comprising the Oak Grove property.

 

During the six months ended June 30, 2013, the Company recorded an impairment of mineral property interests of $437,732 on the Oak Grove property.

 

Capitalized mineral property acquisition costs are summarized as follows:

 

   

June 30, 

2013

   

December 31, 

2012

 
             
USA            
Ann Mason   $ 48,055,476     $ 55,752,523  
Lordsburg     500,000       990,797  
Other     286,073       302,262  
Total USA     48,841,549       57,045,582  
                 
AUSTRALIA                
Blue Rose JV     540,742       571,342  
Total Australia     540,742       571,342  
                 
Total all locations   $ 49,382,291     $ 57,616,924  

 

Ann Mason capitalized mineral property acquisition costs are net of the $5 million Sandstorm NSR Payment.

 

Expensed exploration costs are summarized as follows:

                         
   

Three Months

Ended

June 30,

2013

   

Three Months

Ended

June 30,

2012

   

Six Months

Ended

June 30,

2013

   

Six Months

Ended

June 30,

2012

 
                         
US   $ 1,571,377     $ 1,677,194     $ 2,512,408     $ 4,546,825  
Mongolia     243,778       652,279       773,612       1,219,800  
Other     89,481       72,611       222,406       251,446  
                                 
Total all locations   $ 1,904,636     $ 2,402,084     $ 3,508,426     $  6,018,071  

8. LOANS PAYABLE
Note 8. LOANS PAYABLE

8.           LOANS PAYABLE

 

Under the terms of the Entrée-OTLLC Joint Venture (Note 7), OTLLC will contribute funds to approved joint venture programs and budgets on the Company’s behalf. Interest on each loan advance shall accrue at an annual rate equal to OTLLC’s actual cost of capital or the prime rate of the Royal Bank of Canada, plus two percent (2%) per annum, whichever is less, as at the date of the advance. The loans will be repayable by the Company monthly from ninety percent (90%) of the Company’s share of available cash flow from the Entrée-OTLLC Joint Venture. In the absence of available cash flow, the loans will not be repayable. The loans are not expected to be repaid within one year.

9. SANDSTORM FINANCING ARRANGEMENT
9. SANDSTORM FINANCING ARRANGEMENT

9.           SANDSTORM FINANCING ARRANGEMENT

 

In February 2013, the Company entered into an equity participation and funding agreement with Sandstorm that provided an upfront deposit (the "Deposit") from Sandstorm of $40 million. The Company will use future payments that it receives from its mineral property interests to purchase and deliver metal credits to Sandstorm, in amounts that are indexed to the Company’s share of gold, silver and copper production from the Joint Venture Property as follows:

 

·   25.7% of the Company’s share of gold and silver, and 2.5% of the Company’s share of copper, produced from the portion of the Shivee Tolgoi mining licence included in the Joint Venture Property; and

 

·   33.8% of the Company’s share of gold and silver, and 2.5% of the Company’s share of copper, produced from the Javhlant mining licence.

 

In addition to the Deposit, upon delivery of the metal credits Sandstorm will make a cash payment to the Company equal to the lesser of the prevailing market price and $220 per ounce of gold, $5 per ounce of silver and $0.50 per pound of copper (subject to inflation adjustments).  After approximately 8.6 million ounces of gold, 40.3 million ounces of silver and 9.1 billion pounds of copper have been produced from the entire Joint Venture Property, the cash payment will increase to the lesser of the prevailing market price and $500 per ounce of gold, $10 per ounce of silver and $1.10 per pound of copper (subject to inflation adjustments). To the extent that the prevailing market price is greater than the amount of the cash payment, the difference between the two will be credited against the Deposit (the net amount of the Deposit being the "Unearned Balance").

 

In the event of a partial expropriation of the Company’s interest in the Joint Venture Property, which is not reversed during the abeyance period provided for in the equity participation and funding agreement, the Company will be required to return a pro rata portion of the Deposit (the amount of the repayment not to exceed the amount of the Unearned Balance) and the metal credits that the Company is required to deliver will be reduced proportionately. In the event of a full expropriation, the full amount of the Unearned Balance must be returned with interest.

 

The Company is not required to deliver actual metal, and the Company may use revenue from any of its assets to purchase the requisite amount of metal credits.

 

The Company recorded the Deposit as deferred revenue and will recognize amounts in revenue as metal credits are delivered to Sandstorm, which is expected to commence in 2019.

 

In addition, the Company entered into an agreement with Sandstorm whereby the Company granted Sandstorm a 0.4% NSR royalty over certain of the Ann Mason Project claims, including the claims covering the Ann Mason and Blue Hill deposits, in return for the Sandstorm NSR Payment of $5 million which was recorded as a recovery to acquisition costs.

 

The Company also completed a private placement with Sandstorm for gross proceeds of $9,722,897.

 

The transactions costs related to the Sandstorm financing arrangement are summarized as follows:

       
   

Three Months

Ended

March 31,

2013

 
       
Consultancy & advisory fees   $ 936,926  
Legal fees included in general and adminstration expenses     192,203  
Share issuance costs     86,636  
    $ 1,215,765  
10. COMMON STOCK
Note 10. COMMON STOCK

10.           COMMON STOCK

 

Share issuances

 

In March 2013, the Company completed a private placement to Sandstorm consisting of 17,857,142 common shares issued at a price of C$0.56 per share for gross proceeds of $9,722,897.  Related share issuance costs were $86,636.

 

Stock options

 

The Company has adopted a stock option plan (the "Plan") to grant options to directors, officers, employees and consultants. Under the Plan, the Company may grant options to acquire up to 10% of the issued and outstanding shares of the Company. Options granted can have a term of up to ten years and an exercise price typically not less than the Company's closing stock price on the last trading day before the date of grant. Vesting is determined at the discretion of the Board of Directors.

 

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. For employees, the compensation expense is amortized on a straight-line basis over the requisite service period which approximates the vesting period. Compensation expense for stock options granted to non-employees is recognized over the contract services period or, if none exists, from the date of grant until the options vest. Compensation associated with unvested options granted to non-employees is re-measured on each balance sheet date using the Black-Scholes option pricing model.

 

The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. Companies are required to utilize an estimated forfeiture rate when calculating the expense for the reporting period.

 

Based on the best estimate, management applied the estimated forfeiture rate of Nil in determining the expense recorded in the accompanying Statements of Operations and Comprehensive Loss.

 

Stock option transactions are summarized as follows:

 

             
   

 

 

Number of Options

   

Weighted Average

Exercise Price

(C$)

 
Balance at December 31, 2011     9,135,500       2.16  
   Granted     1,882,000       1.22  
   Expired     (1,177,500 )     2.14  
   Forfeited     (617,000 )     2.05  
Balance at December 31, 2012     9,223,000       1.98  
   Granted     4,985,000       0.56  
Balance at March 31, 2013     14,208,000       1.48  
   Granted     200,000       0.34  
   Expired     (1,305,000 )     2.00  
Balance at June 30, 2013     13,103,000       1.41  

 

There were 5,185,000 stock options granted during the six months ended June 30, 2013 with a weighted average exercise price of C$0.55 and a weighted average fair value of C$0.21. The number of stock options exercisable at June 30, 2013 was 13,103,000.

 

At June 30, 2013, the following stock options were outstanding:

                             

 

Number of

Options

   

Exercise

Price

(C$)

   

Aggregate

Intrinsic Value

(C$)

 

 

 

Expiry Date

 

Number of

Options

Exercisable

   

Aggregate

Intrinsic Value

(C$)

 
                             
  37,500       2.02       -   July 17, 2013     37,500       -  
  1,032,000       1.55       -   September 17, 2013     1,032,000       -  
  5,000       1.55       -   October 10, 2013     5,000       -  
  50,000       1.27       -   January 18, 2014     50,000       -  
  1,289,000       1.32       -   February 12, 2014     1,289,000       -  
  1,472,500       2.60       -   December 29, 2014     1,472,500       -  
  300,000       2.34       -   September 22, 2015     300,000       -  
  1,372,500       2.86       -   November 22, 2015     1,372,500       -  
  200,000       3.47       -   January 4, 2016     200,000       -  
  125,000       2.94       -   March 8, 2016     125,000       -  
  150,000       2.05       -   July 7, 2016     150,000       -  
  100,000       2.23       -   July 15, 2016     100,000       -  
  1,684,500       1.25       -   January 6, 2017     1,684,500       -  
  100,000       0.73       -   June 18, 2017     100,000       -  
  4,985,000       0.56       -   March 15, 2018     4,985,000       -  
  50,000       0.32       2,000   April 9, 2018     50,000       2,000  
  150,000       0.34       3,000   June 27, 2018     150,000       3,000  
  13,103,000             $ 5,000         13,103,000     $ 5,000  

 

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of C$0.36 per share as of June 30, 2013, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options vested and exercisable as of June 30, 2013 was 200,000. The total intrinsic value of options exercised during the six months ended June 30, 2013 was $Nil (June 30, 2012 - $Nil).

 

Subsequent to June 30, 2013, 37,500 stock options with an exercise price of C$2.02 expired.

 

Stock-based compensation

 

5,185,000 stock options were granted during the six months ended June 30, 2013. The fair value of stock options granted during the six months ended June 30, 2013 was $1,051,712 (June 30, 2012 - $1,124,930). Stock-based compensation recognized during the six months ended June 30, 2013 was $1,052,637 (June 30, 2012 - $1,149,434) which has been recorded in the consolidated statements of operations as follows with corresponding additional paid-in capital recorded in stockholders' equity:

 

                               
   

Three Months

Ended

June 30,

2013

   

Three Months

Ended

June 30,

2012

   

Six Months

Ended

June 30,

2013

   

Six Months

Ended

June 30,

2012

   

 

Cumulative to

June 30,

2013

 
Exploration   $ -     $ 8,902     $ 148,125     $ 266,812     $ 4,222,978  
General and administration     42,257       32,151       904,512       923,675       19,583,419  
    $ 42,257     $ 41,053     $ 1,052,637     $ 1,190,487     $ 23,806,397  

 

The following weighted-average assumptions were used for the Black-Scholes valuation of stock options granted:

             
             
   

June 30,

2013

   

June 30,

2012

 
             
Risk-free interest rate     1.25 %     1.13 %
Expected life of options (years)     4.3       4.9  
Annualized volatility     76 %     73 %
Dividend rate     0.00 %     0.00 %
                 
11. SEGMENT INFORMATION
Note 11. SEGMENT INFORMATION

11.           SEGMENT INFORMATION

 

The Company operates in one business segment being the exploration of mineral property interests.

 

Geographic information is as follows:

             
             
    June 30, 2013     December 31, 2012  
             
Identifiable assets            
   USA   $ 49,810,951     $ 58,094,222  
   Canada     51,536,322       3,953,053  
   Australia     1,335,885       1,487,117  
   Mongolia     355,679       613,723  
   Other     13,265       25,415  
    $ 103,052,102     $ 64,173,530  
12. FINANCIAL INSTRUMENTS
Note 12. FINANCIAL INSTRUMENTS

12.           FINANCIAL INSTRUMENTS

 

The Company's financial instruments generally consist of cash and cash equivalents, receivables, deposits, accounts payable and accrued liabilities and loans payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, except as noted below.

 

The Company is exposed to currency risk by incurring certain expenditures in currencies other than the Canadian dollar. The Company does not use derivative instruments to reduce this currency risk.

 

Fair value measurement is based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value which are:

 

Level 1 — Quoted prices that are available in active markets for identical assets or liabilities.

 

Level 2 — Quoted prices in active markets for similar assets that are observable.

 

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

At June 30, 2013, the Company had Level 1 financial instruments, consisting of cash and cash equivalents, with a fair value of $52,051,940.

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI)
Note 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI)

13.           ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI)

                         
   

Three

Months

Ended

June 30,

2013

   

Three

Months

Ended

June 30,

2012

   

Six

Months

Ended

June 30,

2013

   

Six

Months

Ended

June 30,

2012

 
                         
Accumulated OCI, beginning of year:                        
Currency translation adjustment   $ 2,669,821     $ 3,046,822     $ 3,253,019     $ 1,901,351  
    $ 2,669,821     $ 3,046,822     $ 3,253,019     $ 1,901,351  
                                 
Other comprehensive income (loss) for the year:                                
Currency translation adjustments   $ (1,740,015 )   $ (1,107,276 )   $ (2,323,213 )   $ 38,195  
    $ (1,740,015 )   $ (1,107,276 )   $ (2,323,213 )   $ 38,195  
                                 
Accumulated OCI, end of year:                                
Currency translation adjustment   $ 929,806     $ 1,939,546     $ 929,806     $ 1,939,546  
    $ 929,806     $ 1,939,546     $ 929,806     $ 1,939,546  

 

14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Note 14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

 

14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

 

The significant non-cash transaction for the six months ended June 30, 2013 consisted of the following item:

  

·   funding by OTLLC of the Company’s investment requirements for the Entrée-OTLLC Joint Venture of $93,246 (June 30, 3012 – $492,113).
15. COMMITMENTS
Note 15. COMMITMENTS

15.           COMMITMENTS

 

The Company is committed to make lease payments for the rental of office space as follows:

 

2013   $ 153,755  
2014     217,198  
2015     209,289  
2016     211,927  
2017     88,302  
    $ 880,471  

 

The Company incurred lease expense of $189,095 (June 30, 2012 – $184,139) for the six months ended June 30, 2013.

17. SUBSEQUENT EVENTS
Note 17. SUBSEQUENT EVENTS

17.           SUBSEQUENT EVENTS

 

Subsequent to June 30, 2013:

 

The Company informed Empirical of its intention to abandon the unpatented lode claims comprising the Oak Grove property in New Mexico.

 

37,500 stock options with an exercise price of C$2.02 expired.

3. SIGNIFICANT ACCOUNTING POLICIES (Policies)
SIGNIFICANT ACCOUNTING POLICIES

3.           SIGNIFICANT ACCOUNTING POLICIES

 

These consolidated financial statements follow the same significant accounting principles as those outlined in the notes to the audited consolidated financial statements for the year ended December 31, 2012.

6. EQUIPMENT (Tables)
Equipment
                                     
          June 30, 2013           December 31, 2012  
    Cost    

Accumulated

Depreciation

   

Net Book

Value

    Cost    

Accumulated

Depreciation

   

Net Book

Value

 
                                     
Office equipment   $ 116,347     $ 89,669     $ 26,678     $ 122,931     $ 90,900     $ 32,031  
Computer equipment     496,940       360,412       136,528       523,893       353,944       169,949  
Field equipment     512,761       279,138       233,623       540,422       274,694       265,728  
Buildings     265,890       203,680       62,210       280,936       209,077       71,859  
    $ 1,391,938     $ 932,899     $ 459,039     $ 1,468,182     $ 928,615     $ 539,567  
7. MINERAL PROPERTY INTERESTS (Tables)
   

June 30, 

2013

   

December 31, 

2012

 
             
USA            
Ann Mason   $ 48,055,476     $ 55,752,523  
Lordsburg     500,000       990,797  
Other     286,073       302,262  
Total USA     48,841,549       57,045,582  
                 
AUSTRALIA                
Blue Rose JV     540,742       571,342  
Total Australia     540,742       571,342  
                 
Total all locations   $ 49,382,291     $ 57,616,924  
                         
   

Three Months

Ended

June 30,

2013

   

Three Months

Ended

June 30,

2012

   

Six Months

Ended

 June 30,

2013

   

Six Months

Ended

June 30,

2012

 
                         
US   $ 1,571,377     $ 1,677,194     $ 2,512,408     $ 4,546,825  
Mongolia     243,778       652,279       773,612       1,219,800  
Other     89,481       72,611       222,406       251,446  
                                 
Total all locations   $ 1,904,636     $ 2,402,084     $ 3,508,426     $ 6,018,071  
9. SANDSTORM FINANCING ARRANGEMENT (Tables)
Schedule of transaction costs related to the Sandstorm financing agreement
       
   

Three Months

Ended

March 31,

2013

 
       
Consultancy & advisory fees   $ 936,926  
Legal fees included in general and adminstration expenses     192,203  
Share issuance costs     86,636  
    $ 1,215,765  
10. COMMON STOCK (Tables)
             
   

 

 

Number of Options

   

Weighted Average

Exercise Price

(C$)

 
Balance at December 31, 2011     9,135,500       2.16  
   Granted     1,882,000       1.22  
   Expired     (1,177,500 )     2.14  
   Forfeited     (617,000 )     2.05  
Balance at December 31, 2012     9,223,000       1.98  
   Granted     4,985,000       0.56  
Balance at March 31, 2013     14,208,000       1.48  
   Granted     200,000       0.34  
   Expired     (1,305,000 )     2.00  
Balance at June 30, 2013     13,103,000       1.41  
                             

 

Number of

Options

   

Exercise

Price

(C$)

   

Aggregate

Intrinsic Value

(C$)

 

 

 

Expiry Date

 

Number of

Options

Exercisable

   

Aggregate

Intrinsic Value

(C$)

 
                             
  37,500       2.02       -   July 17, 2013     37,500       -  
  1,032,000       1.55       -   September 17, 2013     1,032,000       -  
  5,000       1.55       -   October 10, 2013     5,000       -  
  50,000       1.27       -   January 18, 2014     50,000       -  
  1,289,000       1.32       -   February 12, 2014     1,289,000       -  
  1,472,500       2.60       -   December 29, 2014     1,472,500       -  
  300,000       2.34       -   September 22, 2015     300,000       -  
  1,372,500       2.86       -   November 22, 2015     1,372,500       -  
  200,000       3.47       -   January 4, 2016     200,000       -  
  125,000       2.94       -   March 8, 2016     125,000       -  
  150,000       2.05       -   July 7, 2016     150,000       -  
  100,000       2.23       -   July 15, 2016     100,000       -  
  1,684,500       1.25       -   January 6, 2017     1,684,500       -  
  100,000       0.73       -   June 18, 2017     100,000       -  
  4,985,000       0.56       -   March 15, 2018     4,985,000       -  
  50,000       0.32       2,000   April 9, 2018     50,000       2,000  
  150,000       0.34       3,000   June 27, 2018     150,000       3,000  
  13,103,000             $ 5,000         13,103,000     $ 5,000  
                               
   

Three Months

Ended

June 30,

2013

   

Three Months

Ended

 June 30,

2012

   

Six Months

Ended

June 30,

2013

   

Six Months

Ended

June 30,

2012

   

 

Cumulative to

June 30,

2013

 
Exploration   $ -     $ 8,902     $ 148,125     $ 266,812     $ 4,222,978  
General and administration     42,257       32,151       904,512       923,675       19,583,419  
    $ 42,257     $ 41,053     $ 1,052,637     $ 1,190,487     $ 23,806,397  
             
             
   

June 30,

2013

   

June 30,

2012

 
             
Risk-free interest rate     1.25 %     1.13 %
Expected life of options (years)     4.3       4.9  
Annualized volatility     76 %     73 %
Dividend rate     0.00 %     0.00 %
                 
11. SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION
             
             
    June 30, 2013     December 31, 2012  
             
Identifiable assets            
   USA   $ 49,810,951     $ 58,094,222  
   Canada     51,536,322       3,953,053  
   Australia     1,335,885       1,487,117  
   Mongolia     355,679       613,723  
   Other     13,265       25,415  
    $ 103,052,102     $ 64,173,530  
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI) (Tables)
ACCUMULATED OTHER COMPREHENSIVE INCOME
                         
   

Three Months

Ended

June 30,

2013

   

Three Months

Ended

June 30,

 2012

   

Six Months

Ended

 June 30,

2013

   

Six Months

Ended

June 30,

2012

 
                         
Accumulated OCI, beginning of year:                        
Currency translation adjustment   $ 2,669,821     $ 3,046,822     $ 3,253,019     $ 1,901,351  
    $ 2,669,821     $ 3,046,822     $ 3,253,019     $ 1,901,351  
                                 
Other comprehensive income (loss) for the year:                                
Currency translation adjustments   $ (1,740,015 )   $ (1,107,276 )   $ (2,323,213 )   $ 38,195  
    $ (1,740,015 )   $ (1,107,276 )   $ (2,323,213 )   $ 38,195  
                                 
Accumulated OCI, end of year:                                
Currency translation adjustment   $ 929,806     $ 1,939,546     $ 929,806     $ 1,939,546  
    $ 929,806     $ 1,939,546     $ 929,806     $ 1,939,546  
15. COMMITMENTS (Tables)
Lease payments
2013   $ 153,755  
2014     217,198  
2015     209,289  
2016     211,927  
2017     88,302  
    $ 880,471  
5. LONG-TERM INVESTMENTS (Details Narrative) (USD $)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
LONG-TERM INVESTMENTS
 
 
Loss in joint venture
$ 93,246 
$ 492,113 
Accrued interest expense
$ 128,809 
$ 107,520 
6. EQUIPMENT (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
PropertyPlant and Equipment
 
 
Cost
$ 1,391,938 
$ 1,468,182 
Accumulated Depreciation
932,899 
928,615 
Net Book Value
459,039 
539,567 
OfficeEquipmentMember
 
 
PropertyPlant and Equipment
 
 
Cost
116,347 
122,931 
Accumulated Depreciation
89,669 
90,900 
Net Book Value
26,678 
32,031 
ComputerEquipmentMember
 
 
PropertyPlant and Equipment
 
 
Cost
496,940 
523,893 
Accumulated Depreciation
360,412 
353,944 
Net Book Value
136,528 
169,949 
FieldEquipmentMember
 
 
PropertyPlant and Equipment
 
 
Cost
512,761 
540,422 
Accumulated Depreciation
279,138 
274,694 
Net Book Value
233,623 
265,728 
BuildingMember
 
 
PropertyPlant and Equipment
 
 
Cost
265,890 
280,936 
Accumulated Depreciation
203,680 
209,077 
Net Book Value
$ 62,210 
$ 71,859 
7. MINERAL PROPERTY INTERESTS (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
$ 49,382,291 
$ 57,616,924 
AustraliaMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
540,742 
571,342 
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
48,841,549 
57,045,582 
BlueRoseJVMember |
AustraliaMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
540,742 
571,342 
AnnMasonMember |
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
48,055,476 
55,752,523 
EmpiricalMember |
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
500,000 
990,797 
OtherProperty |
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
$ 286,073 
$ 302,262 
7. MINERAL PROPERTY INTERESTS (Details 1) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
$ 1,904,636 
$ 2,402,084 
$ 3,508,426 
$ 6,018,071 
US
 
 
 
 
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
1,571,377 
1,677,194 
2,512,408 
4,546,825 
Mongolia
 
 
 
 
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
243,778 
652,279 
773,612 
1,219,800 
Other
 
 
 
 
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
$ 89,481 
$ 72,611 
$ 222,406 
$ 251,446 
9. SANDSTORM FINANCING ARRANGEMENT (Details) (USD $)
6 Months Ended
Jun. 30, 2013
Sandstorm Financing Arrangement Details
 
Consultancy and advisory fees
$ 936,926 
Legals fees included in general and adminstration expenses
192,203 
Share issuance costs
86,636 
Total
$ 1,215,765 
10. COMMON STOCK (Details) (USD $)
3 Months Ended 12 Months Ended
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Number of options
 
 
 
Beginning Balance
14,208,000 
9,223,000 
9,135,500 
Granted
200,000 
4,985,000 
1,882,000 
Expired
(1,305,000)
 
(1,177,500)
Forfeited
 
 
(617,000)
Ending Balance
13,103,000 
14,208,000 
9,223,000 
Weighted Average Exercise Price
 
 
 
Beginning Balance
$ 1.48 
$ 1.98 
$ 2.16 
Granted
$ 0.34 
$ 0.56 
$ 1.22 
Expired
$ 2.00 
 
$ 2.14 
Forfeited
 
 
$ 2.05 
Ending Balance
$ 1.41 
$ 1.48 
$ 1.98 
10. COMMON STOCK (Details 1) (USD $)
Jun. 30, 2013
Option Outstanding
 
Number of Options
13,103,000 
Aggregate Intrinsic Value, (C$)
$ 5,000 
Number of Options Exercisable
 
Number of Shares
13,103,000 
Aggregate Intrinsic Value ($C)
5,000 
ShareBasedCompensationStockOptionOneMember
 
Option Outstanding
 
Number of Options
37,500 
Exercise Price, ($C)
$ 2.02 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jul. 17, 2013 
Number of Options Exercisable
 
Number of Shares
37,500 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionTwoMember
 
Option Outstanding
 
Number of Options
1,032,000 
Exercise Price, ($C)
$ 1.55 
Aggregate Intrinsic Value, (C$)
Expiry Date
Sep. 17, 2013 
Number of Options Exercisable
 
Number of Shares
1,032,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionThreeMember
 
Option Outstanding
 
Number of Options
5,000 
Exercise Price, ($C)
$ 1.55 
Aggregate Intrinsic Value, (C$)
Expiry Date
Oct. 10, 2013 
Number of Options Exercisable
 
Number of Shares
5,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionFourMember
 
Option Outstanding
 
Number of Options
50,000 
Exercise Price, ($C)
$ 1.27 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jan. 18, 2014 
Number of Options Exercisable
 
Number of Shares
50,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionFiveMember
 
Option Outstanding
 
Number of Options
1,289,000 
Exercise Price, ($C)
$ 1.32 
Aggregate Intrinsic Value, (C$)
Expiry Date
Feb. 12, 2014 
Number of Options Exercisable
 
Number of Shares
1,289,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionSixMember
 
Option Outstanding
 
Number of Options
1,472,500 
Exercise Price, ($C)
$ 2.6 
Aggregate Intrinsic Value, (C$)
Expiry Date
Dec. 29, 2014 
Number of Options Exercisable
 
Number of Shares
1,472,500 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionSevenMember
 
Option Outstanding
 
Number of Options
300,000 
Exercise Price, ($C)
$ 2.34 
Aggregate Intrinsic Value, (C$)
Expiry Date
Sep. 22, 2015 
Number of Options Exercisable
 
Number of Shares
300,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionEightMember
 
Option Outstanding
 
Number of Options
1,372,500 
Exercise Price, ($C)
$ 2.86 
Aggregate Intrinsic Value, (C$)
Expiry Date
Nov. 22, 2015 
Number of Options Exercisable
 
Number of Shares
1,372,500 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionNineMember
 
Option Outstanding
 
Number of Options
200,000 
Exercise Price, ($C)
$ 3.47 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jan. 04, 2016 
Number of Options Exercisable
 
Number of Shares
200,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionTenMember
 
Option Outstanding
 
Number of Options
125,000 
Exercise Price, ($C)
$ 2.94 
Aggregate Intrinsic Value, (C$)
Expiry Date
Mar. 08, 2016 
Number of Options Exercisable
 
Number of Shares
125,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionElevenMember
 
Option Outstanding
 
Number of Options
150,000 
Exercise Price, ($C)
$ 2.05 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jul. 07, 2016 
Number of Options Exercisable
 
Number of Shares
150,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionTwelveMember
 
Option Outstanding
 
Number of Options
100,000 
Exercise Price, ($C)
$ 2.23 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jul. 15, 2016 
Number of Options Exercisable
 
Number of Shares
100,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionThirteenMember
 
Option Outstanding
 
Number of Options
1,684,500 
Exercise Price, ($C)
$ 1.25 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jan. 06, 2017 
Number of Options Exercisable
 
Number of Shares
1,684,500 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionFourteenMember
 
Option Outstanding
 
Number of Options
100,000 
Exercise Price, ($C)
$ 0.73 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jun. 18, 2017 
Number of Options Exercisable
 
Number of Shares
100,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionFifteenMember
 
Option Outstanding
 
Number of Options
4,985,000 
Exercise Price, ($C)
$ 0.56 
Aggregate Intrinsic Value, (C$)
Expiry Date
Mar. 15, 2018 
Number of Options Exercisable
 
Number of Shares
4,985,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionSixteenMember
 
Option Outstanding
 
Number of Options
50,000 
Exercise Price, ($C)
$ 0.32 
Aggregate Intrinsic Value, (C$)
2,000 
Expiry Date
Apr. 09, 2018 
Number of Options Exercisable
 
Number of Shares
50,000 
Aggregate Intrinsic Value ($C)
2,000 
ShareBasedCompensationStockOptionSeventeenMember
 
Option Outstanding
 
Number of Options
150,000 
Exercise Price, ($C)
$ 0.34 
Aggregate Intrinsic Value, (C$)
3,000 
Expiry Date
Jun. 27, 2018 
Number of Options Exercisable
 
Number of Shares
150,000 
Aggregate Intrinsic Value ($C)
$ 3,000 
10. COMMON STOCK (Details 2) (USD $)
3 Months Ended 6 Months Ended 213 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Stock based compensation
$ 42,257 
$ 41,053 
$ 1,052,637 
$ 1,190,487 
$ 23,806,397 
Exploration
 
 
 
 
 
Stock based compensation
8,902 
148,125 
266,812 
4,222,978 
General and Administrative
 
 
 
 
 
Stock based compensation
$ 42,257 
$ 32,151 
$ 904,512 
$ 923,675 
$ 19,583,419 
10. COMMON STOCK (Details 3)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Black-Scholes valuation of stock options granted
 
 
Risk-free interest rate
1.25% 
1.13% 
Expected life of options (years)
4 years 3 months 18 days 
4 years 10 months 24 days 
Annualized volatility
76.00% 
73.00% 
Dividend rate
0.00% 
0.00% 
11. SEGMENT INFORMATION (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
SEGMENT INFORMATION
 
 
Identifiable Assets
$ 103,052,102 
$ 64,173,530 
USAMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
49,810,951 
58,094,222 
CanadaMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
51,536,322 
3,953,053 
AustraliaMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
1,335,885 
1,487,117 
MongoliaMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
355,679 
613,723 
OtherCountryMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
$ 13,265 
$ 25,415 
12. FINANCIAL INSTRUMENTS (Details Narrative) (USD $)
Jun. 30, 2013
Dec. 31, 2012
FinancialInstrumentsDetailsNarrativeAbstract
 
 
Cash and cash equivalents
$ 52,051,940 
$ 4,255,508 
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
AccumulatedOtherComprehensiveIncomeOciDetailsTextualsAbstract
 
 
 
 
Currency translation adjustment
$ 2,669,821 
$ 3,046,822 
$ 3,253,019 
$ 1,901,351 
Total Accumulated OCI, beginning of period
2,669,821 
3,046,822 
3,253,019 
1,901,351 
Currency translation adjustments
(1,740,015)
(1,107,276)
(2,323,213)
38,195 
Total Other comprehensive income (loss) for the period
(1,740,015)
(1,107,276)
(2,323,213)
38,195 
Currency translation adjustment
929,806 
1,939,546 
929,806 
1,939,546 
Total Accumulated OCI, end of period
$ 929,806 
$ 1,939,546 
$ 929,806 
$ 1,939,546 
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Details Narrative) (USD $)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Supplemental Disclosure With Respect To Cash Flows Details Narrative
 
 
Loan advance from OTLLC
$ 93,246 
$ 492,113 
15. COMMITMENTS (Details) (USD $)
Jun. 30, 2013
COMMITMENTS
 
2013
$ 153,755 
2014
217,198 
2015
209,289 
2016
211,927 
2017
88,302 
Total
$ 880,471 
15. COMMITMENTS (Details Narrative) (USD $)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
CommitmentsDetailsTextualsAbstract
 
 
Lease expense
$ 189,095 
$ 184,139