ENTREE GOLD INC, 6-K filed on 11/13/2013
Report of Foreign Issuer
Document and Entity Information
9 Months Ended
Sep. 30, 2013
Cancelled
 
Entity Registrant Name
ENTREE GOLD INC 
Entity Central Index Key
0001271554 
Document Type
6-K 
Document Period End Date
Sep. 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
Q3 
Document Fiscal Year Focus
2013 
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
Sep. 30, 2013
Dec. 31, 2012
ASSETS
 
 
Cash and cash equivalents (Note 4)
$ 48,657,339 
$ 4,255,508 
Receivables
248,001 
223,722 
Prepaid expenses
921,409 
779,605 
Total current assets
49,826,749 
5,258,835 
Equipment (Note 6)
446,477 
539,567 
Mineral property interests (Note 7)
50,472,202 
57,616,924 
Reclamation deposits
491,808 
606,155 
Other assets
195,551 
152,049 
Total assets
101,432,787 
64,173,530 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
Accounts payable and accrued liabilities
431,904 
559,579 
Loans payable to Oyu Tolgoi LLC (Note 8)
5,911,332 
5,563,657 
Deferred revenue (Note 9)
38,922,701 
Deferred income tax liabilities
8,671,851 
9,722,384 
Total liabilities
53,937,788 
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)
2,029,273 
3,253,019 
Accumulated deficit during the exploration stage
(151,324,850)
(141,026,787)
Total stockholders' equity
47,494,999 
48,327,910 
Total liabilities and stockholders' equity
$ 101,432,787 
$ 64,173,530 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Sep. 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 9 Months Ended 213 Months Ended
Sep. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
EXPENSES
 
 
 
 
 
Exploration (Note 7)
$ 1,168,327 
$ 1,228,341 
$ 4,676,753 
$ 7,246,412 
$ 97,666,430 
General and administration
1,047,875 
924,419 
5,012,222 
4,062,786 
58,359,471 
Consultancy and advisory fees
320,567 
1,631,668 
1,631,668 
Depreciation
24,831 
37,010 
80,371 
117,337 
1,507,438 
Foreign exchange loss (gain)
662,337 
(354,197)
(348,072)
(249,309)
(266,347)
Impairment of mineral property interests
437,732 
1,455,483 
Gain on sale of mineral property interests
(104,914)
(1,679,437)
Loss from operations
(3,223,937)
(1,835,573)
(11,490,674)
(11,072,312)
(158,674,706)
Gain on sale of investments
3,326,275 
Interest income
140,418 
29,328 
304,932 
168,156 
5,808,200 
Interest expense (Note 5)
(65,313)
(58,705)
(194,122)
(166,225)
(648,440)
Loss on equity investee (Note 5)
(23,049)
(238,988)
(116,295)
(731,101)
(5,047,080)
Fair value adjustment of asset backed commercial paper
147,564 
(2,184,967)
Loss from operations before income taxes
(3,171,881)
(2,103,938)
(11,348,595)
(11,801,482)
(157,420,718)
Current income tax expense
(152,190)
Deferred income tax recovery
241,279 
204,780 
1,050,532 
1,582,787 
6,248,058 
Net loss
(2,930,602)
(1,899,158)
(10,298,063)
(10,218,695)
(151,324,850)
Comprehensive loss:
 
 
 
 
 
Net loss
(2,930,602)
(1,899,158)
(10,298,063)
(10,218,695)
(151,324,850)
Foreign currency translation adjustment (Note 13)
1,099,467 
1,921,720 
(1,223,746)
1,959,915 
2,029,273 
Comprehensive loss
$ (1,831,135)
$ 22,562 
$ (11,521,809)
$ (8,258,780)
$ (149,295,577)
Basic and diluted net loss per share
$ (0.02)
$ (0.01)
$ (0.07)
$ (0.08)
 
Weighted average number of common shares outstanding
146,734,385 
128,877,243 
142,875,149 
128,574,756 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
3 Months Ended 9 Months Ended 213 Months Ended
Sep. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net loss
$ (2,930,602)
$ (1,899,158)
$ (10,298,063)
$ (10,218,695)
$ (151,324,850)
Items not affecting cash:
 
 
 
 
 
Depreciation
24,831 
37,010 
80,371 
117,337 
1,507,438 
Stock-based compensation
10,235 
1,052,637 
1,200,722 
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
23,049 
238,988 
116,295 
731,101 
5,047,080 
Interest expense
65,313 
58,705 
194,122 
166,225 
648,440 
Deferred income tax recovery
(241,279)
(204,780)
(1,050,532)
(1,582,787)
(6,248,058)
Gain on sale of mineral property interest
(104,914)
(1,679,437)
Impairment of mineral property interests
437,732 
1,455,483 
Gain on sale of investments
(3,326,275)
Other items not affecting cash
659,355 
(353,194)
(76,744)
(247,774)
(142,945)
Changes in assets and liabilities:
 
 
 
 
 
Receivables
(28,098)
(12,909)
(31,674)
248,748 
(152,629)
Prepaid expenses
(546,297)
(844)
(167,729)
338,837 
(820,969)
Other assets
(19,528)
(16,699)
(11,817)
(49,201)
11,096 
Accounts payable and accrued liabilities
(596,422)
(121,790)
(109,693)
(1,315,620)
167,711 
Deposit on metal credit delivering obligation
40,000,000 
40,000,000 
Net cash provided by (used in) operating activities
(3,589,678)
(2,264,436)
30,134,905 
(10,716,021)
(82,664,457)
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
(1,700,000)
(50,000)
(3,910,000)
(4,954,610)
Reclamation deposits
(207,962)
115,180 
(207,962)
(303,970)
Short-term investments
5,076,271 
Purchase of asset backed commercial paper
(4,031,122)
Acquisition of PacMag Metals Limited
(7,465,495)
Acquisition of equipment
(2,283)
(16,173)
(4,736)
(33,480)
(2,128,348)
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
(2,283)
(1,924,135)
5,060,444 
1,029,743 
(5,715,082)
Effect of foreign currency translation on cash and cash equivalents
197,360 
275,241 
(429,779)
260,487 
1,262,894 
Change in cash and cash equivalents during the period
(3,394,601)
(3,913,330)
44,401,831 
(7,905,266)
48,657,339 
Cash and cash equivalents, beginning of period
52,051,940 
10,520,262 
4,255,508 
14,512,198 
Cash and cash equivalents, end of period
48,657,339 
6,606,932 
48,657,339 
6,606,932 
48,657,339 
Cash paid for interest during the period
Cash paid for income taxes during the period
$ 0 
$ 0 
$ 0 
$ 0 
$ (152,190)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (USD $)
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income / Loss
Accumulated Deficit During the Exploration Stage
Total
Beginning Balance - Amount at Sep. 30, 2012
$ 167,428,814 
$ 18,665,708 
$ 3,861,266 
$ (136,049,353)
$ 53,906,435 
Beginning 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 
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 
 
 
 
 
Share issuance costs
 
 
 
 
Foreign currency translation adjustment
 
 
1,099,467 
   
1,099,467 
Net loss
 
 
 
(2,930,602)
(2,930,602)
Ending Balance, Amount at Sep. 30, 2013
$ 177,065,075 
$ 19,725,501 
$ 2,029,273 
$ (151,324,850)
$ 47,494,999 
Ending Balance, Shares at Sep. 30, 2013
146,734,385 
 
 
 
 
1. NATURE AND CONTINUANCE OF OPERATIONS
Note 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

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 nine months ended September 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

 

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

 

Cash and cash equivalents consist of cash at bank and in hand of $48,657,339 as at September 30, 2013 (December 31, 2012 - $4,255,508).

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

Equity Method Investment

 

The Company accounts for its 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), as a 20% equity investment. The Company’s share of the loss of the joint venture is $116,295 for the nine months ended September 30, 2013 (September 30, 2012 - $731,101) plus accrued interest expense of $194,122 for the nine months ended September 30, 2013 (September 30, 2012 - $166,225).

6. EQUIPMENT
Note 6. EQUIPMENT
                   
      September 30, 2013        December 31, 2012   
   Cost  Accumulated Depreciation  Net Book Value  Cost  Accumulated Depreciation  Net Book Value
                               
Office equipment  $118,915   $93,356   $25,559   $122,931   $90,900   $32,031 
Computer equipment   510,245    380,015    130,230    523,893    353,944    169,949 
Field equipment   524,078    294,249    229,829    540,422    274,694    265,728 
Buildings   271,758    210,899    60,859    280,936    209,077    71,859 
   $1,424,996   $978,519   $446,477   $1,468,182   $928,615   $539,567 
7. MINERAL PROPERTY INTERESTS
Note 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 Notice stated that the 2009 Order breached sections of the Minerals Law of Mongolia and Charter of the Minerals Resource Counsel that give the head of MRAM the authority to register reserves, rather than the Minister of Mineral Resources and Energy.  The Notice further advised that the Company is temporarily restricted from transferring, selling or leasing the Shivee Tolgoi and Javhlant mining licences.  On September 4, 2013, the Minister of Mining issued Order No. 179, advising the Minerals Professional Council to re-submit its previous conclusions regarding the reserves to MRAM for review and registration.  On September 6, 2013, the head of MRAM ordered that the Hugo Dummett (including the Hugo North Extension) and Heruga reserves be registered.  The Company was also subsequently advised that the temporary transfer restriction on the joint venture mining licences will be lifted.

 

As of September 30, 2013, the Entrée-OTLLC Joint Venture had expended approximately $26.3 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 nine months ended September 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.  During the quarter ended September 30, 2013, the Company abandoned the unpatented lode claims comprising the Oak Grove property.

 

During the nine months ended September 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:

 

    September 30,   December 31,
 2013  2012
             
USA            
Ann Mason   $ 49,116,103   $ 55,752,523
Lordsburg     511,035     990,797
Other     292,387     302,262
Total USA     49,919,525     57,045,582
             
AUSTRALIA            
Blue Rose JV     552,677     571,342
Total Australia     552,677     571,342
             
Total all locations   $ 50,472,202   $ 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   Three Months   Nine Months   Nine Months
Ended  Ended  Ended Ended 
September 30, September 30,  September 30,  September 30,
 2013 2012 2013 2012
                         
US   $ 766,309   $ 728,767   $ 3,278,717   $ 5,275,592
Mongolia     297,740     395,662     1,071,352     1,615,462
Other     104,278     103,912     326,684     355,358
                         
Total all locations   $ 1,168,327   $ 1,228,341   $ 4,676,753   $ 7,246,412

 

8. LOANS PAYABLE
Note 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

 

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

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 
    Expired    (1,074,500)   1.57 
    Forfeited    (3,000)   1.25 
 Balance at September 30, 2013    12,025,500    1.40 

 

There were 5,185,000 stock options granted during the nine months ended September 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 September 30, 2013 was 12,025,500. 

 

At September 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$)
                          
 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    —   
 1,681,500    1.25    —     January 6, 2017   1,681,500    —   
 100,000    0.73    —     June 18, 2017   100,000    —   
 4,985,000    0.56    —     March 15, 2018   4,985,000    —   
 50,000    0.32    —     April 9, 2018   50,000    —   
 150,000    0.34    —     June 27, 2018   150,000    —   
 12,025,500        $—         12,025,500   $—   

 

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of C$0.30 per share as of September 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 September 30, 2013 was Nil. The total intrinsic value of options exercised during the nine months ended September 30, 2013 was $Nil (September 30, 2012 - $Nil).

 

Stock-based compensation

 

5,185,000 stock options were granted during the nine months ended September 30, 2013. The fair value of stock options granted during the nine months ended September 30, 2013 was $1,051,712 (September 30, 2012 - $1,124,930). Stock-based compensation recognized during the nine months ended September 30, 2013 was $1,052,637 (September 30, 2012 - $1,200,722) 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

September 30,

2013

 

Three Months
Ended

September 30,

2012

 

Nine Months
Ended

September 30,

2013

 

Nine Months Ended

September 30,

2012

 

Cumulative 
to

September 30,

2013

Exploration  $—     $640   $148,125   $267,452   $4,222,978 
General and administration   —      9,595    904,512    933,270    19,583,419 
   $—     $10,235   $1,052,637   $1,200,722   $23,806,397 

 

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

 

   September 30, 2013  September 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

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

 

Geographic information is as follows:

 

    September 30,   December 31,
2013  2012 
Identifiable assets            
   USA   $ 51,336,689   $ 58,094,222
   Canada     47,992,436     3,953,053
   Australia     1,329,437     1,487,117
   Mongolia     760,219     613,723
   Other     14,006     25,415
    $ 101,432,787   $ 64,173,530

12. FINANCIAL INSTRUMENTS
Note 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 September 30, 2013, the Company had Level 1 financial instruments, consisting of cash and cash equivalents, with a fair value of $48,657,339.

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI)
Note 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI)
    Three Months   Three Months   Nine Months   Nine Months
Ended  Ended  Ended  Ended 
September 30,  September 30,  September 30,  September 30, 
2013 2012 2013 2012
                 
Accumulated OCI, beginning of period:                
Currency translation adjustment   $ 929,806   $ 1,939,546   $ 3,253,019   $ 1,901,351
    $ 929,806   $ 1,939,546   $ 3,253,019   $ 1,901,351
                                 
Other comprehensive income (loss) for the period:                                
Currency translation adjustments   $ 1,099,467   $ 1,921,720   $ (1,223,746 ) $ 1,959,915
    $ 1,099,467   $ 1,921,720   $ (1,223,746 ) $ 1,959,915
                                 
Accumulated OCI, end of period:                                
Currency translation adjustment   $ 2,029,273   $ 3,861,266   $ 2,029,273   $ 3,861,266
    $ 2,029,273   $ 3,861,266   $ 2,029,273   $ 3,861,266
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Note 14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

 

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

 

·   funding by OTLLC of the Company’s investment requirements for the Entrée-OTLLC Joint Venture of $116,295 (September 30, 3012 – $731,101).

 

15. COMMITMENTS
Note 15. COMMITMENTS

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

 

 2013   $87,493 
 2014    294,160 
 2015    213,908 
 2016    216,604 
 2017    90,251 
     $902,416 

 

The Company incurred lease expense of $291,099 (September 30, 2012 – $293,871) for the nine months ended September 30, 2013.

17. SUBSEQUENT EVENTS
Note 17. SUBSEQUENT EVENTS

Subsequent to September 30, 2013:

 

The Company received the first of two cash payments of A$475,778 pertaining to an agreement whereby a third party acquired the Blue Rose joint venture’s iron ore rights. 

3. SIGNIFICANT ACCOUNTING POLICIES (Policies)
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
                   
      September 30, 2013        December 31, 2012   
   Cost  Accumulated Depreciation  Net Book Value  Cost  Accumulated Depreciation  Net Book Value
                               
Office equipment  $118,915   $93,356   $25,559   $122,931   $90,900   $32,031 
Computer equipment   510,245    380,015    130,230    523,893    353,944    169,949 
Field equipment   524,078    294,249    229,829    540,422    274,694    265,728 
Buildings   271,758    210,899    60,859    280,936    209,077    71,859 
   $1,424,996   $978,519   $446,477   $1,468,182   $928,615   $539,567 
7. MINERAL PROPERTY INTERESTS (Tables)

    September 30,   December 31,
 2013  2012
             
USA            
Ann Mason   $ 49,116,103   $ 55,752,523
Lordsburg     511,035     990,797
Other     292,387     302,262
Total USA     49,919,525     57,045,582
             
AUSTRALIA            
Blue Rose JV     552,677     571,342
Total Australia     552,677     571,342
             
Total all locations   $ 50,472,202   $ 57,616,924

 

 

    Three Months   Three Months   Nine Months   Nine Months
Ended  Ended  Ended Ended 
September 30, September 30,  September 30,  September 30,
 2013 2012 2013 2012
                         
US   $ 766,309   $ 728,767   $ 3,278,717   $ 5,275,592
Mongolia     297,740     395,662     1,071,352     1,615,462
Other     104,278     103,912     326,684     355,358
                         
Total all locations   $ 1,168,327   $ 1,228,341   $ 4,676,753   $ 7,246,412

 

 

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 
    Expired    (1,074,500)   1.57 
    Forfeited    (3,000)   1.25 
 Balance at September 30, 2013    12,025,500    1.40 
Number of Options  Exercise
Price
(C$)
  Aggregate Intrinsic Value (C$)  Expiry Date  Number of Options Exercisable  Aggregate Intrinsic Value (C$)
                          
 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    —   
 1,681,500    1.25    —     January 6, 2017   1,681,500    —   
 100,000    0.73    —     June 18, 2017   100,000    —   
 4,985,000    0.56    —     March 15, 2018   4,985,000    —   
 50,000    0.32    —     April 9, 2018   50,000    —   
 150,000    0.34    —     June 27, 2018   150,000    —   
 12,025,500        $—         12,025,500   $—   

 

                
                
  

Three Months
Ended

September 30,

2013

 

Three Months
Ended

September 30,

2012

 

Nine Months
Ended

September 30,

2013

 

Nine Months Ended

September 30,

2012

 

Cumulative 
to

September 30,

2013

Exploration  $—     $640   $148,125   $267,452   $4,222,978 
General and administration   —      9,595    904,512    933,270    19,583,419 
   $—     $10,235   $1,052,637   $1,200,722   $23,806,397 

 

   September 30, 
2013
  September 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
    September 30,   December 31,
2013  2012 
Identifiable assets            
   USA   $ 51,336,689   $ 58,094,222
   Canada     47,992,436     3,953,053
   Australia     1,329,437     1,487,117
   Mongolia     760,219     613,723
   Other     14,006     25,415
    $ 101,432,787   $ 64,173,530
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI) (Tables)
ACCUMULATED OTHER COMPREHENSIVE INCOME
    Three Months   Three Months   Nine Months   Nine Months
Ended  Ended  Ended  Ended 
September 30,  September 30,  September 30,  September 30, 
2013 2012 2013 2012
                 
Accumulated OCI, beginning of period:                
Currency translation adjustment   $ 929,806   $ 1,939,546   $ 3,253,019   $ 1,901,351
    $ 929,806   $ 1,939,546   $ 3,253,019   $ 1,901,351
                                 
Other comprehensive income (loss) for the period:                                
Currency translation adjustments   $ 1,099,467   $ 1,921,720   $ (1,223,746 ) $ 1,959,915
    $ 1,099,467   $ 1,921,720   $ (1,223,746 ) $ 1,959,915
                                 
Accumulated OCI, end of period:                                
Currency translation adjustment   $ 2,029,273   $ 3,861,266   $ 2,029,273   $ 3,861,266
    $ 2,029,273   $ 3,861,266   $ 2,029,273   $ 3,861,266
15. COMMITMENTS (Tables)
Lease payments
 2013   $87,493 
 2014    294,160 
 2015    213,908 
 2016    216,604 
 2017    90,251 
     $902,416 
5. LONG-TERM INVESTMENTS (Details Narrative) (USD $)
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
LONG-TERM INVESTMENTS
 
 
Loss in joint venture
$ (116,295)
$ (731,101)
Accrued interest expense
$ 194,122 
$ 166,225 
6. EQUIPMENT (Details) (USD $)
Sep. 30, 2013
Dec. 31, 2012
PropertyPlant and Equipment
 
 
Cost
$ 1,424,996 
$ 1,468,182 
Accumulated Depreciation
978,519 
928,615 
Net Book Value
446,477 
539,567 
OfficeEquipmentMember
 
 
PropertyPlant and Equipment
 
 
Cost
118,915 
122,931 
Accumulated Depreciation
93,356 
90,900 
Net Book Value
25,559 
32,031 
ComputerEquipmentMember
 
 
PropertyPlant and Equipment
 
 
Cost
510,245 
523,893 
Accumulated Depreciation
380,015 
353,944 
Net Book Value
130,230 
169,949 
FieldEquipmentMember
 
 
PropertyPlant and Equipment
 
 
Cost
524,078 
540,422 
Accumulated Depreciation
294,249 
274,694 
Net Book Value
229,829 
265,728 
BuildingMember
 
 
PropertyPlant and Equipment
 
 
Cost
271,758 
280,936 
Accumulated Depreciation
210,899 
209,077 
Net Book Value
$ 60,859 
$ 71,859 
7. MINERAL PROPERTY INTERESTS (Details) (USD $)
Sep. 30, 2013
Dec. 31, 2012
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
$ 50,472,202 
$ 57,616,924 
AustraliaMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
552,677 
571,342 
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
49,919,525 
57,045,582 
BlueRoseJVMember |
AustraliaMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
552,677 
571,342 
AnnMasonMember |
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
49,116,103 
55,752,523 
LordsburgMember |
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
511,035 
990,797 
OtherProperty |
USAMember
 
 
PaymentsToAcquireMineralRightsLineItems [Line Items]
 
 
Capitalized mineral property acquisition Cost
$ 292,387 
$ 302,262 
7. MINERAL PROPERTY INTERESTS (Details 1) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
$ 1,168,327 
$ 1,228,341 
$ 4,676,753 
$ 7,246,412 
US
 
 
 
 
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
766,309 
728,767 
3,278,717 
5,275,592 
Mongolia
 
 
 
 
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
297,740 
395,662 
1,071,352 
1,615,462 
Other
 
 
 
 
ShareBasedCompensationStockOptionFiveMember [Line Items]
 
 
 
 
Exploration costs
$ 104,278 
$ 103,912 
$ 326,684 
$ 355,358 
9. SANDSTORM FINANCING ARRANGEMENT (Details) (USD $)
9 Months Ended
Sep. 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
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Number of options
 
 
 
 
Beginning Balance
13,103,000 
14,208,000 
9,223,000 
9,135,500 
Granted
 
200,000 
4,985,000 
1,882,000 
Expired
(1,074,500)
(1,305,000)
 
(1,177,500)
Forfeited
(3,000)
 
 
(617,000)
Ending Balance
12,025,500 
13,103,000 
14,208,000 
9,223,000 
Weighted Average Exercise Price
 
 
 
 
Beginning Balance
$ 1.41 
$ 1.48 
$ 1.98 
$ 2.16 
Granted
 
$ 0.34 
$ 0.56 
$ 1.22 
Expired
$ 1.57 
$ 2 
 
$ 2.14 
Forfeited
$ 1.25 
 
 
$ 2.05 
Ending Balance
$ 1.4 
$ 1.41 
$ 1.48 
$ 1.98 
10. COMMON STOCK (Details 1) (USD $)
Sep. 30, 2013
Option Outstanding
 
Number of Options
12,025,500 
Aggregate Intrinsic Value, (C$)
$ 0 
Number of Options Exercisable
 
Number of Shares
12,025,500 
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
1,681,500 
Exercise Price, ($C)
$ 1.25 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jan. 06, 2017 
Number of Options Exercisable
 
Number of Shares
1,681,500 
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$)
Expiry Date
Apr. 09, 2018 
Number of Options Exercisable
 
Number of Shares
50,000 
Aggregate Intrinsic Value ($C)
ShareBasedCompensationStockOptionSeventeenMember
 
Option Outstanding
 
Number of Options
150,000 
Exercise Price, ($C)
$ 0.34 
Aggregate Intrinsic Value, (C$)
Expiry Date
Jun. 27, 2018 
Number of Options Exercisable
 
Number of Shares
150,000 
Aggregate Intrinsic Value ($C)
$ 0 
10. COMMON STOCK (Details 2) (USD $)
3 Months Ended 9 Months Ended 213 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Stock based compensation
$ 0 
$ 10,235 
$ 1,052,637 
$ 1,200,722 
$ 23,806,397 
Exploration
 
 
 
 
 
Stock based compensation
640 
148,125 
267,452 
4,222,978 
General and Administrative
 
 
 
 
 
Stock based compensation
$ 0 
$ 9,595 
$ 904,512 
$ 933,270 
$ 19,583,419 
10. COMMON STOCK (Details 3)
9 Months Ended
Sep. 30, 2013
Sep. 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 $)
Sep. 30, 2013
Dec. 31, 2012
SEGMENT INFORMATION
 
 
Identifiable Assets
$ 101,432,787 
$ 64,173,530 
USAMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
51,336,689 
58,094,222 
CanadaMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
47,992,436 
3,953,053 
AustraliaMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
1,329,437 
1,487,117 
MongoliaMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
760,219 
613,723 
OtherCountryMember
 
 
SEGMENT INFORMATION
 
 
Identifiable Assets
$ 14,006 
$ 25,415 
12. FINANCIAL INSTRUMENTS (Details Narrative) (USD $)
Sep. 30, 2013
Dec. 31, 2012
FinancialInstrumentsDetailsNarrativeAbstract
 
 
Cash and cash equivalents
$ 48,657,339 
$ 4,255,508 
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (OCI) (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
AccumulatedOtherComprehensiveIncomeOciDetailsTextualsAbstract
 
 
 
 
Currency translation adjustment
$ 929,806 
$ 1,939,546 
$ 3,253,019 
$ 1,901,351 
Total Accumulated OCI, beginning of period
929,806 
1,939,546 
3,253,019 
1,901,351 
Currency translation adjustments
1,099,467 
1,921,720 
(1,223,746)
1,959,915 
Total Other comprehensive income (loss) for the period
1,099,467 
1,921,720 
(1,223,746)
1,959,915 
Currency translation adjustment
2,029,273 
3,861,266 
2,029,273 
3,861,266 
Total Accumulated OCI, end of period
$ 2,029,273 
$ 3,861,266 
$ 2,029,273 
$ 3,861,266 
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Details Narrative) (USD $)
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Supplemental Disclosure With Respect To Cash Flows Details Narrative
 
 
Loan advance from OTLLC
$ 116,295 
$ 731,101 
15. COMMITMENTS (Details) (USD $)
Sep. 30, 2013
COMMITMENTS
 
2013
$ 87,493 
2014
294,160 
2015
213,908 
2016
216,604 
2017
90,251 
Total
$ 902,416 
15. COMMITMENTS (Details Narrative) (USD $)
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
CommitmentsDetailsTextualsAbstract
 
 
Lease expense
$ 291,099 
$ 293,871