Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Graystone Co (1510524) 10-Q published on Nov 19, 2013 at 5:00 am
Reporting Period: Sep 29, 2013
As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
The Company’s operations in Peru have focused on its property referred to as Gorilla. In June 2011, the Company acquired the Gorilla Project. The purchase price for the property was $44,000 USD. The project consists of 400 hectares (one hectares equals 2.47 acres) located in Loreto, Peru (Northern Peru). The Gorilla Project operation involves alluvial mining of gold from the deposits of sand and gravel usually left from modern or ancient stream beds.
The Company’s mining operations in Peru have generated approximately 240-260 grams per month for the months of June, July, and August. The Company has generated approximately 160 grams through the first 20 days of mining in September. The Company has doubled its production since April 2013 when it produced approximately 130 grams. The Company’s operating expenses in Peru exceed the gold produced by approximately $7,500 - $15,000 per month. The Company was losing between $7,500 - $15,000 in Peru. The company needs to acquire an excavator and additional heavy machinery to remove the layers of clay located on its mining properties before the Company expects to see any significant increase in its mining production in Peru. The Company’s operations have completed its current operations and will begin general mining operations once it has secured an excavator for Gorilla. The Company cannot provide a timetable for when that it will be able to acquire the excavator as the Company currently does not have the cash resources to acquire one and will need to raise approximately $200,000 to acquire the excavator.
The Company is currently financing the operations in Suriname through debt financing being provided by Renard Properties, LLC. More information on this is provided under Note 3.
Although the mining operations in Suriname look promising there are a number of risks that the joint venture is facing. These include, but not limited, to: inability to locate a rich gold vein on the properties, insufficient water during the dry season, inability to identify a water source that conforms to environmental plans for the area, cost of trucking pay dirt to a water source for processing, the possibility of not coming to terms with the claim owners, inability to properly fund the project during prospect phase and/or during production, risk of the mining camp could be robbed and risk that the material/gold could be robed during transport. Additionally, the Company’s current cash position is insufficient to cover the expected expenses related to get Suriname’s operations into the next phase. If the Company cannot borrow or raise the necessary capital required then the Company may have to sell a piece of its ownership in the joint venture or shut the operations down in Suriname.