SECURITIES & EXCHANGE COMMISSION EDGAR FILING
SILVER BULL RESOURCES, INC.
Form: 10-K
Date Filed: 2014-01-13
Corporate Issuer CIK: 1031093
Symbol:
SIC Code:
Fiscal Year End:
SVBL
1000
10/31
© Copyright 2014, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the
terms of use.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
R
£
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED October 31, 2013
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD OF _________ TO _________.
Commission File Number: 001-33125
SILVER BULL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Nevada
State or other jurisdiction of incorporation or organization
91-1766677
(I.R.S. Employer Identification No.)
925 West Georgia Street, Suite 1908
Vancouver, B.C. V6C 3L2
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (604) 687-5800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 Par Value
Name of each exchange on which registered
NYSE MKT
Common Stock, $0.01 Par Value
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
Yes o No R
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.
Yes o No R
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes R No ❑
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes R No ❑
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ❑
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller
reporting company:
Large accelerated filer ❑ Accelerated filer R Non-accelerated filer ❑ Smaller reporting company ❑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No R
As of January 13, 2014, there were 159,072,657 shares of the registrant’s $0.01 par value Common Stock (“Common Stock”), the
registrant’s only outstanding class of voting securities, outstanding. As of April 30, 2013, the aggregate market value of the registrant’s
voting Common Stock held by non-affiliates of the registrant was approximately $51.0 million based upon the closing sale price of the
Common Stock as reported by the NYSE MKT. For the purpose of this calculation, the registrant has assumed that its affiliates as of
April 30, 2013 included all directors and officers and one shareholder that held approximately 15.6% of its outstanding common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation
14A in connection with the 2014 annual meeting of shareholders are incorporated by reference in Part III of this annual report on Form
10-K.
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SILVER BULL RESOURCES, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
PART II
Items 1 and 2. Business and Properties
Item 1A.
Item 1B.
Item 3.
Item 4.
Risk Factors
Unresolved Staff Comments
Legal Proceedings
Mine Safety Disclosure
Item 5.
Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 15.
Exhibits, Financial Statement Schedules
Signatures
PART IV
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When we use the terms “Silver Bull,” “we,” “us,” or “our,” we are referring to Silver Bull Resources, Inc. and its subsidiaries, unless the
context otherwise requires. We have included technical terms important to an understanding of our business under “Glossary of
Common Terms” at the end of this section. Throughout this document we make statements that are classified as “forward-looking.”
Please refer to the “Cautionary Statement Regarding Forward-Looking Statements” section of this document for an explanation of
these types of assertions.
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes certain statements that may be deemed to be “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and the United States Private Securities Litigation Reform Act of 1995, and “forward-
looking information” within the meaning of applicable Canadian securities legislation. We use words such as “anticipate,” “continue,”
“likely,” “estimate,” “expect,” “may,” “will,” “projection,” “should,” “believe,” “potential,” “could,” or similar words suggesting future
outcomes (including negative and grammatical variations) to identify forward-looking statements. These statements include, among
other things, our planned activities at the Sierra Mojada Project in 2014, continuing to progress in securing additional surface rights,
the timing and scope of our metallurgical program and exploration activities, the projections and estimates set forth in the PEA
Technical Report and our proposed capital and operating budgets for the Sierra Mojada Project and general and administrative
expenses.
These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of
historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties and our actual results could differ from those express
or implied in these forward-looking statements as a result of the factors described under “Risk Factors” in this Annual Report on Form
10-K, including:
· Results of future exploration at our Sierra Mojada Project;
· Our ability to raise necessary capital to conduct our exploration activities, and do so on acceptable terms;
· Worldwide economic and political events affecting the market prices for silver, gold, zinc, lead, copper, manganese and
other minerals that may be found on our exploration properties;
· The amount and nature of future capital and exploration expenditures;
· Competitive factors, including exploration-related competition;
· Our inability to obtain required permits;
· Timing of receipt and maintenance of government approvals;
· Unanticipated title issues;
· Changes in tax laws;
· Changes in regulatory frameworks or regulations affecting our activities;
· Our ability to retain key management and consultants and experts necessary to successfully operate and grow our
business; and
· Political and economic instability in Mexico and other countries in which we conduct our business, and future potential
actions of the governments in such countries with respect to nationalization of natural resources or other changes in
mining or taxation policies.
These factors are not intended to represent a complete list of the general or specific factors that could affect us.
All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.
Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or
circumstances. You should not place undue reliance on these forward-looking statements.
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Cautionary Note Regarding Exploration Stage Companies
We are an exploration stage company and do not currently have any known reserves and cannot be expected to have known reserves
unless and until a feasibility study is completed for the Sierra Mojada concessions that shows proven and probable reserves. There
can be no assurance that our concessions contain proven and probable reserves and investors may lose their entire investment. See
“Risk Factors.”
The following terms are used throughout this Annual Report on Form 10-K.
Glossary of Common Terms
Concession
A grant of a tract of land made by a government or other controlling authority in return for stipulated
services or a promise that the land will be used for a specific purpose.
Exploration Stage
A prospect that is not yet in either the development or production stage.
Feasibility Study
An engineering study designed to define the technical, economic, and legal viability of a mining
project with a high degree of reliability.
Formation
A distinct layer of sedimentary rock of similar composition.
Mineralized Material
Mining
Mineral bearing material such as zinc, silver, gold, lead or copper that has been physically
delineated by one or more of a number of methods including drilling, underground work, surface
trenching and other types of sampling. This material has been found to contain a sufficient amount
of mineralization of an average grade of metal or metals to have economic potential that warrants
further exploration evaluation. While this material is not currently or may never be classified as
reserves, it is reported as mineralized material only if the potential exists for reclassification into the
reserves category. This material cannot be classified in the reserves category until final technical,
economic and legal factors have been determined. Under the U.S. Securities and Exchange
Commission’s standards, a mineral deposit does not qualify as a reserve unless the recoveries
from the deposit are expected to be sufficient to recover total cash and non-cash costs for the mine
and related facilities and make a profit.
The process of extraction and beneficiation of mineral reserves to produce a marketable metal or
mineral product. Exploration continues during the mining process and, in many cases, mineral
reserves are expanded during the life of the mine operations as the exploration potential of the
deposit is realized.
Ore, Ore Reserve, or Mineable
Ore Body
The part of a mineral deposit which could be economically and legally extracted or produced at the
time of the reserve determination.
Reserves
Estimated remaining quantities of mineral deposit and related substances anticipated to be
recoverable from known accumulations, from a given date forward, based on:
(a) analysis of drilling, geological, geophysical and engineering data;
(b) the use of established technology;
(c) specified economic conditions, which are generally accepted as being reasonable, and which
are disclosed; and
(d) permitted and financed for development
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Resources
Those quantities of mineral deposit estimated
accumulations.
to exist originally
in naturally occurring
Resources are, therefore, those quantities estimated on a particular date to be remaining in known
accumulations plus those quantities already produced from known accumulations plus those
quantities in accumulations yet to be discovered.
Resources are divided into:
(a) discovered resources, which are limited to known accumulations; and
(b) undiscovered resources.
Tonne
A metric ton which is equivalent to 2,204.6 pounds.
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Items 1 and 2. BUSINESS AND PROPERTIES
Overview and Corporate Structure
PART I
Silver Bull Resources, Inc. was incorporated in the State of Nevada on November 8, 1993 as the Cadgie Company for the purpose of
acquiring and developing mineral properties. The Cadgie Company was a spin-off from its predecessor, Precious Metal Mines, Inc. In
1996, our name was changed to Metalline Mining Company (“Metalline”). On April 21, 2011, we changed our name to Silver Bull
Resources, Inc. We have not realized any revenues from our planned operations and we are considered an Exploration Stage
Company. We have not established any reserves with respect to our exploration projects, and may never enter into the development
with respect to any of our projects.
We engage in the business of mineral exploration. We currently own or have the option to acquire a number of property concessions in
Mexico within a mining district known as the Sierra Mojada District, located in the west-central part of the state of Coahuila,
Mexico. We conduct our operations in Mexico through our wholly-owned subsidiary corporations, Minera Metalin S.A. de C.V.
(“Minera Metalin”) and Contratistas de Sierra Mojada S.A. de C.V. (“Contratistas”) and through Minera Metalin’s wholly-owned
subsidiary Minas de Coahuila SBR S.A. de C.V (“Minas”).
In April 2010, Metalline Mining Delaware, Inc., our wholly-owned subsidiary, was merged with and into Dome Ventures Corporation
(“Dome”). As a result, Dome became a wholly-owned subsidiary of Silver Bull. Dome’s subsidiaries include its wholly-owned
subsidiaries Dome Asia Inc. and Dome International Global Inc., which are incorporated in the British Virgin Islands. Dome
International Global Inc.’s subsidiaries include its wholly-owned subsidiaries incorporated in Gabon, Dome Ventures SARL Gabon
(“Dome Gabon”) and African Resources SARL Gabon (“African Resources”), as well as its 99.99%-owned subsidiary, Dome Minerals
Nigeria Limited, incorporated in Nigeria. We conduct our exploration activities in Gabon, Africa through Dome Gabon and African
Resources.
Our efforts have been concentrated in expenditures related to exploration properties, principally in the Sierra Mojada Property located
in Coahuila, Mexico. We have not determined whether the exploration properties contain ore reserves that are economically
recoverable. The ultimate realization of our investment in exploration properties is dependent upon the success of future property
sales, the existence of economically recoverable reserves, our ability to obtain financing or make other arrangements for development
and future profitable production. The ultimate realization of our investment in exploration properties cannot be determined at this time,
and accordingly, no provision for any asset impairment that may result, in the event we are not successful in developing or selling
these properties, has been made in the accompanying consolidated financial statements, except as disclosed in Note 5.
Sierra Mojada Project
Location, Access and Infrastructure
The Sierra Mojada project is located within a mining district known as the Sierra Mojada District. The Sierra Mojada District is located
in the west central part of the state of Coahuila, Mexico, near the Coahuila-Chihuahua state border approximately 200 kilometers south
of the Big Bend of the Rio Grande River. The principal mining area extends for approximately 5 kilometers in an east-west direction
along the base of the precipitous, 1,000 meter high, Sierra Mojada Range.
The Sierra Mojada project site is situated to the south of the village of Esmeralda, on the northern side of a major escarpment that
forms the northern margin of the Sierra Mojada range. In general, the site is approximately 1,500 meters above sea level. The project
is accessible by paved road from the city of Torreon, Coahuila, which lies approximately 250 kilometers to the southwest. Esmerelda
is served by a rail spur of the Coahuila Durango railroad. There is an airstrip east of Esmeralda, although its availability is limited, and
another airstrip at the nearby Penoles plant, which we can use occasionally. The Sierra Mojada District has high voltage electric
power supplied by the national power company, Comision Federal de Electricidad, C.F.E., and is supplied water by the municipality of
Sierra Mojada. Although power levels are sufficient for current operations and exploration, future development of the project, if any,
may require additional power supplies to be sourced.
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Our facilities in Mexico include offices, residences, shops, warehouse buildings and exploration equipment located at Calle Mina #1,
La Esmeralda, Coahuila, Mexico.
The map below shows the location of the Sierra Mojada project:
Property History
Silver and lead were first discovered by a foraging party in 1879, and mining to 1886 consisted of native silver, silver chloride, and lead
carbonate ores. After 1886, silver-lead-zinc-copper sulphate ores within limestone and sandstone units were produced. No accurate
production history has been found for historical mining during this period.
Approximately 90 years ago, zinc silicate and zinc carbonate minerals (“Zinc Manto Zone”) were discovered underlying the silver-lead
mineralized horizon. The Zinc Manto Zone is predominantly zinc dominated, but with subordinate lead – rich manto and is principally
situated in the footwall rocks of the Sierra Mojada Fault System. Since discovery and up to 1990, zinc, silver, and lead ores were
mined from various mines along the strike of the deposit including from the Sierra Mojada Property. Ores mined from within these
areas were hand-sorted, and the concentrate shipped mostly to smelters in the United States.
Activity during the period of 1956 to 1990 consisted of operations by the Mineros Norteños Cooperativa and operations by individual
owners and operators of pre-existing mines. The Mineros Norteños operated the San Salvador, Encantada, Fronteriza, Esmeralda,
and Parrena mines, and shipped oxide zinc ore to Zinc National’s smelter in Monterrey, while copper and silver ore were shipped to
smelters in Mexico and the United States.
We estimate that over 45 mines have produced ore from underground workings throughout the approximately five kilometer by two
kilometer area that comprises the Sierra Mojada District. We estimate that since its discovery in 1879, the Sierra Mojada District has
produced approximately 10 million tons of silver, zinc, lead and copper ore. The District does not have a mill to concentrate ore and all
mining conducted thus far has been limited to selectively mined ore of sufficient grade to direct ship to smelters. We believe that mill-
grade mineralization that was not mined remains available for extraction. No mining operations are currently active within the area of
the Sierra Mojada District, except for a dolomite quarry by Peñoles near Esmeralda.
In the 1990’s, Kennecott Copper Corporation (“Kennecott”) had a joint venture agreement involving USMX’s Sierra Mojada
concessions. Kennecott terminated the joint venture in approximately 1995. We entered into a Joint Exploration and Development
Agreement with USMX in July 1996 involving USMX’s Sierra Mojada concessions. In 1998, we purchased the Sierra Mojada and the
USMX concessions and the Joint Exploration and Development Agreement was terminated. We also purchased certain other
concessions during this time and conducted exploration for copper and silver mineralization from 1997 through 1999.
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In October of 1999, we entered into a joint venture with North Limited of Melbourne, Australia (now Rio Tinto). North Limited withdrew
from the joint venture in October 2000.
We entered into a joint venture agreement with Peñoles in November 2001. The agreement allowed Peñoles to acquire 60% of the
Sierra Mojada project by completing a bankable Feasibility Study and making annual payments to us. During 2002 and 2003, Peñoles
conducted an underground exploration program. In December 2003, the joint venture was terminated by mutual consent between
Peñoles and us.
Title and Ownership Rights
The Sierra Mojada Project is comprised of 35 concessions consisting of 85,060 hectares (about 210,188 acres). We periodically obtain
additional concessions in the Sierra Mojada Project area and whether we will continue to hold these additional concessions will
depend on future exploration work and exploration results and our ability to obtain financing. Over the course of the year we have
terminated our rights to significant concessions holdings not in the core area of the Sierra Mojada Project.
Seven of the concessions in the Sierra Mojada project are subject to options to purchase from existing third party concession owners.
During 2013 we terminated or permitted to expire option agreements covering six concessions that are not in the core area of the
Sierra Mojada Project. We also modified the terms of certain of the remaining agreements to defer certain option payments to after
2013. If exploration results warrant, we intend to make the payments described below. Pursuant to the option purchase agreements,
we are required to make certain payments over the terms of these contracts to obtain full ownership of these concessions as set forth
in the table below:
Olympia (1 concession)
Payment Date
March 2014(1)
Payment Amount
Mexican peso (“$MXN”) 500,000
(1) If a change of control occurs prior to the payment date, this payment is due
upon the change of control.
Nuevo Dulces Nombres (Centenario) and Yolanda III (2 concessions)
Payment Date
Monthly payment beginning August 2014 and
ending July 2016
Payment Amount(1)
$20,000 per month
(1) Until July 2016, the Company has the option of acquiring Nuevo Dulces
Nombres (100% interest) for $4 million and Yolanda III (100% interest) for $2 million
plus a lump sum payment equal to any remaining monthly payments.
Poder de Dios, Anexas a Poder de Dios and Ampliacion a Poder de Dios (3 concessions)
Payment Date
April 2014
October 2014
April 2015(1)
Payment Amount(1)
$6 million
$6 million
$7 million
(1) Payments shown reflect the option purchase price for a period of six months from the
payment date for the acquisition of 100% of the concessions. Subsequent to April 2015 the option
purchase price is $7 million for the acquisition of 100% of the concessions. In addition the Company is
required to make payments of $300,000 in April and October of each year until the option purchase is
made otherwise the Company will lose its interest in the concessions. The option purchase price until
April 2014 is $5 million.
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Veta Rica o La Inglesa (1 concession)
Payment Date
April 2014
Payment Amount
$300,000
Each mining concession enables us to explore the underlying concession in consideration for the payment of a semi-annual fee to the
Mexican government and completion of certain annual assessment work. Annual assessment work in excess of statutory annual
requirements can be carried forward and applied to future periods.
Ownership of a concession provides the owner with exclusive exploration and exploitation rights to all minerals located on the
concessions, but does not include the surface rights to the real property. Therefore, we will need to negotiate any necessary
agreements with the appropriate surface landowners if we determine that a mining operation is feasible for the concessions. We own
surface rights to five lots in the Sierra Mojada Property (Sierra Mojada lot #1, #3, #4, #6 and #7), but anticipate that we will be required
to obtain additional surface rights if we determine that a mining operation is feasible.
Geology and Mineralization
The Sierra Mojada concessions contain a mineral system which can be separated into two distinct zones: The “Silver Zone” and the
“Zinc Zone.” These two zones lie along the Sierra Mojada Fault which trends east-west along the base of the Sierra Mojada range. All
of the mineralization identified to date is seen as oxide, which has been derived from primary “sulphide” bodies which have been
oxidized and remained in situ or remobilized into porous and fractured rock along the Sierra Mojada Fault. The formation of a silver
rich zone (the Silver Zone) and a zinc rich zone (the Zinc Zone) is a reflection of the mobility’s of the metals in the ground water
conditions at Sierra Mojada.
The geology of the District is composed of a Cretaceous limestone and dolomite sequence sitting on top of the Jurassic “San Marcos”
red sediments. This sedimentary sequence has then later been intruded by Tertiary volcanics, which are considered to be responsible
for the mineralization seen at Sierra Mojada. Historical mines are dry and the rocks are competent for the most part. The thickness and
attitude of the mineralized material could potentially be amenable to high volume mechanized mining methods and low cost
production.
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Preliminary Economic Assessment Technical Report
On December 19, 2013, JDS Energy & Mining Inc. (“JDS”) delivered Silver Bull’s amended initial Preliminary Economic Assessment
(the “PEA Technical Report”) on the silver and zinc mineralization for the Sierra Mojada Project in accordance with Canadian National
Instrument 43-101 (“NI 43-101”). The PEA Technical Report includes an update on the silver and zinc mineralization, which was
estimated from 1,372 diamond drill holes, 25 reverse circulation drill holes, 9,025 channel samples and 2,345 long holes. At a cutoff
grade of 25 grams/tonne of silver for mineralized material, the PEA Technical Report indicates mineralized material of 71.1 million
tonnes at an average silver grade of 71.5 grams/tonne silver and an average zinc percentage of 1.34%. Mineralized material
estimates do not include any amounts categorized as inferred resources. The PEA Technical Report included a preliminary
assessment of capital costs, mine plan, processing and projected operating costs of a possible future mine at the Sierra Mojada
Project. We believe the results of the PEA Technical Report, although preliminary in nature, were encouraging and show that the
Sierra Mojada Project has the potential to continue to advance.
“Mineralized material” as used in this Annual Report on Form 10-K, although permissible under the Securities and Exchange
Commission’s (“SEC’s”) Industry Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any part of the
Sierra Mojada Project will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors are cautioned
not to assume that all or any part of the mineralized material will ever be confirmed or converted into reserves or that mineralized
material can be economically or legally extracted.
Sampling, Analysis, Quality Control and Security
Our activities conform to mining industry standard practices and follow the Best Practices Guidelines of the Canadian Institute of
Mining, Metallurgy, and Petroleum (CIM). Sampling is directed and supervised by trained and experienced geologists. Drill core and
other samples are processed and logged using industry standard methods. Standard samples, duplicates and blanks are periodically
entered into the stream of samples submitted for assays, and campaigns of re-sampling and duplicate analyses and round-robin inter-
laboratory validations are conducted periodically. We use ALS Chemex - Vancouver (“ALS Chemex”) laboratory as our independent
primary laboratory. ALS Chemex is ISO 9001:2000 certified. All analytical results that are used in resource models are exclusively
from the independent primary laboratory.
Our consultants perform technical audits of our operations, including our formal QA/QC program, and recommend improvements as
needed. A systematic program of duplicate sampling and assaying of representative samples from previous exploration activities was
completed in 2010 under the direction and control of our consultants. Results of this study acceptably confirm the values in the project
database used for resource modeling.
We formerly operated a sample preparation and an analytical laboratory at the project that prepared samples for shipment, performed
QA/QC analyses to ensure against cross contamination of samples during preparation and removed most low-value samples from the
flow to the primary laboratory. For both cost and perception reasons, the internal laboratory has been shut down, and all drill samples
are submitted directly to ALS Chemex for sample preparation and analyses.
Prior Exploration Activities
We have focused our exploration efforts on two primary locations: the Silver Zone and the Zinc Zone. As further described below, we
have conducted various exploration activities at the Sierra Mojada Project, however, to date, we have not established any reserves,
and the project remains in the exploration state and may never enter the development stage.
Prior to 2008, exploration efforts largely focused on the Zinc Zone with surface and underground drilling. In 2008 Pincock, Allen, & Holt
(“PAH”) published a resource report on the Zinc Zone, but no further significant work has been completed on this area until recently.
In fiscal year 2009, we scaled back our exploration activities and administrative costs to conserve capital while we tried to secure
additional sources of capital.
After closing the transaction with Dome in April 2010, we focused our exploration activities at Sierra Mojada on the Silver Zone which
lies largely at surface. By the end of calendar 2012, approximately 100,000 meters of diamond drilling from surface and 10,000 meters
of underground drilling had been completed.
The silver contained within the Silver Zone is seen primarily as silver halide minerals. The zinc contained within the Zinc Zone is
contained mostly in the mineral hemimorphite and, to a lesser amount, in the mineral smithsonite.
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2013 Exploration Activities
Our focus for 2013 was the completion of an updated NI 43-101 compliant resource estimate, continued metallurgical work and the
completion of a preliminary economic assessment. During April 2013, JDS delivered a technical report (the “April 2013 Technical
Report”) on the mineralization at the Sierra Mojada Project in accordance with NI 43-101. Further in December 2013, the preliminary
economic assessment was completed, together with an updated estimate on the silver and zinc mineralization. We also continued to
progress our metallurgical program, as described below.
A 4,000 meter drill program for 2013 had been planned targeting what is believed to be an extension to the “high grade silver
mineralization”. Approximately 400 meters of underground drilling under this program has been conducted, but due to volatile market
conditions, the remaining drill program has been placed on hold.
A regional mapping and prospecting exploration program was completed on the Palamos Negros prospect. The aim of this program
was to identify drill targets in this prospect which lies outside of the silver zone. More work is needed on this area to better understand
the controls on the mineralization. Due to volatile market conditions, further work has been put on hold.
2014 Exploration Program
As discussed in the “Material Changes in Financial Condition, Liquidity and Capital Resources” section below we have approved a
calendar year 2014 budget of $1.8 million for the Sierra Mojada Property. The focus of the 2014 calendar year program is continuing to
progress in securing additional surface rights, maintenance of our property concessions, further studying power and water alternatives
and continued metallurgical work. Due to current market conditions our calendar year 2014 budget for the Sierra Mojada Project does
not include plans to complete a pre-feasibility study.
Metallurgical Studies
We have an active metallurgical program to test the recovery of the silver mineralization using the agitation cyanide leach method and
recovery of the zinc mineralization using the SART process (sulfidization, acidification, recycling, and thickening).
We received results for metallurgical testing on samples taken from areas throughout the silver zone and the zinc zone. The test work
on the silver zone focused on cyanide leach recovery of the silver using “Bottle Roll” tests to simulate an agitation leach system and to
determine the recovery of low grade zinc that occurs in the silver zone and high grade zinc from the zinc zone that had been blended
with mineralization from the silver zone to the leach solution. The silver was recovered from the cyanide leach solution using the Merrill
Crowe technique and the zinc was recovered from the leach solution using the SART process. The SART Process is a metallurgical
process that regenerates and recycles the cyanide used in the leaching process of the silver and zinc and allows for the recovery of
zinc that has been leached by the cyanide solution. The preliminary results showed an overall average silver recovery of 73.2% with
peak values of 89.0% and an overall average zinc recovery of 44% in the silver zone. Floatation test work focused on the zinc zone
was completed in October 2013 and it does not appear to be a viable way to recover the zinc based on the work done to date.
Gabon, Africa Licenses and Interests
We, through our wholly-owned subsidiary Dome, own two exploration licenses (Ndjole and Mitzic), each covering approximately 2,000
square kilometers in Gabon, Africa. These concessions are without known reserves and the project is exploratory in nature. The
Ndjole license and the Mitzic license are approximately 150 km east of Libreville, the capital of Gabon.
As described further in Management’s Discussion and Analysis of Financial Condition and Results of Operation, we have entered into
a binding agreement to sell our interests in the Ndjole prospect.
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The map below shows the location of the Gabon Projects:
In November 2006, Dome was granted the Mitzic prospection permit covering 12,800 square kilometers in Gabon. In July of 2008,
Dome converted three areas of the Mitzic prospection permit into three “exploration” licenses, namely the Mitzic exploration license,
the Mevang exploration license (which we chose not to pursue) and the Ndjole exploration license, each covering an area of 2,000
square kilometers.
The “Mitzic” and “Ndjole” exploration licenses take in areas of Archaean basement rocks and Palaeo-Proterozic cover sequences that
are highly prospective for gold, manganese and iron. An extensive stream sampling campaign conducted by the French geological
survey in the 1970’s and 1980’s identified numerous stream anomalies within these areas that had never been explored with modern
exploration methods due to the dense cover of equatorial rainforest, the low population of the country, and the government’s previous
focus on petroleum and forestry. The Mitzic exploration license takes in a series of Archaean rocks that include greenstone belts and
banded iron formations and is highly prospective for iron ore. The Ndjole exploration license takes in Palaeo-Proterozoic rocks that
form part of the Central West African Orogenic Belt, and are strongly deformed and metamorphosed to greenschist facies, making
them highly prospective for large “orogenic”-type gold deposits. The Ndjole license also takes in structural disruptions associated with
a second continental-scale structure, the “Ikoye-Ikobe Fault.” This area is characterized by extensive artisinal gold workings of which
the gold is thought to come from a local primary source.
The Ndjole license and previously-held Mevang license were being explored under a joint venture agreement with AngloGold Ashanti
(“AngloGold”). AngloGold terminated this joint venture effective August 16, 2012 after incurring exploration expenditures of $5.9
million. As a result of this termination a 100% interest in the Ndjole license has reverted back to Silver Bull.
To date, three main coherent gold anomalies above 50 parts per billion (“ppb”) and over 5km in length and up to 1.5km wide and
several smaller anomalous zones up to 2km in length and up to 1km wide have been identified. Background gold values in the region
are less than 5 ppb and results above 20 ppb are considered anomalous. Over 25% of the results received to date are above 30 ppb
with peak values in excess of 5,000 ppb in the soils. The anomalies appear to have strong structural controls concentrating along
mapped or inferred lithological contacts, structural breaks, and fold hinges. There is also a strong spatial relationship of the gold
anomalies to a thick graphitic lithological unit in the area that is thought to represent an ideal lithological trap for mineralizing fluids.
Initial prospecting in these anomalous zones has identified a number of gold-bearing quartz veins, many of which run between 2 g/t to
5 g/t gold.
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Exploratory drilling has focused on these gold anomalies. East-west trending drill fences have been positioned to test roughly north-
south trending lithological contacts which are considered as the most favorable sites for gold deposition. A total of 5,300 meters has
been drilled with gold intercepts between 1 meter to 13 meters in thickness encountered. The best intercept averaged 7.24 g/t gold
over 9 meters. Most intercepts were in the 1 meter to 3 meters range at 1 to 4 g/t gold. In addition the drilling identified manganese with
the best manganese intercept averaging 22% manganese over 34.5 meters from surface.
Gabon Facility
Our facilities in Gabon include three rented offices which double as living accommodations for staff. Two of the offices are located in
the capital city of Libreville, and one field office is located in the village of Ndjole. The Libreville offices include an office-house used by
our staff to coordinate exploration activities involving the Mitzic license, and an office-house used by our staff to coordinate and
manage exploration activities for the Ndjole license. The Ndjole field office is four hours by sealed road due east from Libreville and is
the main staging point for exploration activities for work on the Ndjole license. Field-based activities here are run out of tented field
camps. Electricity for all offices is supplied from the local grid and from light diesel generators for field camps.
Executive Officers of Silver Bull Resources
We have three executive officers: (1) a Chairman, (2) a President and Chief Executive Officer and (3) a Chief Financial Officer. Set
forth below is information regarding our executive officers.
Name and Residence
Brian Edgar
Vancouver, BC
Tim Barry
Vancouver, BC
Sean Fallis
Vancouver, BC
Age
63
Chairman
Position
38
President, Chief Executive Officer and Director
34
Chief Financial Officer
Brian Edgar. Mr. Edgar was appointed Chairman of the Board of Directors in April 2010. Mr. Edgar has broad experience working in
junior and mid-size natural resource companies. He previously served as Dome's President and Chief Executive Officer from February
2005 until it was acquired by Silver Bull in April 2010. Further, Mr. Edgar served on Dome's Board of Directors from 1998 to 2010. Mr.
Edgar currently serves as a director of BlackPearl Resources Inc., Denison Mines Corp., Lucara Diamond Corp., Lundin Mining
Corporation, and ShaMaran Petroleum Corp. Mr. Edgar practiced corporate/securities law in Vancouver, British Columbia, Canada for
sixteen years.
Tim Barry. Mr. Barry has served as a director, President and Chief Executive Officer of Silver Bull since March 2011. From August
2010 to March 2011, he served as our Vice President - Exploration. Between 2006 and August 2010, Mr. Barry spent 5 years working
as Chief Geologist in West and Central Africa for Dome. During this time, he managed all aspects of Dome’s exploration programs, as
well as oversaw corporate compliance for Dome’s various subsidiaries. Mr. Barry also served on Dome’s board of directors. In 2005,
he worked as a project geologist in Mongolia for Entree Gold, a company that has a significant stake in the Oyu Tolgoi mine in
Mongolia. Between 1998 and 2005, Mr. Barry worked as an exploration geologist for Ross River Minerals on its El Pulpo copper/gold
project in Sinaloa, Mexico, for Canabrava Diamonds on its exploration programs in the James Bay lowlands in Ontario, Canada, and
for Homestake on its Plutonic Gold Mine in Western Australia. He has also worked as a mapping geologist for the Geological Survey
of Canada in the Coast Mountains, and as a research assistant at the University of British Columbia, where he examined the potential
of CO2 sequestration in Canada using ultramafic rocks. Mr. Barry received a bachelor of science from the University of Otago in
Dundein, New Zealand and is a registered geologist (MAusIMM). He also serves on the board of directors of Acme Resources,
a junior exploration company listed on the Toronto Stock Exchange.
Sean Fallis. Mr. Fallis was appointed Chief Financial Officer in April 2011. From February 2011 to April 2011, he served as our Vice
President - Finance. From July 2008 to February 2011, Mr. Fallis served as the Corporate Controller for Rusoro Mining Ltd. Prior to
working at Rusoro Mining Ltd, he worked at PricewaterhouseCoopers as an Audit Senior Associate from January 2007 to June 2008,
At
where he worked with both Canadian and U.S. publicly-listed companies
PricewaterhouseCoopers, Mr. Fallis focused on clients in the mining industry. Further, he worked at SmytheRatcliffe Chartered
Accountants as a staff accountant from September 2004 to December 2006. Mr. Fallis received a bachelor of science from Simon
Fraser University in 2002 and is a Chartered Accountant.
the audit and assurance practice.
in
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Competition and Mineral Prices
Mineral Prices
Silver and zinc are commodities, and their prices are volatile. From January 1, 2013 to December 31, 2013 the price of silver ranged
from a low of $18.61 per troy ounce to a high of $32.23 per troy ounce, and from January 1, 2013 to November 30, 2013 the price of
zinc ranged from a low of $1,831 per tonne to a high of $2,129 per tonne. Silver and zinc prices are affected by many factors beyond
our control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation,
currency values, governmental decisions regarding the disposal of precious metals stockpiles, global and regional demand and
production, political and economic conditions and other factors. The competitive nature of the business and the risks with which we are
therefore faced are discussed further in the item entitled “Risk Factors,” below.
The following tables set forth, for the periods indicated, on the London Metal Exchange, high and low silver and zinc prices in U.S.
dollars per troy ounce and per tonne, respectively. On October 31, 2013, the closing price of silver was $22.20 per troy ounce. On
October 31, 2013, the closing price of zinc was $1,885 per tonne.
Silver
(per troy ounce)
High
$14.94
$15.82
$20.92
$19.18
$30.70
$48.70
$37.23
$32.23
Low
$8.83
$11.67
$8.88
$10.51
$15.14
$26.16
$26.67
$18.61
Zinc
(per tonne)
High
$4,381
$3,848
$2,511
$2,374
$2,414
$2,473
$2,040
$2,129
Low
$2,091
$2,379
$1,113
$1,118
$1,746
$1,871
$1,816
$1,831
Year
2006
2007
2008
2009
2010
2011
2012
2013
Year
2006
2007
2008
2009
2010
2011
2012
2013*
* Through November 30, 2013.
Competition
Our industry is highly competitive. We compete with other mining and exploration companies in connection with the acquisition and
exploration of mineral properties. There is competition for a limited number of mineral property acquisition opportunities, some of
which is with other companies having substantially greater financial resources, staff and facilities than we do. As a result, we may have
difficulty acquiring attractive exploration properties, staking claims related to our properties and exploring properties. Our competitive
position depends upon our ability to successfully and economically acquire and explore new and existing mineral properties.
Government Regulation
Mineral exploration activities are subject to various national, state/provincial, and local laws and regulations, which govern prospecting,
development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment,
mine safety, hazardous substances and other matters. Similarly, if any of our properties are developed and/or mined, those activities
are also subject to significant governmental regulation and oversight. We will obtain the licenses, permits or other authorizations
currently required to conduct our exploration program. We believe that we are in compliance in all material respects with applicable
mining, health, safety and environmental statutes and the regulations applicable to the mineral interests we now hold in Mexico and
Gabon.
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Environment Regulations
Our activities are subject to various national and local laws and regulations governing protection of the environment. These laws are
continually changing and, in general, are becoming more restrictive. We intend to conduct business in a way that safeguards public
health and the environment. We will conduct our operational compliance with applicable laws and regulations.
Changes to current state or federal laws and regulations in Mexico and Gabon could, in the future, require additional capital
expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any,
might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.
During fiscal year 2013, we had no material environmental incidents or non-compliance with any applicable environmental regulations.
Employees
We have four employees, of which, all are full time. Contratistas, our wholly-owned operating subsidiary in Mexico currently has 10
employees who are all full time. Minera, our mineral holding company in Mexico, does not have any employees. Dome Gabon, our
wholly-owned subsidiary in Gabon, has four employees who are all full time. African Resources does not have any employees.
Corporate Offices
Our corporate offices are located at 925 West Georgia Street, Suite 1908, Vancouver, British Columbia, Canada V6C 3L2. Our
telephone number is (604) 687-5800, and our fax number is (604) 563-6004.
Available Information
We maintain an internet website at http://www.silverbullresources.com. The information on our website is not incorporated by
reference in this Annual Report on Form 10-K. We make available on or through our website certain reports and amendments to those
reports that we file with or furnish to the SEC in accordance with the Exchange Act. Alternatively, you may read and copy any
information we file with the SEC at its public reference room at 100 “F” Street NE, Washington, D.C. 20549. You may obtain
information about the operation of the public reference room by calling 1-800-SEC-0330. You may also obtain this information from the
SEC’s website, http://www.sec.gov.
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Item 1A. RISK FACTORS
A purchase of our securities involves a high degree of risk. Our business, operating or financial condition could be harmed due to any
of the following risks. Accordingly, investors should carefully consider these risks in making a decision as to whether to purchase, sell
or hold our securities. In addition, investors should note that the risks described below are not the only risks facing us. Additional risks
not presently known to us, or risks that do not seem significant today, may also impair our business operations in the future. You
should carefully consider the risks described below, as well as the other information contained in this Annual Report on Form 10-K and
the documents incorporated by reference herein, before making a decision to invest in our securities.
RISKS RELATED TO OUR BUSINESS:
We may have difficulty meeting our current and future capital requirements.
Our management and our board of directors monitor our overall costs and expenses and, if necessary, adjust our programs and
planned expenditures in an attempt to ensure we have sufficient operating capital. We continue to evaluate our costs and planned
expenditures for our on-going exploration efforts at our Sierra Mojada Project. As of October 31, 2013, we had working capital of $4.7
million and cash and cash equivalents of $5.3 million. Although we believe we have sufficient capital to accomplish our 2014
objectives, the continued exploration and possible development of the Sierra Mojada Property will require significant amounts of
additional capital. We do not have a credit, off-take or other commercial financing arrangement in place that would finance continued
evaluation or development of the Sierra Mojada Project and we believe that securing credit for these projects may be difficult due to
continuing volatility in global credit markets. Moreover, equity financing may not be available on attractive terms and if available, will
likely result in significant dilution to existing shareholders. If we are unable to fund exploration and capital requirements by way of
financing, including public or private offerings of equity or debt securities, we will need to significantly reduce operations, which will
result in an adverse impact on our business, financial conditions and exploration activities.
We are an exploration stage mining company with no history of operations.
We are an exploration stage enterprise engaged in mineral exploration in Mexico and Gabon, Africa. We have a very limited operating
history and are subject to all the risks inherent in a new business enterprise. As an exploration stage company, we may never enter
the development and production stages. To date we have had no revenues and have relied upon equity financing to fund our
operations. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays
frequently encountered in connection with an exploration stage business, and the competitive and regulatory environment in which we
operate and will operate, such as under-capitalization, personnel limitations, and limited financing sources.
We have no commercially mineable ore body.
No commercially mineable ore body has been delineated on our Sierra Mojada Project or on our exploration licenses in Gabon, Africa,
nor have our properties been shown to contain proven or probable mineral reserves. The preliminary economic assessment of the
Sierra Mojada Project recently completed by JDS was preliminary in nature and investors should not assume that the projections
contained therein will ever be realized. We cannot assure you that any mineral deposits we identify on the Sierra Mojada Project, in
Gabon or on another property will qualify as an ore body that can be legally and economically exploited or that any particular level of
recovery of silver or other minerals from discovered mineralization will in fact be realized. Most exploration projects do not result in the
discovery of commercially mineable ore deposits. Even if the presence of reserves is established at a project, the legal and economic
viability of the project may not justify exploitation.
Mineral resource estimates may not be reliable.
There are numerous uncertainties inherent in estimating quantities of mineralized material such as silver, zinc, lead, and gold,
including many factors beyond our control, and no assurance can be given that the recovery of mineralized material will be realized. In
general, estimates of mineralized material are based upon a number of factors and assumptions made as of the date on which the
estimates were determined, including:
· geological and engineering estimates that have inherent uncertainties and the assumed effects of regulation by governmental
agencies;
· the judgment of the engineers preparing the estimate;
· estimates of future metals prices and operating costs;
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
· the quality and quantity of available data;
· the interpretation of that data; and
· the accuracy of various mandated economic assumptions, all of which may vary considerably from actual results.
All estimates are, to some degree, uncertain. For these reasons, estimates of the recoverable mineral resources prepared by different
engineers or by the same engineers at different times, may vary substantially. As such, there is significant uncertainty in any
mineralized material estimate and actual deposits encountered and the economic viability of a deposit may differ materially from our
estimates.
Our business plan is highly speculative, and its success largely depends on the successful exploration of our Sierra Mojada
concessions.
Although we hold exploration licenses in Gabon, our business plan is focused on exploring the Sierra Mojada concessions to identify
reserves, and if appropriate, to ultimately develop this property. Further, although we have reported mineralized material on our Sierra
Mojada Project, we have not established any reserves and remain in the exploration stage. We may never enter the development or
production stage. Exploration of mineralization and determination of whether the mineralization might be extracted profitably is highly
speculative, and it may take a number of years until production is possible, during which time the economic viability of the project may
change. Substantial expenditures are required to establish reserves, extract metals from ore and to construct mining and processing
facilities.
The Sierra Mojada Project is subject to all of the risks inherent in mineral exploration and development. The economic feasibility of any
mineral exploration and/or development project is based upon, among other things, estimates of the size and grade of mineral
reserves, proximity to infrastructures and other resources (such as water and power), anticipated production rates, capital and
operating costs, and metals prices. To advance from an exploration project to a development project, we will need to overcome
various hurdles, including the completion of favorable feasibility studies, issuance of necessary permits, and the ability to raise
significant further capital to fund activities. There can be no assurance that we will be successful in overcoming these risks. Because
of our focus on the Sierra Mojada Project, the success of our operations and our profitability may be disproportionately exposed to the
impact of adverse conditions unique to the Torreon, Mexico region, as the Sierra Mojada Project is located 250 kilometers north of this
area.
Due to our history of operating losses, we are uncertain that we will be able to maintain sufficient cash to accomplish our
business objectives.
During the years ended October 31, 2013, October 31, 2012 and October 31, 2011, we suffered net losses of $7,466,580,
$13,360,411 and $12,237,360, respectively. At October 31, 2013, we had stockholders’ equity of $31,938,809 and working capital of
$4,718,183. Significant amounts of capital will be required to continue to explore and potentially develop the Sierra Mojada
concessions. We are not engaged in any revenue producing activities, and we do not expect to be in the near future. Currently, our
sources of funding consist of the sale of additional equity securities, entering into joint venture agreements or selling a portion of our
interests in our assets. There is no assurance that any additional capital that we will require will be obtainable on terms acceptable to
us, if at all. Failure to obtain such additional financing could result in delays or indefinite postponement of further exploration of our
projects. Additional financing, if available, will likely result in substantial dilution to existing stockholders.
Our exploration activities require significant amounts of capital that may not be recovered.
Mineral exploration activities are subject to many risks, including the risk that no commercially productive or extractable resources will
be encountered. There can be no assurance that our activities will ultimately lead to an economically feasible project or that we will
recover all or any portion of our investment. Mineral exploration often involves unprofitable efforts, including drilling operations that
ultimately do not further our exploration efforts. The cost of minerals exploration is often uncertain and cost overruns are common. Our
drilling and exploration operations may be curtailed, delayed or canceled as a result of numerous factors, many of which are beyond
our control, including title problems, weather conditions, compliance with governmental requirements, including permitting issues, and
shortages or delays in the delivery of equipment and services.
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Our financial condition could be adversely affected by changes in currency exchange rates, especially between the U.S.
dollar and the Mexican peso given our focus on the Sierra, Mojada Project.
Our financial condition is affected in part by currency exchange rates, as portions of our exploration costs in Mexico and Gabon are
denominated in the local currency. A weakening U.S. dollar relative to the Mexican peso will have the effect of increasing exploration
costs while a strengthening U.S. dollar will have the effect of reducing exploration costs. The Gabon local currency is tied to the Euro.
Some of our exploration activities in Mexico are tied to the peso. The exchange rates between the Euro and the U.S. dollar and
between the peso and U.S. dollar have fluctuated widely in response to international political conditions, general economic conditions
and other factors beyond our control. We seek to mitigate exposure to foreign currency fluctuations by holding a majority of our cash
balances in U.S. dollars.
THE BUSINESS OF MINERAL EXPLORATION IS SUBJECT TO MANY RISKS:
There are inherent risks in the mineral exploration industry
We are subject to all of the risks inherent in the minerals exploration industry including, without limitation, the following:
· we are subject to competition from a large number of companies, many of which are significantly larger than we are, in the
acquisition, exploration, and development of mining properties;
· we might not be able raise enough money to pay the fees and taxes and perform the labor necessary to maintain our
concessions in good force;
· exploration for minerals is highly speculative and involves substantial risks and is frequently un-productive, even when
conducted on properties known to contain significant quantities of mineralization, and our exploration projects may not result
in the discovery of commercially mineable deposits of ore;
· the probability of an individual prospect ever having reserves that meet the requirements for reporting under SEC Industry
Guide 7 is remote and any funds spent on exploration may be lost;
· our operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting
procedures, safety precautions, property reclamation, employee health and safety, air quality standards, pollution and other
environmental protection controls and we may not be able to comply with these regulations and controls; and
· a large number of factors beyond our control, including fluctuations in metal prices, inflation, and other economic conditions,
will affect the economic feasibility of mining.
Metals prices are subject to extreme fluctuation.
Our activities are influenced by the prices of commodities, including silver, zinc, lead, gold, manganese and other metals. These prices
fluctuate widely and are affected by numerous factors beyond our control, including interest rates, expectations for inflation,
speculation, currency values (in particular the strength of the U.S. dollar), global and regional demand, political and economic
conditions and production costs in major metal producing regions of the world.
Our ability to establish reserves through our exploration activities, our future profitability and our long-term viability, depend, in large
part, on the market prices of silver, zinc, lead, gold, manganese and other metals. The market prices for these metals are volatile and
are affected by numerous factors beyond our control, including:
· global or regional consumption patterns;
· supply of, and demand for, silver, zinc, lead, gold, manganese and other metals;
· speculative activities and producer hedging activities;
· expectations for inflation;
· political and economic conditions; and
· supply of, and demand for, consumables required for production.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
19
Future weakness in the global economy could increase volatility in metals prices or depress metals prices, which could in turn reduce
the value of our properties, make it more difficult to raise additional capital, and make it uneconomical for us to continue our
exploration activities.
There are inherent risks with foreign operations.
Our business activities are primarily conducted in Mexico, and we also hold interests in Gabon, and as such, our activities are
exposed to various levels of foreign political, economic and other risks and uncertainties. These risks and uncertainties include, but
are not limited to, terrorism, hostage taking, military repression, extreme fluctuations in currency exchange rates, high rates of inflation,
labor unrest, the risks of war or civil unrest, expropriation and nationalization, renegotiation or nullification of existing concessions,
licenses, permits, approvals and contracts, illegal mining, changes in taxation policies, restrictions on foreign exchange and
repatriation, changing political conditions, currency controls and governmental regulations that favor or require the rewarding of
contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.
Changes, if any, in mining or investment policies or shifts in political attitude in Mexico and/or Gabon may adversely affect our
exploration and possible future development activities. We may also be affected in varying degrees by government regulations with
respect to, but not limited to, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local
people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral
right applications and tenure, could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or
foreign parties as joint venture partners with carried or other interests.
The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on our
operations. In addition, legislation in the U.S., Canada, Mexico and/or Gabon regulating foreign trade, investment and taxation could
have a material adverse effect on our financial condition.
Our Sierra Mojada Project is located in Mexico and is subject to various levels of political, economic, legal and other risks.
The Sierra Mojada Project, our primary focus, is in Mexico. In the past, Mexico has been subject to political instability, changes and
uncertainties, which have resulted in changes to existing governmental regulations affecting mineral exploration and mining activities.
Mexico’s status as a developing country may make it more difficult for us to obtain any required financing for the Sierra Mojada Project
or other projects in Mexico in the future. Our Sierra Mojada Project is also subject to a variety of governmental regulations governing
health and worker safety, employment standards, waste disposal, protection of historic and archaeological sites, mine development,
protection of endangered and protected species and other matters. Mexican regulators have broad authority to shut down and/or levy
fines against facilities that do not comply with regulations or standards.
Our exploration activities in Mexico may be adversely affected in varying degrees by changing government regulations relating to the
mining industry or shifts in political conditions that increase the costs related to the Sierra Mojada Project. Changes, if any, in mining or
investment policies or shifts in political attitude may adversely affect our financial condition. Expansion of our activities will be subject
to the need to obtain sufficient access to adequate supplies of water, assure the availability of sufficient power, as well as sufficient
surface rights which could be affected by government policy and competing operations in the area.
The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on our
financial condition. Future changes in applicable laws and regulations or changes in their enforcement or regulatory interpretation
could negatively impact current or planned exploration activities with the Sierra Mojada Project or in respect to any other projects in
which we become involved in Mexico. Any failure to comply with applicable laws and regulations, even if inadvertent, could result in
the interruption of exploration operations or material fines, penalties or other liabilities.
Title to our properties may be challenged or defective.
Our future operations, including our activities at the Sierra Mojada Project and other exploration activities, will require additional
permits from various governmental authorities. Our operations are and will continue to be governed by laws and regulations governing
prospecting, mineral exploration, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use,
environmental protection, mine safety, mining royalties and other matters. There can be no assurance that we will be able to acquire
all required licenses, permits or property rights on reasonable terms or in a timely manner, or at all, and that such terms will not be
adversely changed, that required extensions will be granted, or that the issuance of such licenses, permits or property rights will not be
challenged by third parties.
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We attempt to confirm the validity of our rights of title to, or contract rights with respect to, each mineral property in which we have a
material interest. However, we cannot guarantee that title to our properties will not be challenged. The Sierra Mojada Property may be
subject to prior unregistered agreements, interests or native land claims, and title may be affected by undetected defects. There may
be valid challenges to the title of any of the claims comprising the Sierra Mojada Property that, if successful, could impair possible
development and/or operations with respect to such properties in the future. Challenges to permits or property rights, whether
successful or unsuccessful; changes to the terms of permits or property rights; or a failure to comply with the terms of any permits or
property rights that have been obtained, could have a material adverse effect on our business by delaying or preventing or making
continued operations economically unfeasible.
A title defect could result in Silver Bull losing all or a portion of its right, title, and interest to and in the properties to which the title
defect relates. Title insurance generally is not available, and our ability to ensure that we have obtained secure title to individual
mineral properties or mining concessions may be severely constrained. In addition, we may be unable to operate our properties as
permitted or to enforce our rights with respect to our properties. We annually monitor the official land records in Mexico City to
determine if there are annotations indicating the existence of a legal challenge against the validity of any of our concessions. As of
December 2013, there were no such annotations, nor are we aware of any challenges from the government or from third parties.
In addition, in connection with the purchase of certain mining concessions, the prior management of Silver Bull agreed to pay a net
royalty interest on revenue from future mineral sales on certain concessions at the Sierra Mojada Project, including concessions on
which a significant portion of our mineralized material is located. The aggregate amount payable under this royalty is capped at $6.875
million, an amount that will only be reached if there is significant future production from the concessions. In addition, records from prior
management indicate that additional royalty interests may have been created, although the continued applicability and scope of these
interests are uncertain. The existence of these royalty interests may have a material effect on the economic feasibility of potential
future development of the Sierra Mojada Project.
We are subject to complex environmental and other regulatory risks, which could expose us to significant liability and delay
and, potentially, the suspension or termination of our exploration efforts.
Our mineral exploration activities are subject to federal, state and local environmental regulation in the jurisdictions where our mineral
properties are located. These regulations mandate, among other things, the maintenance of air and water quality standards and land
reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. No
assurance can be given that environmental standards imposed by these governments will not be changed, thereby possibly materially
adversely affecting our proposed activities. Compliance with these environmental requirements may also necessitate significant
capital outlays or may materially affect our earning power.
Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for
companies and their officers, directors and employees. As a result of recent changes in environmental laws in Mexico, for example,
more legal actions supported or sponsored by non-governmental groups interested in halting projects may be filed against companies
operating in all industrial sectors, including the mining sector. Mexican projects are also subject to the environmental agreements
entered into by Mexico, the United States and Canada in connection with the North American Free Trade Agreement.
Future changes in environmental regulation in the jurisdictions where our projects are located may adversely affect our exploration
activities, make them prohibitively expensive, or prohibit them altogether. Environmental hazards may exist on the properties in which
we currently hold interests, such as the Sierra Mojada Project, or may hold interests in the future, which are unknown to us at present
and that have been caused by us or previous owners or operators, or that may have occurred naturally. We may be liable for
remediating any damage that we may have caused. The liability could include costs for removing or remediating the release and
damage to natural resources, including ground water, as well as the payment of fines and penalties.
We may face a shortage of water.
Water is essential in all phases of the exploration and development of mineral properties. It is used in such processes as exploration,
drilling, leaching, placer mining, dredging, testing, and hydraulic mining. Both the lack of available water and the cost of acquisition
may make an otherwise viable project economically impossible to complete. In November 2013 Silver Bull was granted the right to
exploit up to 3.5 million cubic meters of water per year from six different well sites by the water regulatory body in Mexico, Comision
Nacional de Agua, but it has yet to be determined if the six well sites can produce this much water over a sustained period of time.
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We may face a shortage of supplies and materials.
The mineral industry has experienced from time to time shortages of certain supplies and materials necessary in the exploration for
and evaluation of mineral deposits. The prices at which such supplies and materials are available have also greatly increased. Our
planned operations could be subject to delays due to such shortages and further price escalations could increase our costs for such
supplies and materials. Our experience and that of others in the industry is that suppliers are often unable to meet contractual
obligations for supplies, equipment, materials, and services, and that alternate sources of supply do not exist.
Competition for outside engineers and consultants is fierce.
We are heavily dependent upon outside engineers and other professionals to complete work on our exploration projects. The mining
industry has experienced significant growth over the last several years and as a result, many engineering and consulting firms have
experienced a shortage of qualified engineering personnel. We closely monitor our outside consultants through regular meetings and
review of resource allocations and project milestones. However, the lack of qualified personnel combined with increased mining
projects could result in delays in completing work on our exploration projects or result in higher costs to keep personnel focused on
our project.
Our non-operating properties are subject to various hazards.
We are subject to risks and hazards, including environmental hazards, the encountering of unusual or unexpected geological
formations, cave-ins, flooding, earthquakes and periodic interruptions due to inclement or hazardous weather conditions. These
occurrences could result in damage to, or destruction of, mineral properties or future production facilities, personal injury or death,
environmental damage, delays in our exploration activities, asset write-downs, monetary losses and possible legal liability. We may
not be insured against all losses or liabilities, either because such insurance is unavailable or because we have elected not to
purchase such insurance due to high premium costs or other reasons. Although we maintain insurance in an amount that we consider
to be adequate, liabilities might exceed policy limits, in which event we could incur significant costs that could adversely affect our
activities. The realization of any significant liabilities in connection with our activities as described above could negatively affect our
activities and the price of our common stock.
We need and rely upon key personnel.
Presently, we employ a limited number of full-time employees, utilize outside consultants, and in large part rely on the personal efforts
of our officers and directors. Our success will depend, in part, upon the ability to attract and retain qualified employees. In particular,
we have only three executive officers, Brian Edgar, Timothy Barry and Sean Fallis, and the loss of the services of any of these three
would adversely affect our business.
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RISKS RELATING TO OUR COMMON STOCK:
Further equity financings may lead to the dilution of our common stock.
In order to finance future operations, we may raise funds through the issuance of common stock or the issuance of debt instruments or
other securities convertible into common stock. We cannot predict the size of future issuances of common stock or the size and terms
of future issuances of debt instruments or other securities convertible into common stock or the effect, if any, that future issuances and
sales of our securities will have on the market price of our common stock. Any transaction involving the issuance of previously
authorized but unissued shares, or securities convertible into common stock, would result in dilution, possibly substantial, to present
and prospective security holders. Demand for equity securities in the mining industry has been weak, therefore equity financing may
not be available on attractive terms and if available, will likely result in significant dilution to existing shareholders.
No dividends are anticipated.
At the present time, we do not anticipate paying dividends, cash or otherwise, on our common stock in the foreseeable future. Future
dividends will depend on our earnings, if any, our financial requirements and other factors. There can be no assurance that we will
pay dividends.
Our stock price can be extremely volatile.
Our common stock is listed on the TSX and NYSE MKT. The trading price of our common stock has been, and could continue to be,
subject to wide fluctuations in response to announcements of our business developments, results and progress of our exploration
activities at the Sierra Mojada Project and in Gabon, progress reports on our exploration activities, and other events or factors. In
addition, stock markets have experienced extreme price volatility generally in recent years. This volatility has had a substantial effect
on the market prices of companies, at times for reasons unrelated to their operating performance. These fluctuations could be in
response to:
· volatility in metal prices;
· political developments in the foreign countries in which our properties, or properties for which we perform services, are
located; and
· news reports relating to trends in our industry or general economic conditions.
These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time,
including as to whether our common stock will sustain market prices at or near its offering price, or as to what effect the sale of shares
or the availability of common stock for sale at any time will have on the prevailing market price.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 3. LEGAL PROCEEDINGS
We are not subject to any pending or, to our knowledge, threatened, legal proceedings.
Item 4. MINE SAFETY DISCLOSURE
Not applicable.
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PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is traded on the NYSE MKT (formerly known as the NYSE Amex) under the symbol “SVBL.” On August 26, 2010,
our common stock began trading on the TSX under the symbol “SVB.”
The following table sets forth the high and low sales prices of our common stock for each quarter during the fiscal years ended October
31, 2013, October 31, 2012, as well as through December 31, 2013, as reported by the NYSE MKT and the TSX.
NYSE MKT
(SVBL)
Toronto
Stock Exchange
(SVB)
High
Low
High
Low
($)
(Cdn$)
2014
First Quarter (through December 31, 2013)
$ 0.39
$ 0.30
$ 0.39
$ 0.30
2013
Fourth Quarter (October 31, 2013)
Third Quarter (July 31, 2013)
Second Quarter (April 30, 2013)
First Quarter (January 31, 2013)
2012
Fourth Quarter (October 31, 2012)
Third Quarter (July 31, 2012)
Second Quarter (April 30, 2012)
First Quarter (January 31, 2012)
$ 0.40
0.45
0.48
0.50
$ 0.55
0.54
0.66
0.70
$0.30
0.35
0.30
0.40
$0.42
0.39
0.47
0.45
$0.43
0.47
0.48
0.51
$0.54
0.53
0.60
0.70
$0.32
0.34
0.31
0.36
$0.44
0.41
0.48
0.45
The closing price of our Common Stock as reported on December 31, 2013 on the NYSE MKT, was $0.35 per share.
Holders
As of January 13, 2014, there were 186 holders of record of our common stock. This does not include persons who hold our common
stock in brokerage accounts and otherwise in “street name.”
Dividends
We did not declare or pay cash or other dividends on our common stock during the last two calendar years. We have no plans to pay
any dividends in the foreseeable future.
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Securities Authorized for Issuance Under Equity Compensation Plans
As of October 31, 2013, we had two active formal equity compensation plans.
·
·
The 2006 Stock Option Plan (the “2006 Plan”) was adopted by the board of directors in May 2006, and approved by the
stockholders in July 2006. Five million shares of common stock are reserved for issuance under the 2006 Plan. As of October
31, 2013, options to acquire 57,144 shares of common stock are outstanding pursuant to the 2006 Plan and 4,467,237
shares remain available for issuance under the plan.
The 2010 Stock Option and Bonus Plan (the “2010 Plan”) was adopted by the board of directors in December 2009 and
approved by the stockholders in April 2010. Under the 2010 Plan, the lesser of (i) 30,000,000 shares or (ii) 10% of the total
shares outstanding will be reserved to be issued upon the exercise of options or the grant of stock bonuses. As of October 31,
2013, there are 15,907,265 shares reserved for issuance under the 2010 Plan. Options to acquire 9,148,333 shares of
common stock are outstanding pursuant to the 2010 plan, and 6,088,574 shares remain available for issuance under the plan.
The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights
under our compensation plans as of October 31, 2013.
Plan Category
Equity compensation plans
approved by security holders
Total
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights
Weighted average exercise
price of outstanding
options, warrants and rights
Number of securities
remaining available for
future issuance
9,205,477(1)
9,205,477
$0.58
$0.58
10,555,811 (2)
10,555,811
(1) Includes: (i) options to acquire 57,144 shares of common stock under the 2006 Plan; and (ii) options to acquire 9,148,333
shares of common stock under the 2010 Plan.
(2) Includes: (i) 4,467,237 shares of common stock available for issuance under the 2006 Plan; and (ii) 6,088,574 shares of
common stock available for issuance under the 2010 Plan.
Recent Sales of Unregistered Securities and Purchases of Equity Securities by the Issuer
No sales of unregistered equity securities occurred during the period covered by this report.
No purchases of equity securities were made by or on behalf of Silver Bull or any “affiliated purchaser” within the meaning of Rule 10b-
18 under the Exchange Act during the period covered by this report.
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Performance Graph
The following information in this Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with
the SEC or subject to the liabilities of Section 8 of the Exchange Act, and will not be deemed to be incorporated by reference into any
filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.
The following graph compares the cumulative return provided to stockholders of Silver Bull relative to the cumulative total returns of
the NYSE MKT Composite Index (XAX) and the Philadelphia Gold and Silver Index (XAU). An investment of $100 is assumed to have
been made in our common stock and in each of the indexes on October 31, 2008 and its relative performance is tracked through
October 31, 2013. The indices are included for comparative purpose only.
Silver Bull Resources, Inc. (SVBL)
NYSE MKT Composite Index (XAX)
Philadelphia Gold and Silver Index (XAU)
Oct. 31,
2008
$100.00
$100.00
$100.00
Oct. 31,
2009
$125.58
$119.45
$193.25
Oct. 31,
2010
$146.51
$142.06
$252.04
Oct. 31,
2011
$155.81
$154.90
$248.27
Oct.31,
2012
$113.95
$160.83
$232.24
Oct.31,
2013
$83.72
$166.62
$117.29
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Item 6. SELECTED FINANCIAL DATA
The following table summarizes certain selected consolidated financial data with respect to Silver Bull and should be read in
conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this report.
(In thousands, except per share data)
FINANCIAL HIGHLIGHTS
Year Ended October 31,
2013
2012
2011
2010
2009
Revenues
Loss from operations
Net loss
Basic and diluted loss per common share
Cash and cash equivalents
Total assets
Stockholders’ equity
$
$
—
(8,164)
(7,467)
(0.05)
5,251
33,114
31,939
—
$
(13,380)
(13,360)
(0.10)
3,201
32,354
30,700
—
$
(11,745)
(12,237)
(0.11)
4,240
35,214
32,991
—
$
(10,838)
(9,405)
(0.12)
10,571
41,313
39,526
—
(4,453)
(4,724)
(0.12)
1,483
7,042
6,237
(1) On April 16, 2010, we completed a merger transaction with Dome whereby Dome became our wholly owned subsidiary. At the
closing of the transaction, as a result of the transaction, $11,961,516 of net proceeds from Dome’s special warrant offering and
the cash acquired in the transaction, our cash and cash equivalents increased by approximately $14,580,000.
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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Business Overview
Silver Bull, incorporated in Nevada, is an exploration stage company, engaged in the business of mineral exploration. Our primary
objective is to define sufficient mineral reserves on the Sierra Mojada Property to justify the development of a mechanized mining
operation. We conduct our operations in Mexico through our wholly-owned Mexican subsidiaries, Minera Metalin and Contratistas, and
through Minera Metalin’s wholly-owned subsidiary, Minas. However, as noted above, we have not established any reserves at the
Sierra Mojada Property, and are in the exploration stage and may never enter the development or production stage.
Our principal offices are located at 925 West Georgia Street, Suite 1908, Vancouver, BC, Canada V6C 3L2, and our telephone
number is 604-687-5800.
Current Year Developments
February 2013 Offering
In February 2013, we raised net proceeds of approximately $8.1 million in a public offering of units consisting of one share of common
stock and one-half of a common stock purchase warrant. We issued a total of 22,912,500 shares of common stock and warrants to
purchase an additional 11,456,250 at an exercise price of $0.55 per share, expiring in August 2014.
Sierra Mojada Property
Our board of directors approved a calendar year 2013 budget of $6.5 million for the Sierra Mojada Property. Due to volatile market
conditions, our board approved an updated budget for the Sierra Mojada Property in September 2013. Our updated exploration budget
for the Sierra Mojada Property for the period from September 2013 to December 2013 was $0.7 million compared to $1.4 million in the
original budget. The updated exploration budget focused on continued metallurgical work and the completion of a NI 43-101
preliminary economic assessment.
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Mineralized Material Estimate
On December 19, 2013, JDS delivered the PEA Technical Report on the silver and zinc mineralization for the Sierra Mojada Project in
accordance with NI 43-101. The PEA Technical Report includes an update on the silver and zinc mineralization which was estimated
from 1,372 diamond drill holes, 25 reverse circulation drill holes, 9,025 channel samples and 2,345 long holes. At a cutoff grade of 25
grams/tonne of silver for mineralized material, the PEA Technical Report indicates mineralized material of 71.1 million tonnes at an
average silver grade of 71.5 grams/tonne silver and an average zinc percentage of 1.34%. Mineralized material estimates do not
include any amounts categorized as inferred resources.
“Mineralized material” as used in this Annual Report on Form 10-K, although permissible under the Securities and Exchange
Commission’s Industry Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any part of the Sierra
Mojada Project will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors are cautioned not to
assume that all or any part of the mineralized material will ever be confirmed or converted into reserves or that mineralized material
can be economically or legally extracted.
Drilling
A 4,000 meter drill program had been planned targeting what is believed to be an extension to the “high grade silver mineralization”.
Approximately 400 meters of underground drilling under this program has been conducted, but due to volatile market conditions, the
remaining drill program has been placed on hold.
Metallurgical Studies
We have an active metallurgical program to test the recovery of the silver mineralization using the agitation cyanide leach method and
recovery of the zinc mineralization using the SART process (sulfidization, acidification, recycling, and thickening).
We received results for metallurgical testing on samples taken from areas throughout the silver zone and the zinc zone. The test work
on the silver zone focused on cyanide leach recovery of the silver using “Bottle Roll” tests to simulate an agitation leach system and to
determine the recovery of low grade zinc that occurs in the silver zone and high grade zinc from the zinc zone that had been blended
with mineralization from the silver zone to the leach solution. The silver was recovered from the cyanide leach solution using the Merrill
Crowe technique and the zinc was recovered from the leach solution using the SART process. The SART Process is a metallurgical
process that regenerates and recycles the cyanide used in the leaching process of the silver and zinc and allows for the recovery of
zinc that has been leached by the cyanide solution. The preliminary results showed an overall average silver recovery of 73.2% with
peak values of 89.0% and an overall average zinc recovery of 44% in the silver zone. Floatation test work focused on the zinc zone
was completed in October 2013 and it does not appear to be a viable way to recover the zinc based on the work done to date.
Geological Mapping
A regional mapping and prospecting exploration program was completed on the Palamos Negros prospect. The aim of this program
was to identify drill targets in this prospect which lies outside of the silver zone. More work is needed on this area to better understand
the controls on the mineralization. Due to volatile market conditions, the potential drill program for 2013 was put on hold.
2014 Exploration Program
As discussed in the “Material Changes in Financial Condition, Liquidity and Capital Resources” section below we have approved a
calendar year 2014 budget of $1.8 million for the Sierra Mojada Property. The focus of the 2014 calendar year program is continuing to
progress in securing additional surface rights, maintenance of our property concessions, further studying power and water alternatives
and continued metallurgical work. Due to current market conditions our calendar year 2014 budget for the Sierra Mojada Project does
not include plans to complete a pre-feasibility study.
Mexican Tax Reform
On December 11, 2013 the Mexican tax reform package was published in the official gazette and will apply as from January 1, 2014.
There are a number of significant changes in the Mexican tax reform package. The planned corporate tax rate reductions to 29% in
2014 and 28% thereafter have been repealed and the corporate tax rate will remain at 30%. The business flat tax (IETU) has been
repealed. A special mining royalty of 7.5% will apply to net profits derived by a property concession holder from the sale or transfer of
extraction related activities. Net profits for the purpose of this royalty will be determined in a manner similar to the calculation of
general taxable income with certain deductions not available including for investment in fixed assets and interest. In addition, owners
of property concessions will be required to pay a 0.5% tax on gross income derived from the sale of gold, silver and platinum. Further,
a 10% withholding tax on dividend distributions has been introduced but will not supercede treaty rates.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Gabon Property
We hold two exploration licenses, the Ndjole license and the Mitzic license, in Gabon, West Africa covering approximately 4,000
square kilometers. We believe that the Ndjole license has gold and manganese potential and the Mitzic license has iron ore potential.
On December 13, 2013, we entered into a binding letter of agreement with BHK Resources, Inc. to sell all of the issued and
outstanding securities of our subsidiary, Dome International Global Inc., which holds, indirectly, a 100% interest in and to the Ndjole
manganese and gold licenses, for cash consideration of $1,500,000.
The proposed transaction is subject to a number of terms and conditions, including the entering into by the parties of a definitive
agreement with respect to the transaction, the completion of satisfactory due diligence investigations, the completion of a financing by
BHK Resources, Inc. generating minimum proceeds of $CDN 4.0 million from the sale of securities, on terms to be determined,
shareholder approval by BHK Resources, Inc. and the approval of the TSX-V and other applicable regulatory authorities. Silver Bull
was paid a $25,000 non-refundable deposit upon the signing of the binding letter of agreement. Prior to the closing of the transaction,
we will transfer all of the issued and outstanding securities of African Resources SARL Gabon, which holds the Mitzic license, from
Dome International Global Inc. to another of our subsidiaries.
Results of Operations
Year Ended October 31, 2013 Compared to Year Ended October 31, 2012
For the fiscal year ended October 31, 2013, we reported a consolidated net loss of $7,467,000 or approximately $0.05 per share,
compared to a consolidated net loss of $13,360,000 or approximately $0.10 per share during the fiscal year ended October 31, 2012.
The $5,893,000 decrease in the consolidated net loss was primarily due to a $5,774,000 decrease in exploration and property holding
costs and a $634,000 increase in other income in the 2013 fiscal year from the 2012 fiscal year, which was partially offset by a
$558,000 increase in general and administrative expenses.
Exploration and Property Holding Costs
Exploration and property holding costs decreased $5,774,000 to $5,515,000 in the 2013 fiscal year from $11,289,000 in the 2012 fiscal
year. This decrease was primarily due to a significantly reduced drilling program on the Sierra Mojada Property which was partially
offset by costs related to the maiden NI 43-101 preliminary economic assessment. During the 2013 fiscal year, we had a small drilling
program for part of the year using our underground drill rigs; whereas, up to three external drill rigs were used in the 2012 fiscal year.
As a result of this reduction in drilling, we reduced the work force at the Sierra Mojada Property. Also, we recorded a $1,271,000
concession impairment in the 2013 fiscal year as we decided not to pursue further work on certain concessions in the Sierra Mojada
Property and we determined that the Ndjole license was impaired as its carrying amounts were not recoverable from its implied fair
value based on the binding letter of agreement. During the 2012 fiscal year we recorded a $2,006,000 concession impairment as
described below.
General and Administrative Costs
General and administrative expenses increased $558,000 to $2,649,000 in the 2013 fiscal year from $2,091,000 in the 2012 fiscal
year as described below.
Personnel costs decreased $152,000 to $894,000 in the 2013 fiscal year from $1,046,000 in the 2012 fiscal year. This decrease was
primarily due to a decrease in stock-based compensation expense to $273,000 in the 2013 fiscal year from $416,000 in the 2012 fiscal
year as a result of stock option vesting in the 2013 fiscal year having a lower fair value than stock option vesting in the 2012 fiscal
year.
Office and administrative expenses increased $102,000 to $983,000 in the 2013 fiscal year from $881,000 in the 2012 fiscal year. This
increase is mainly due to increased investor relations activities and corporate travel related to the February 2013 offering described in
the “Material Changes in Financial Condition; Liquidity and Capital Resources” section.
Professional fees decreased $61,000 to $404,000 in the 2013 fiscal year from $465,000 in the 2012 fiscal year. The decrease was
primarily due a decrease in legal fees in the 2013 fiscal year compared to 2012 fiscal year.
Directors’ fees decreased $212,000 to $359,000 for the 2013 fiscal year as compared to $571,000 for the 2012 fiscal year. This
decrease was primarily due to a decrease in stock based compensation expense to $176,000 in the 2013 fiscal year from $382,000 in
the 2012 fiscal year as a result of stocks options vesting in the 2013 fiscal year having a lower fair value than stock options vesting in
the 2012 fiscal year.
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30
We recorded a provision of $5,000 for uncollectible value-added taxes (“VAT”) in the 2013 fiscal year compared to a recovery of
$875,000 in the 2012 fiscal year. The recovery for uncollectible taxes in the 2012 fiscal year was mainly due to value added taxes
collected in Mexico during the year inclusive of interest of $3,332,000 after a significant period where no collections were made. The
allowance for uncollectible taxes was estimated by management based upon a number of factors including the length of time the
returns have been outstanding, responses received from tax authorities, general economic conditions in Mexico and Gabon and
estimated net recovery after commissions.
Other Income (Expense)
We recorded other income of $762,000 in the 2013 fiscal year compared to other income of $128,000 in the 2012 fiscal year. The
significant factor was a $85,000 foreign currency transaction gain in the 2013 fiscal year, compared to a foreign currency transaction
loss of $276,000 for the 2012 fiscal year and a $644,000 miscellaneous income in the 2013 fiscal year as compared to a $244,000
miscellaneous income for the 2012 fiscal year. This was partially offset by a decrease in interest and investment income to $33,000 for
the 2013 fiscal year as compared to a $160,000 for the 2012 fiscal year. The decrease in interest and investment income is due to
significant value added tax collections of historical returns and associated interest occurring in the 2012 fiscal year.
The miscellaneous income in the 2013 fiscal year was primarily the result of our determination that AngloGold abandoned all of its
rights and benefits under two joint venture agreements. Upon AngloGold’s termination of these agreements, VAT receivable
outstanding at the termination of the agreements and subsequent cash collected related to this VAT receivable of $492,000 was
determined to be the sole property of Silver Bull. Also, we recorded $86,000 in miscellaneous income from the gain on office and
mining equipment sales at the Sierra Mojada Property. The miscellaneous income in the 2012 fiscal year was primarily the result of us
receiving supporting documents that allowed us to reduce our liability for certain withholding taxes.
The foreign currency transaction gain in the 2013 fiscal year was primarily the result of the appreciation of the Central African franc
(“$CFA”) and the resulting impact on the intercompany loans between Silver Bull and our Gabonese subsidiaries. The foreign currency
transaction loss in the 2012 fiscal year was primarily the result of the depreciation of the Central African franc and the resulting impact
on the intercompany loans between Silver Bull and our Gabonese subsidiaries.
Income Tax Expense
Income tax expense decreased $43,000 to $65,000 in the 2013 fiscal year from $108,000 in the 2012 fiscal year. The decrease was
primarily due to a decrease in income tax expense in Mexico in the 2013 fiscal year.
Year Ended October 31, 2012 Compared to Year Ended October 31, 2011
For the fiscal year ended October 31, 2012, we experienced a consolidated net loss of $13,360,000 or approximately $0.10 per share,
compared to a consolidated net loss of $12,237,000 or approximately $0.11 per share during the fiscal year ended October 31, 2011.
The $1,123,000 increase in the consolidated net loss was primarily due to a $2,916,000 increase in exploration and property holding
costs in the 2012 fiscal year from the 2011 fiscal year and other income of $128,000 in the 2012 fiscal year compared to other
expenses of $465,000 in the 2011 fiscal year. This was partially offset by a $875,000 recovery of uncollectible value-added taxes in
the 2012 fiscal year compared to a $204,000 provision for uncollectible value added taxes in the 2011 fiscal year.
Exploration and Property Holding Costs
Exploration and property holding costs increased $2,916,000 to $11,289,000 in the 2012 fiscal year from $8,373,000 in the 2011 fiscal
year primarily due to increased drilling costs due to higher drilling costs in the Parrena Adit, increased assay costs due to rush orders
on certain assays and increased metallurgical costs as metallurgical work was a significant focus in the 2012 fiscal year. Also, we
recorded a $2,006,000 concession impairment in the 2012 fiscal year as certain concessions in Gabon and Mexico will not be pursued
and certain concessions which we plan to pursue did not have expected cash flows that supports the value of these assets before the
impairment was recorded.
General and Administrative Costs
General and administrative expenses decreased $1,281,000 to $2,091,000 in the 2012 fiscal year from $3,372,000 in the 2011 fiscal
year as described below.
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Personnel costs decreased $323,000 to $1,046,000 in the 2012 fiscal year from $1,369,000 in the 2011 fiscal year. This decrease was
primarily due to $165,000 non-recurring severance payment in the comparable period last year and lower stock based compensation,
which decreased to $416,000 in the 2012 fiscal year from $587,000 in the 2011 fiscal year.
Office and administrative expenses increased $223,000 to $881,000 in the 2012 fiscal year from $658,000 in the 2011 fiscal year. This
increase is mainly due to increased investor relation activities.
Professional fees decreased $124,000 to $465,000 in the 2012 fiscal year from $589,000 in the 2011 fiscal year. The decrease was
primarily due to a decrease in recruitment fees paid for new employees and a decrease in accounting and tax expenses.
Directors’ fees of $571,000 in the 2012 fiscal year was similar to $526,000 in the 2012 fiscal year.
We recorded a recovery of $875,000 in the 2012 fiscal year for uncollectible value-added taxes compared to a provision of $204,000 in
the 2011 fiscal year. The change in management expectation of collection was mainly due to value-added tax collected in Mexico of
$3,332,000 inclusive of interest related to the tax returns filed in Mexico City for calendar year 2007 to 2012. The allowance for
uncollectible taxes was estimated by management based upon a number of factors including the length of time the returns have been
outstanding, responses received form tax authorities, general economic conditions in Mexico and Gabon and estimated net recovery
after commissions.
Other Income (Expense)
We recorded other income of $128,000 in the 2012 fiscal year compared to other expense of $465,000 in the 2011 fiscal year. We
recorded interest income of $160,000 in the 2012 fiscal year compared to $37,000 in the 2011 fiscal year. This increase in interest
income was mainly as a result of interest received on value added tax collection in Mexico. We recorded a foreign currency
transaction loss of $276,000 in the 2012 fiscal year compared to a foreign currency transaction loss of $349,000 in the 2011 fiscal
year as discussed below. Also, we recorded miscellaneous income of $243,000 in the 2012 fiscal year compared to miscellaneous
expense of $153,000 in the 2011 fiscal year. During the 2012 fiscal year we received supporting documents that allowed us to reduce
our liability for certain withholding taxes. This amount was accrued in 2011 fiscal year and was included in miscellaneous expense in
the 2011 fiscal year.
The foreign currency transaction loss in the 2012 fiscal year was primarily the result of the depreciation of the $CFA and the resulting
impact on the intercompany loans between Silver Bull and our Gabonese subsidiaries. The foreign currency transaction loss in the
2011 fiscal year was primarily the result of the depreciation of the Mexican Peso and the resulting impact on the intercompany loans
between Silver Bull and our Mexican subsidiaries. In the 2012 fiscal year, foreign currency transaction gains/losses are not recorded
on the intercompany loans between Silver Bull and our Mexican subsidiaries due to the change in functional currency described in the
“Critical Accounting Policies” section.
Income Tax Expense
Income tax expense increased $81,000 to $108,000 in the 2012 fiscal year from $27,000 in the 2011 fiscal year. The increase was
primarily due to an increase in income tax expense in Canada and Mexico in the 2012 fiscal year.
Material Changes in Financial Condition, Liquidity and Capital Resources
February 2013 Offering
On February 14, 2013, we closed the Offering of 22,912,500 units at a price of $0.40 per unit for net proceeds of $8.1 million. Each
unit was comprised of one share of common stock and one-half of one common stock purchase warrant, with each whole warrant
exercisable to purchase one share of common stock, at an exercise price of $0.55, for a period of 18 months from the closing of the
Offering. We paid the agents on the Offering a cash commission equal to 6.0% of the gross proceeds, except for $2.5 million in units
sold to purchasers arranged by us for which the agents received a 3.0% cash commission.
In addition, the agents received compensation warrants equal in number to 6.0% of the aggregate number of units issued under the
Offering except for $2.5 million in units sold to purchasers arranged by us for which the agents received compensation warrants equal
in number to 3.0% of the units sold to such purchasers. The compensation warrants have the same terms as the other warrants issued
in the Offering.
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Cash Flows
During the 2013 fiscal year, we primarily utilized cash and cash on equivalents to fund exploration activities at the Sierra Mojada
Property and for general and administrative expenses. Additionally, during fiscal year 2013, we received net proceeds (after offering
costs) of $8,095,000 in connection with the Offering. As a result of the Offering, offset by the exploration activities and general and
administrative expenses, cash and cash equivalents increased from $3,201,000 at October 31, 2012 to $5,251,000 at October 31,
2013.
Cash flows used in operations for the 2013 fiscal year was $5,425,000 as compared to $9,592,000 in the 2012 fiscal year. This
decrease was mainly due to the decreased exploration work at the Sierra Mojada Property in the 2013 fiscal year compared to the
2012 fiscal year which was partially offset by a decrease in net VAT collected of $614,000 in the 2013 fiscal year compared to
$1,680,000 in the 2012 fiscal year.
Cash flows used in investing activity for the 2013 fiscal year was $658,000 as compared to $1,615,000 in the 2012 fiscal year. The
decrease was mainly due to decreased property concession acquisition costs.
Cash flows provided by financing activities for the 2013 fiscal year was $8,127,000 as compared to $10,254,000 for the 2012 fiscal
year. The majority of the cash flow provided by financing activities in the 2013 fiscal year was due to the Offering, with net proceeds of
$8,095,000. The majority of the cash flow provided by financing activities in the 2012 fiscal year was due to the completion of certain
registered direct offerings for net proceeds of $10,218,000.
Capital Resources
As of October 31, 2013, we had cash and cash on hand of $5,251,000 and working capital of $4,718,000 as compared to cash and
cash on hand of $3,201,000 and working capital of $2,925,000 as of October 31, 2012. The increase in liquidity and working capital
were primarily the result of the Offering in February 2013 which was partially offset by cash and cash equivalents used by exploration
activities at the Sierra Mojada Property and general and administrative expense.
Since inception, we have relied primarily upon proceeds from sales of our equity securities and warrant exercises as our primary
sources of financing to fund our operations. We anticipate that we will continue to rely on sales of our securities in order to continue to
fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance
that we will be able to complete any additional sales of our equity securities or that we will be able arrange for other financing to fund
our planned business activities. See Note 1 to our Consolidated Financial Statements included in this Annual Report on the Form 10-
K.
Capital Requirements and Liquidity; Need for Subsequent Funding
Our management and board of directors monitor our overall costs, expenses, and financial resources and, if necessary, will adjust our
planned operational expenditures in an attempt to ensure we have sufficient operating capital. We continue to evaluate our costs and
planned expenditures including for our Sierra Mojada Property as discussed below.
The continued exploration of the Sierra Mojada Property will require significant amounts of additional capital. In January 2014, our
board of directors approved a calendar year 2014 budget of $1.8 million for the Sierra Mojada Property and a $1.8 million budget for
general and administrative expenses. As of December 31, 2013, we had approximately $4.7 million in cash on hand. We will continue
to evaluate our ability to raise additional capital, and we will reduce expenditures on the Sierra Mojada Property if we determine that
additional capital is unavailable or available on terms that we determine are unacceptable. Also, the continued exploration and if
warranted, development, of the Sierra Mojada Property ultimately will require us to raise additional capital, identify other sources of
funding or identify another strategic transaction. The on-going uncertainty and volatility in the global financial and capital markets have
limited the availability of funding. Debt or equity financing may not be available to us on acceptable terms, if at all. Equity financing, if
available, will likely result in substantial dilution to existing stockholders. If we are unable to fund future operations by way of
financing, including public or private offerings of equity or debt securities, our business, financial condition and results of operations will
be adversely impacted.
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Table of Contractual Obligations
The following table summarizes our contractual obligations as of October 31, 2013:
Contractual Obligations
Total
Operating leases
Sierra Mojada concession option purchase
payments
Total
Less Than
1 Year
1 - 3
Years
(in thousands of $)
4 - 5
Years
306
88
180
15,019
15,325
999
1,087
14,020
14,200
More
Than 5
Years
38
-
38
-
-
-
The above table assumes the Poder de Dios, Anexas a Poder de Dios and Amplicaion a Poder de Dios option purchase price is
exercised on January 1, 2016 and the Nuevo Dulces Nombres and Yolanda III option purchase is exercised on August 1, 2016.
Off Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to our stockholders.
Recent Accounting Pronouncements Adopted in the Year Ended October 31, 2013
Effective November 1, 2012, we adopted Accounting Standards Update (“ASU”) 2011-04 “Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update amended explanations of how to measure
fair value to result in common fair value measurement and disclosure requirements in accounting principles generally accepted in the
United States of American (“GAAP”) and International Financial Reporting Standards. The adoption of this standard had no material
effect on our financial position, results of operations or cash flows.
Effective November 1, 2012, we adopted ASU 2011-05 , “Presentation of Comprehensive Income,” to provide an entity the option to
present the total of comprehensive income, the components of net income, and the components of other comprehensive income either
in a single continuous statement of comprehensive income or in two separate but consecutive statements. We chose to use the single
continuous statement approach and the update had no effect on our financial position, results of operations or cash flows.
Effective November 1, 2012 we adopted ASU 2011-08 “Intangibles – Goodwill and Other”. This new guidance on testing goodwill
provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value
of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently
prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment
loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is not less than its
carrying amount, the two-step goodwill impairment test is not required. The adoption of this guidance had no material effect on our
financial position, results of operations or cash flows.
Recent Accounting Pronouncements Not Yet Adopted
In December 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-11, "Balance Sheet (Topic 201):
Disclosures about Offsetting Assets and Liabilities." This ASU adds certain additional disclosure requirements about financial
instruments and derivative instruments that are subject to netting arrangements. ASU 2011-11 is effective for fiscal years, and interim
periods within those years, beginning after January 1, 2013, with retrospective application required. We do not believe the adoption of
this update will have a material impact on the disclosure requirements for our consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are
not believed to have a material impact on our present or future consolidated financial statements.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates and
assumptions that affect our reported amounts of assets and liabilities at the date of the consolidated financial statements. These
financial statements include some estimates and assumptions that are based on informed judgments and estimates of management.
We evaluate our policies and estimates on an on-going basis and discuss the development, selection and disclosure of critical
accounting policies with the Audit Committee of the Board of Directors. Predicting future events is inherently an imprecise activity and
as such requires the use of judgment. Our consolidated financial statements may differ based upon different estimates and
assumptions.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
34
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
We discuss our significant accounting policies in Note 2 — Summary of Significant Accounting Policies — to our consolidated financial
statements. Our significant accounting policies are subject to judgments and uncertainties that affect the application of such policies.
We believe these consolidated financial statements include the most likely outcomes with regard to amounts that are based on our
judgment and estimates. Our consolidated financial position and results of operations may be materially different when reported under
different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions
prove to be different from the actual amounts, adjustments are made in subsequent periods to reflect more current information. We
believe the following accounting policies are critical to the preparation of our consolidated financial statements due to the estimation
process and business judgment involved in their application:
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates based on
assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the
consolidated financial statements. Actual results could differ from those estimates. Estimates and assumptions are reviewed on an
ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions
to estimates and assumptions are accounted for prospectively.
Significant areas involving the use of estimates include determining the allowance for uncollectible taxes, evaluating recoverability of
property concessions, evaluating impairment of long-lived assets, evaluating impairment of goodwill, establishing a valuation
allowance on future use of deferred tax assets and calculating stock-based compensation.
Property Concessions
Property concessions acquisition costs are capitalized when incurred and will be amortized using the units of production method
following the commencement of production. If a property concession is subsequently abandoned or impaired, any capitalized costs will
be expensed in the period of abandonment or impairment. To date, no property concession have reached the production stage.
Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of property concessions.
Exploration Costs
Exploration costs incurred are expensed to the date of establishing that costs incurred are economically recoverable. Exploration
expenditures incurred subsequent to the establishment of economic recoverability are capitalized and included in the carrying amount
of the related property. To date, we have not established the economic recoverability of its exploration prospects; therefore, all
exploration costs are being expensed.
Impairment of Long-Lived Assets
Management reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the
related carrying amounts of its assets may not be recoverable. Impairment is considered to exist if the future cash flows on an
undiscounted basis are less than the carrying amount of the long-lived asset. An impairment loss is measured and recorded based on
the difference between book value and fair value of the asset group, as determined through the application of a present value
technique using expected future cash flows to estimate fair value in the absence of a market price. In estimating future cash flows,
assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of cash flows from other
asset groups.
Goodwill
Goodwill is the purchase premium after adjusting for the fair value of net assets acquired. Goodwill is not amortized but is reviewed for
potential impairment on an annual basis, or when events or circumstances indicate a potential impairment, at the reporting unit level.
We perform our annual goodwill impairment tests at April 30th of each fiscal year.
In performing the goodwill impairment tests we have elected to first perform a qualitative assessment to determine whether it is more
likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that this is the case, we are
required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure
the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If we determine that the fair value of a reporting
unit is not less than its carrying amount, the two-step goodwill impairment test is not required.
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Income Taxes
We follow the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities
are determined based on temporary differences between the tax basis and accounting basis of the assets and liabilities measured
using tax rates enacted at the balance sheet date. We recognize the tax benefit from uncertain tax positions only if it is at least “more
likely than not” that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that
has a greater than 50% likelihood of being realized upon settlement with the taxing authorities. This accounting standard also provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.
A valuation allowance is recorded against deferred tax assets if management does not believe we have met the “more likely than not”
standard imposed by this guidance to allow recognition of such an asset. Management recorded a full valuation allowance at October
31, 2013 and October 31, 2012 against the deferred tax assets as it deems future realization would not meet the criteria “more likely
than not”.
Stock-Based Compensation and Warrants
We use the Black-Scholes pricing model as a method for determining the estimated fair value for all stock options awarded to
employees, officers, directors and consultants. The expected term of the options is based upon evaluation of historical and expected
future exercise behavior. The risk-free interest rate is based upon U.S. Treasury rates at the date of grant with maturity dates
approximately equal to the expected life of the grant. Volatility is determined upon historical volatility of our stock and adjusted if future
volatility is expected to vary from historical experience. The dividend yield is assumed to be none as we have not paid dividends nor
do we anticipate paying any dividends in the foreseeable future. We use the graded vesting attribution method to recognize
compensation costs over the requisite service period.
We also used the Black-Scholes valuation model to determine the fair market value of warrants. Expected volatility is based upon
weighted average of historical volatility over the contractual term of the warrant and implied volatility. The risk-free interest rate is
based upon implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the contractual term of the warrants.
The dividend yield is assumed to be none as the Company has not paid dividends nor does not anticipate paying any dividends in the
foreseeable future.
Foreign Currency Translation
During the year ended October 31, 2013, the functional currency of Silver Bull Resources, Inc. and its subsidiaries is the U.S. dollar
except for the Gabonese subsidiaries whose functional currency is the CFA.
As at November 1, 2011, we determined that the functional currency of our Mexican subsidiaries changed from the MXN to the U.S.
dollar. During the year ended October 31, 2013 and October 31, 2012 our Mexican foreign operations monetary assets and liabilities
were translated into U.S. dollars at the period-end exchange rate and non-monetary assets and liabilities were translated using the
historical exchange rate. Our Mexican foreign operations revenue and expenses were translated at the average exchange rate during
the period except for depreciation of office and mining equipment and impairment of property concessions which are translated using
the historical exchange rate. Foreign currency translation gains and losses of our foreign Mexican operations occurring after
November 1, 2011 are included in the consolidated statement of operations.
During the year ended October 31, 2011 assets and liabilities of our Mexican and Gabonese operations were translated into U.S.
dollars at the period-end exchange rate, and revenue and expenses were translated at the average exchange rate during the period.
Exchange differences arising on translation were disclosed as a separate component of stockholders’ equity. Realized gains and
losses from foreign currency transactions were reflected in the results of operations. Intercompany transactions and balances with our
Mexican and Gabonese subsidiaries were considered to be planned or anticipated to settle in the foreseeable future except for $13.4
million of intercompany loans which the Company agreed to convert to equity. All foreign currency transaction gains and losses on
intercompany loans which were considered to be planned or anticipated to settle in the foreseeable future were included in the
consolidated statement of operations.
During the year ended October 31, 2013 and October 31, 2012 our Gabonese foreign operations were translated into U.S. dollars
consistent with the year-ended October 31, 2011.
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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We hold substantially all of our cash and cash equivalents in bank and demand deposit accounts with major financial institutions. The
interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash and cash
equivalent and restricted cash balances during the year ended October 31, 2013, a 1% decrease in interest rates would have resulted
in a reduction in interest income for the period of $4,927.
Foreign Currency Exchange Risk
Certain purchases of labor, operating supplies and capital assets are denominated in Canadian Dollars (“$CDN”), $MXN, $CFA or
other currencies. As a result, currency exchange fluctuations may impact the costs of our operations. Specifically, the appreciation of
the $MXN, $CDN or $CFA against the U.S. dollar may result in an increase in operating expenses and capital costs in U.S. dollar
terms. As of October 31, 2013, we maintained the majority of our cash balance in U.S. Dollars. We currently do not engage in any
currency hedging activities.
Commodity Price Risk
Our primary business activity is the exploration of properties containing silver, zinc, lead, gold, manganese and other minerals. As a
result, decreases in the price of any of these metals have the potential to negatively impact our ability to establish reserves and
develop our exploration properties. None of our properties are in production and we do not currently hold any commodity derivative
positions.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See “Index to Consolidated Financial Statements” following the signature page of this Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of October 31, 2013, we have carried out an evaluation under the supervision of, and with the participation of our Chief Executive
Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation as of October 31, 2013, our Chief
Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-
15(e) under the Exchange Act) were effective.
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our
management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is
defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our
principal executive and principal financial officers, we assessed, as of October 31, 2013, the effectiveness of our internal control over
financial reporting. This assessment was based on criteria established in the framework in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992. Based on our assessment using those
criteria, management concluded that our internal control over financial reporting as of October 31, 2013, was effective.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
37
Internal control over financial reporting is defined as a process designed by, or under the supervision of, our principal executive and
principal financial officers and effected by our board of directors, management and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those policies and procedures that:
· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of our assets;
· provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in
accordance with U.S. generally accepted accounting principles and that our receipts and expenditures are being made only in
accordance with authorization of our management and directors; and
· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on the financial statements.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of
controls can provide absolute assurance that all control issues, if any, within a company have been detected.
(c) Attestation Report of Registered Public Accounting Firm
Hein & Associates LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over
financial reporting, which is required under this Item 9A and is set forth below under the caption “Report of Independent Registered
Public Accounting Firm.”
(d) Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting during the year ended October 31, 2013 that materially affected,
or were reasonably likely to materially affect, our internal control over financial reporting.
38
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Silver Bull Resources, Inc.
We have audited Silver Bull Resources, Inc’s internal control over financial reporting as of October 31, 2013, based on criteria
established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission in 1992. Silver Bull Resources, Inc.’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (a) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Silver Bull Resources, Inc. maintained, in all material respects, effective internal control over financial reporting as of
October 31, 2013, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 1992.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Silver Bull Resources, Inc. and subsidiaries as of October 31, 2013 and 2012, and the related
statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years ended October 31,
2013, 2012 and 2011 and for the period from inception (November 8, 1993) to October 31, 2013, and our report dated January 13,
2014 expressed an unqualified opinion.
/s/ Hein & Associates LLP
HEIN & ASSOCIATES LLP
Denver, Colorado
January 13, 2014
39
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
For information regarding our executive officers, see “Items 1 and 2: Business and Properties – Executive Officers of Silver Bull
Resources”
Information relating to this item will be included in an amendment to this report or in the proxy statement for our 2014 annual
shareholders meeting and is incorporated by reference in this report.
We have adopted a Code of Ethics that applies to all of our directors and employees, including our principal executive officer, principal
financial officer, principal accounting officer, and those of our officers performing similar functions. The full text of our Code of Ethics
can be found on the Corporate Governance page of our website. In the event our board approves an amendment to or waiver from
any provision of our Code of Ethics, we will disclose the required information pertaining to such amendment or waiver on our website.
Item 11. EXECUTIVE COMPENSATION
Information relating to this item will be included in an amendment to this report or in the proxy statement for our 2014 annual
shareholders meeting and is incorporated by reference in this report.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
Information relating to this item will be included in an amendment to this report or in the proxy statement for our 2014 annual
shareholders meeting and is incorporated by reference in this report.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information relating to this item will be included in an amendment to this report or in the proxy statement for our 2014 annual
shareholders meeting and is incorporated by reference in this report.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information relating to this item will be included in an amendment to this report or in the proxy statement for our 2014 annual
shareholders meeting and is incorporated by reference in this report.
40
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Financial Statements and Financial Statement Schedules
See “Index to Consolidated financial statements” on page F-1.
Exhibit
Number
3.1
Restated Articles of Incorporation.
Exhibit Description
Form Date of Report Exhibit
10/31/2010
10-K
3.1.1
Filed
Herewith
Incorporated by Reference
3.2
4.1
10.1
10.2
10.3
10.4
10.5
14
21.1
23.1
23.2
31.1
31.2
32.1
32.2
Amended and Restated Bylaws
10-K
10/31/2010
3.1.2
Rights Agreement
8-A
06/12/2007
1
2006 Stock Option Plan.
10-KSB
10/31/2006
4.2
2010 Stock Option Plan and Stock Bonus Plan, as amended
8-K
02/28/2012
10.1
Employment agreement with Timothy Barry, as amended
8-K
02/26/2013
10.1
Employment agreement with Sean Fallis, as amended
8-K
02/26/2013
10.2
Employment agreement with Brian Edgar, as amended
8-K
02/26/2013
10.3
Code of Ethics
10-KSB
01/31/2007
14
Subsidiaries of the Registrant
Consent of Hein & Associates LLP
Consent of JDS Energy & Mining Inc.
Certification of CEO Pursuant to Exchange Act Rules 13a-14 and
15d-14, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
Certification of CFO Pursuant to Exchange Act Rules 13a-14 and
15d-14, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
Certification of CEO Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Certification of CFO Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
101.INS*
XBRL Instance Document
101.SCH*
XBRL Schema Document
101.CAL*
XBRL Calculation Linkbase Document
101.DEF*
XBRL Definition Linkbase Document
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
41
X
X
X
X
X
X
X
X
X
X
X
101.LAB*
XBRL Labels Linkbase Document
101.PRE* XBRL Presentation Linkbase Document
99.1
Sierra Mojada location map. (1)
99.2
Gabon location map. (1)
X
X
X
X
In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K is
deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed
not filed for purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.
(1) Filed herewith under Items 1 and 2. Business and Properties.
42
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: January 13, 2014
Date: January 13, 2014
SILVER BULL RESOURCES, INC.
By:
/s/ Timothy Barry
Timothy Barry,
President and Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Sean Fallis
Sean Fallis,
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Date: January 13, 2014
Date: January 13, 2014
Date: January 13, 2014
Date: January 13, 2014
Date: January 13, 2014
Date: January 13, 2014
By:
/s/ Timothy Barry
Timothy Barry,
President and Chief Executive Officer and
Director
By:
/s/ Joshua Crumb
Joshua Crumb,
Director
By:
/s/ Brian Edgar
Brian Edgar,
Director
By:
/s/ Murray Hitzman
Murray Hitzman,
Director
By:
/s/ Daniel Kunz
Daniel Kunz,
Director
By:
/s/ John McClintock
John McClintock,
Director
43
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SILVER BULL RESOURCES, INC.
(An Exploration Stage Company)
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Stockholders’ Equity
Notes to Consolidated Financial Statements
[The balance of this page has been intentionally left blank.]
F-1
PAGE NO.
F-2
F-3
F-4
F-5 - F-6
F-7 - F-13
F-14 - F-35
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Silver Bull Resources, Inc.
We have audited the accompanying consolidated balance sheets of Silver Bull Resources, Inc. (an exploration stage company) as of
October 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’
equity, and cash flows for the years then ended October 31, 2013, 2012 and 2011 and for the period from inception (November 8,
1993) to October 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Silver Bull Resources, Inc. (an exploration stage company) as of October 31, 2013 and 2012 and the results of its operations and its
cash flows for the years ended October 31, 2013, 2012 and 2011 and for the period from inception (November 8, 1993) to October 31,
2013, in conformity with U.S. generally accepted accounting principles.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Silver
Bull Resources, Inc.’s and subsidiaries’ internal control over financial reporting as of October 31, 2013, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992,
and our report dated January 13, 2014 expressed an unqualified opinion on the effectiveness of Silver Bull Resources, Inc.’s internal
control over financial reporting.
/s/ Hein & Associates LLP
HEIN & ASSOCIATES LLP
Denver, Colorado
January 13, 2014
F-2
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
CURRENT ASSETS
October 31,
2013
October 31,
2012
Cash and cash equivalents
Restricted cash
Value-added tax receivable, net of allowance for uncollectible taxes of $127,557 and
$
5,251,003
—
$
3,201,240
12,614
$203,835, respectively (Note 3)
Income tax receivable
Other receivables
Prepaid expenses and deposits
Total Current Assets
Office and mining equipment, net (Note 4)
Property concessions (Note 5)
Goodwill (Note 6)
Other assets
338,275
396
67,094
236,739
5,893,507
940,212
—
116,251
308,453
4,578,770
508,751
8,216,844
18,495,031
—
709,322
8,526,662
18,495,031
43,843
TOTAL ASSETS
$
33,114,133
$
32,353,628
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
Accrued liabilities and expenses
Income tax payable
Payable to AngloGold (Note 7)
Total Current Liabilities
COMMITMENTS AND CONTINGENCIES (Notes 1, 9 and 15)
STOCKHOLDERS’ EQUITY (Notes 9, 10, 11 and 12)
Common stock, $0.01 par value; 300,000,000 shares authorized,
159,072,657 and 136,160,157 shares issued and outstanding, respectively
Additional paid-in capital
Deficit accumulated during exploration stage
Other comprehensive income
Total Stockholders’ Equity
$
$
470,958
704,366
—
—
1,175,324
500,619
654,750
8,540
490,095
1,654,004
1,590,726
124,641,777
(94,386,856)
93,162
31,938,809
1,361,601
116,199,819
(86,920,276)
58,480
30,699,624
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
33,114,133
$
32,353,628
The accompanying notes are an integral part of these consolidated financial statements.
F-3
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Years Ended October 31,
2012
2011
2013
Period from
November 8,
1993
(Inception)
to October
31,
2013
REVENUES
$
— $
— $
— $
—
EXPLORATION AND PROPERTY HOLDING COSTS
Exploration and property holding costs
Depreciation and asset impairment (Note 5)
TOTAL EXPLORATION AND PROPERY HOLDING
4,105,490
1,409,511
9,145,570
2,143,300
8,099,070
274,381
49,158,250
4,974,812
COSTS
5,515,001
11,288,870
8,373,451
54,133,062
GENERAL AND ADMINISTRATIVE EXPENSES
Personnel
Office and administrative (Note 8)
Professional services
Directors’ fees
Provision for (recovery of) uncollectible value-added
taxes
Depreciation
TOTAL GENERAL AND ADMINISTRATIVE
EXPENSES
893,789
982,803
404,319
358,796
5,167
4,437
1,046,177
880,914
464,652
570,855
1,368,524
658,225
589,246
526,459
17,726,429
5,870,428
8,819,781
5,367,752
(875,491)
3,784
204,190
25,285
539,261
269,001
2,649,311
2,090,891
3,371,929
38,592,652
LOSS FROM OPERATIONS
(8,164,312)
(13,379,761)
(11,745,380)
(92,725,714)
OTHER INCOME (EXPENSES)
Interest and investment income
Foreign currency transaction gain (loss)
Miscellaneous income (expense)
TOTAL OTHER INCOME (EXPENSES)
33,014
85,394
644,032
762,440
160,424
(276,263)
243,398
127,559
36,535
(348,813)
(152,845)
(465,123)
1,128,336
(3,028,101)
666,712
(1,233,053)
LOSS BEFORE INCOME TAXES
(7,401,872)
(13,252,202)
(12,210,503)
(93,958,767)
INCOME TAX EXPENSE (Note 13)
64,708
108,209
26,857
301,999
NET LOSS
$
(7,466,580) $
(13,360,411) $
(12,237,360) $
(94,260,766)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments
34,682
(139,971)
(1,232,438)
93,162
COMPREHENSIVE LOSS
$
(7,431,898) $
(13,500,382) $
(13,469,798) $
(94,167,604)
BASIC AND DILUTED NET LOSS PER COMMON
SHARE
$
(0.05) $
(0.10) $
(0.11)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING
152,481,390
133,743,777
109,977,943
The accompanying notes are an integral part of these consolidated financial statements.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-4
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and asset impairment
Provision for (recovery of) uncollectible value-added
taxes
Noncash (income) expenses
Foreign currency transaction (gain) loss
Common stock issued for services
Common stock issued for compensation and
directors’ fees
Stock options issued for compensation
Stock options and warrants issued for services,
general financing fees and directors’ fees
Changes in operating assets and liabilities:
Restricted cash
Value-added tax receivable
Income tax receivable
Other receivable
Prepaid expenses and deposits
Accounts payable
Accrued liabilities and expenses
Income tax payable
Accrued severance costs
Years Ended October 31,
2012
2013
2011
Period from
November 8,
1993
(Inception)
to October
31,
2013
$
(7,466,580) $
(13,360,411) $
(12,237,360) $
(94,260,766)
1,413,948
2,147,084
241,150
5,212,170
5,167
(579,889)
(104,583)
—
—
576,358
(875,491)
—
306,446
—
—
991,110
204,190
—
173,930
—
532,286
(453,025)
3,030,139
1,563,574
—
1,129,421
1,753,222
10,712,097
—
—
—
4,769,840
12,859
614,455
(396)
49,926
73,200
(32,826)
22,359
(8,540)
—
58,100
1,679,948
—
(34,799)
(42,081)
(282,495)
(179,420)
717
—
(75,839)
(1,471,491)
—
(63,268)
4,906
100,577
666,897
8,363
(184,000)
(11,502,524)
(4,880)
(1,046,694)
(396)
(53,939)
(215,442)
249,272
772,711
3,429
—
(67,436,402)
Net cash used by operating activities
(5,424,542)
(9,591,292)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments
Proceeds from sale of investments
Cash acquired in merger with Dome Ventures
Equipment purchases
Proceeds from sale of equipment
Proceeds from mining concession option payment
Acquisition of property concessions
Net cash used by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of
offering costs
Proceeds from sales of options and warrants
Proceeds from exercise of options
Proceeds from exercise of warrants
Deferred cash offering costs
Payable to AngloGold
Proceeds from shareholder loans
Payment of note payable
Net cash provided by financing activities
—
—
—
—
149,330
—
—
—
—
(77,380)
9,779
—
(807,732)
(658,402)
(1,547,736)
(1,615,337)
—
—
—
(142,508)
442,665
100,000
(797,960)
(397,803)
(21,609,447)
21,609,447
2,618,548
(3,095,062)
610,674
200,000
(8,158,944)
(7,824,784)
8,094,725
—
—
—
43,843
(11,551)
—
—
8,127,017
10,217,774
—
—
—
50,706
(14,166)
—
—
10,254,314
4,917,221
—
188,913
699,344
(94,549)
(102,778)
—
—
5,608,151
73,003,430
949,890
188,913
6,350,286
—
453,878
30,000
(15,783)
80,960,614
Effect of exchange rates on cash and cash equivalents
5,690
(86,344)
(38,523)
(448,425)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents beginning of period
2,049,763
3,201,240
(1,038,659)
4,239,899
(6,330,699)
10,570,598
5,251,003
—
Cash and cash equivalents end of period
$
5,251,003
$
3,201,240
$
4,239,899
$
5,251,003
The accompanying notes are an integral part of these consolidated financial statements.
F-5
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid
Interest paid
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Warrants issued for offering costs (Note 12)
Common stock issued in merger with Dome
Warrants issued in merger with Dome
Common stock issued for equipment
Common stock options issued for financing fees
Common stock options issued for non-cash options
$
$
$
$
$
$
$
$
Years Ended October 31,
2012
2013
2011
Period from
November 8,
1993
(Inception)
to October 31,
2013
56,471
—
$
$
93,955
440
$
$
23,556
—
$
$
290,991
287,211
51,672
—
—
—
—
—
$
$
$
$
$
$
—
—
—
—
—
—
$
$
$
$
$
$
—
—
—
—
—
727
$
$
$
$
$
$
51,672
24,840,886
1,895,252
25,000
276,000
59,947
The accompanying notes are an integral part of these consolidated financial statements.
F-6
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Common Stock
Additional
Stock
Deficit
Accumulated
During
Other
Number of
Shares
Amount
Paid-in
Capital
Subscriptions
Receivable
Exploration
Stage
Comprehensive
Income (Loss)
Total
Common stock issuance prior to inception
(no value)
576,480 $
5,765 $
(5,765) $
— $
— $
— $
—
Net loss for the year ended October 31, 1994
Balances, October 31, 1994
—
576,480
—
5,765
—
(5,765)
Net loss for the year ended October 31, 1995
Balance, October 31, 1995
—
576,480
—
5,765
—
(5,765)
Issuances of common stock as follows: - for
par value at transfer of ownership
- for cash at an average of $0.11 per share
- for services at an average of $0.08 per
share
- for computer equipment at $0.01 per share
- for mineral property at $0.01 per share
2,000
1,320,859
20
13,209
—
133,150
185,000
150,000
900,000
1,850
1,500
9,000
12,600
13,500
—
Net loss for the year ended October 31, 1996
Balances, October 31, 1996
—
3,134,339
—
31,344
—
153,485
Issuances of common stock as follows: - for
cash at an average of $0.61 per share
- for services at an average of $0.74 per
share
- for payment of a loan at $0.32 per share
926,600
9,266
594,794
291,300
100,200
2,913
1,002
159,545
30,528
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8,831)
(8,831)
(7,761)
(16,592)
—
—
—
—
—
(40,670)
(57,262)
—
—
—
—
—
—
—
(8,831)
(8,831)
(7,761)
(16,592)
—
—
20
146,359
—
—
—
14,450
15,000
9,000
—
—
(40,670)
127,567
—
604,060
—
—
162,458
31,530
Options issued as follows:
- 300,000 options for cash
—
—
3,000
—
—
—
3,000
Net loss for the year ended October 31, 1997
Balances, October 31, 1997
—
4,452,439
—
44,525
—
941,352
—
—
(582,919)
(640,181)
—
—
(582,919)
345,696
Issuances of common stock as follows: - for
cash at an average of $1.00 per share
- for cash and receivables at $1.00 per share
- for services at an average of $0.53 per
843,500
555,000
8,435
5,550
832,010
519,450
—
(300,000)
share
- for mine data base at $1.63 per share
41,800
200,000
418
2,000
21,882
323,000
Options issued or granted as follows: -
1,200,000 options for cash
- for financing fees
- for consulting fees
—
—
—
—
—
—
120,000
60,000
117,000
—
—
—
—
—
—
—
—
—
—
—
—
Warrants issued for services
—
—
488,980
—
(488,980)
—
—
840,445
225,000
—
—
22,300
325,000
—
—
—
—
120,000
60,000
117,000
—
Net loss for the year ended October 31, 1998
Balance, October 31, 1998
—
6,092,739 $
—
—
60,928 $ 3,423,674 $
—
(906,036)
(300,000) $ (2,035,197) $
—
(906,036)
— $ 1,149,405
The accompanying notes are an integral part of these consolidated financial statements.
F-7
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock
Additional
Number of
Shares
Amount
Paid-in
Capital
Stock
Subscriptions
Receivable
Deficit
Accumulated
During
Exploration
Stage
Other
Comprehensive
Income (Loss)
Total
Balance, October 31, 1998
6,092,739 $
60,928 $ 3,423,674 $
(300,000) $ (2,035,197) $
— $ 1,149,405
Issuances of common stock as follows:
- for cash at an average of $1.04 per share
- for drilling fees at $0.90 per share
818,800
55,556
8,188
556
842,712
49,444
Stock option and warrant activity as follows:
- exercise of options at $0.90 per share
- issuance of options for financing fees
250,000
—
2,500
—
222,500
216,000
—
—
—
—
Stock subscription received
—
—
—
300,000
—
—
—
—
—
—
—
850,900
50,000
—
—
225,000
216,000
—
300,000
Net loss for the year ended October 31,
1999
Balance, October 31, 1999
—
7,217,095
—
—
72,172 4,754,330
—
—
(1,423,045)
(3,458,242)
— (1,423,045)
— 1,368,260
Stock option and warrant activity as follows:
- Exercise of options at $0.86 per share
- Warrants issued for services
950,000
—
9,500
—
802,750
55,000
Issuances of common stock as follows:
- for cash at an average of $2.77 per share 1,440,500
120,000
- for services at $1.28 per share
15,000
- for equipment at $1.67 per share
14,405 3,972,220
152,160
24,850
1,200
150
—
—
—
—
—
—
—
—
—
—
—
—
812,250
55,000
— 3,986,625
153,360
—
25,000
—
share
21,000
210
43,260
—
9,742,595
—
—
97,427 9,761,310
—
—
(882,208)
(4,340,450)
(882,208)
—
— 5,518,287
20,000
—
—
200
—
—
14,800
740,892
144,791
250,000
2,500
497,500
18,000
6,000
12,000
180
60
120
36,720
14,640
17,880
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15,000
740,892
144,791
—
500,000
—
43,470
—
—
—
36,900
14,700
18,000
—
10,069,595
—
—
100,697 11,271,793
—
—
(2,069,390)
(6,409,840)
— (2,069,390)
— 4,962,650
per share
86,078
861
104,014
50,000
96,000
66,667
500
960
667
99,500
143,040
99,333
—
—
—
—
—
—
—
—
—
—
—
100,000
144,000
100,000
—
104,875
—
—
61,000
—
—
—
61,000
—
—
—
—
(765,765)
—
(765,765)
— $ 4,706,760
Balance, October 31, 2002
10,368,340 $
103,685 $ 11,778,680 $
— $ (7,175,605) $
The accompanying notes are an integral part of these consolidated financial statements.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Net loss for the year ended October 31,
2000
Balances, October 31, 2000
Stock option and warrant activity as follows:
- Warrants exercised at $0.75 per share
- Options issued for consulting fees
- Warrants issued for consulting fees
Issuances of common stock as follows:
- for cash at $2.00 per share
- for cash of $210 and services at $2.07 per
- for cash of $180 and services at $2.05 per
share
- for services at $2.45 per share
- for services at $1.50 per share
Net loss for the year ended October 31,
2001
Balance, October 31, 2001
Issuances of common stock as follows:
- for cash at $2.00 per share
- for cash and warrants at $1.50 per share
- for cash and warrants at $1.50 per share
- for compensation at an average of $1.23
Stock option activity as follows:
- for compensation at $0.61 per share
Net loss for the year ended October 31,
2002
F-8
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock
Additional
Stock
Deficit
Accumulated
During
Other
Number of
Shares
Amount
Paid-in
Capital
Subscriptions
Receivable
Exploration
Stage
Comprehensive
Income (Loss)
Total
Balance, October 31, 2002
10,368,340 $
103,685 $ 11,778,680 $
— $ (7,175,605) $
— $ 4,706,760
Issuances of common stock as follows:
- for cash at $2.00 per share
- for cash at an average of $0.98 per share
- for cash and warrants at $1.50 per share
- for compensation at an average of $1.25
100,000
849,000
7,000
1,000
8,489
70
199,000
821,510
10,430
per share
391,332
3,913
487,275
- for services at an average of $1.23 per
share
91,383
914
119,320
- for subscriptions receivable at $1.00 per
—
—
—
—
—
share
38,000
380
37,620
(38,000)
—
—
—
—
—
—
—
—
—
200,000
829,999
10,500
—
491,188
—
120,234
—
—
Net loss for the year ended October 31,
2003
—
—
—
—
(1,107,228)
— (1,107,228)
Balance, October 31, 2003
11,845,055
118,451 13,453,835
(38,000)
(8,282,833)
— 5,251,453
Issuances of common stock as follows:
- for cash at $1.00 per share, less issuance
costs of $698,863
7,580,150
75,801 6,805,485
- for compensation at an average of $1.26
per share
- for services at various prices
120,655
141,286
1,207
1,413
151,064
153,801
—
—
—
Stock subscription received
—
—
—
38,000
Miscellaneous corrections and adjustments
64,263
643
(643)
—
—
—
—
—
—
— 6,881,286
—
—
152,271
155,214
—
38,000
—
—
Net loss for the year ended October 31,
2004
—
—
—
—
(5,036,805)
— (5,036,805)
Balance, October 31, 2004
19,751,409
197,515 20,563,542
— (13,319,638)
— 7,441,419
Issuances of common stock as follows:
- for cash at an average of $0.98 per share
with attached warrants
476,404
4,764
461,965
- for compensation at an average of $1.00
per share
176,772
1,768
175,005
—
—
—
—
—
466,729
—
176,773
Net loss for the year ended October 31,
2005
—
—
—
—
(3,302,161)
Balance, October 31, 2005
20,404,585 $
204,047 $ 21,200,512 $
— $ (16,621,799) $
— (3,302,161)
— $ 4,782,760
The accompanying notes are an integral part of these consolidated financial statements.
F-9
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock
Additional
Stock
Deficit
Accumulated
During
Other
Number of
Shares
Amount
Paid-in
Capital
Subscriptions
Receivable
Exploration
Stage
Comprehensive
Income (Loss)
Total
Balance, October 31, 2005
20,404,585 $
204,047 $ 21,200,512 $
— $ (16,621,799) $
— $ 4,782,760
Issuance of common stock as follows:
- for cash at an average price of $.80 per
share with attached warrants
13,374,833
133,748 11,077,879
- for services at an average price of $.80
per share with attached warrants
73,650
736
58,213
- for compensation at an average price of
$.80 per share
248,593
2,486
154,389
- for adjustment of private placement
selling price
81,251
812
(812)
—
—
—
—
—
—
—
—
— 11,211,627
—
58,949
—
156,875
—
—
Stock option and warrant activity as
follows:
- stock based compensation for options
issued to officers and independent
directors at an average fair value of
$2.18 per share
- options & warrants for directors fees at
an average fair value of $2.17 per
share
- modification of options
- exercise of warrants at an average price
—
— 4,360,000
—
—
—
4,360,000
of $1.25 per share
25,000
250
31,000
—
—
— 1,665,705
48,000
—
—
—
—
—
—
—
—
—
1,665,705
48,000
—
31,250
Net loss for the year ended October 31,
2006
—
—
—
— (11,193,037)
— (11,193,037)
Balance, October 31, 2006
34,207,912 $
342,079 $ 38,594,886 $
— $ (27,814,836) $
— $ 11,122,129
Issuance of common stock as follows:
- for cash at an average price of $2.35 per
share with attached warrants
2,413,571
24,136 5,647,757
- for services at an average price of $4.31
per share
49,120
491
211,069
- for directors fees at an average price of
$2.71 per share
108,000
1,080
305,100
—
—
—
—
—
—
—
5,671,893
—
211,560
—
306,180
Stock option and warrant activity as
follows:
- exercise of warrants at an average price
of $1.30 per share
2,240,374
22,404 2,917,750
—
—
—
2,940,154
- warrants issued for financial services at
an average fair value of $1.82 per
share
- stock based compensation for options
issued to officer and independent
director
- for cashless exercise of options
- extension of warrant for services
Other Comprehensive Income – Foreign
—
— 1,094,950
—
—
—
1,094,950
—
126,000
—
—
1,260
—
434,189
(1,260)
68,999
—
—
—
—
—
—
434,189
—
68,999
Currency translation adjustment
—
—
—
—
—
(86,642)
(86,642)
Net loss for the year ended October 31,
2007
—
—
—
—
(6,931,557)
—
(6,931,557)
Balance, October 31, 2007
39,144,977 $
391,450 $ 49,273,440 $
— $ (34,746,393) $
(86,642) $ 14,831,855
The accompanying notes are an integral part of these consolidated financial statements.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-10
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock
Additional
Stock
Deficit
Accumulated
During
Other
Number of
Shares
Amount
Paid-in
Capital
Subscriptions
Receivable
Exploration
Stage
Comprehensive
Income (Loss)
Total
Balance, October 31, 2007
39,144,977 $
391,450 $ 49,273,440 $
— $ (34,746,393) $
(86,642) $ 14,831,855
Issuance of common stock as follows:
- for directors fees at an average price of
$1.69 per share
145,200
1,452
243,480
- for services at an average price of $2.18
per share
38,000
380
82,460
Stock option and warrant activity as
follows:
- exercise of warrants at an average price
of $1.25 per share
381,250
3,812
472,751
- warrants issued for financial services at
an average fair value of $.82 per share
—
—
81,838
- stock based compensation for options
issued to officer and independent
directors during prior periods
- stock based compensation for options
issued to officers
- stock based compensation for options
issued to employees
- stock based compensation for options
issued to consultant
Other Comprehensive Income – Foreign
Currency Translation Adjustment
Net loss for the year ended October 31,
2008
—
—
693,362
—
—
475,018
—
—
164,435
—
—
266,616
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
244,932
—
82,840
—
476,563
—
81,838
—
693,362
—
475,018
—
164,435
—
266,616
—
—
—
—
—
2,442,682
2,442,682
—
—
—
— (12,320,422)
— (12,320,422)
Balance, October 31, 2008
39,709,427 $
397,094 $ 51,753,400 $
— $ (47,066,815) $
2,356,040 $ 7,439,719
Issuance of common stock as follows:
- for cash at an average price of $0.25 per
share with attached warrants
5,291,952
52,920 1,270,068
- for directors fees at an average price of
$0.36 per share
129,600
1,296
45,036
—
—
—
—
—
1,322,988
—
46,332
Stock option and warrant activity as
follows:
- exercise of warrants at an average price
of $0.34 per share
3,703,450
37,034 1,212,346
—
—
—
1,249,380
- warrants issued for financial services at
an average fair value of $0.43 per share
- extension of warrant for services
- stock based compensation for options
issued to officers, employees, and
independent directors during prior
periods
- stock based compensation for options
issued to officers and independent
directors
—
—
—
—
39,022
4,664
—
—
—
39,022
4,664
—
—
514,152
—
—
—
514,152
—
—
179,436
—
—
—
179,436
Deemed dividend on exercise of warrants
—
—
126,090
—
(126,090)
—
—
Other Comprehensive Income – Foreign
Currency Translation Adjustment
Net loss for the year ended October 31,
2009
—
—
—
—
—
165,556
165,556
—
—
—
—
(4,724,110)
—
(4,724,110)
Balance, October 31, 2009
48,834,429 $
488,344 $ 55,144,214 $
— $ (51,917,015) $
2,521,596 $ 6,237,139
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The accompanying notes are an integral part of these consolidated financial statements.
F-11
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock
Additional
Stock
Deficit
Accumulated
During
Other
Number of
Shares
Amount
Paid-in
Capital
Subscriptions
Receivable
Exploration
Stage
Comprehensive
Income
Total
Balance, October 31, 2009
48,834,429
$
488,344
$ 55,144,214
$
—
$ (51,917,015)
$
2,521,596
$ 6,237,139
Issuance of common stock as follows:
- for cash at an average price of $0.46
per share with attached warrant
- for special warrant offering at an
average price of $0.46 per share less
offering costs of $1,048,484
- for Dome merger consideration at $1.26
6,700,000
67,000
3,043,000
28,009,594
280,096
11,681,420
per share with attached warrant
19,714,989
197,150
24,643,736
- for directors fees at an average price of
$0.81 per share
118,800
1,188
94,644
Stock option and warrant activity as
follows:
- warrants issued to replace Dome
warrants as of Merger Date
- warrants issued at an average price of
$0.41 per share
- for cashless exercise of options
- stock based compensation for options
issued to officers, employees, and
independent directors during prior
periods
- stock based compensation for options
issued to officers and independent
directors
Other Comprehensive Income – Foreign
Currency Translation Adjustment
Net loss for the year ended October 31,
2010
—
—
1,895,252
2,308,281
243,669
23,082
2,437
930,512
(2,437)
—
—
—
—
—
—
67,065
860,934
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,110,000
—
11,961,516
—
24,840,886
—
95,832
—
1,895,252
—
953,594
—
—
67,065
—
860,934
(1,090,707)
(1,090,707)
—
—
—
—
(9,405,490)
— (9,405,490)
Balance, October 31, 2010
105,929,762 $ 1,059,297 $ 98,358,340 $
— $ (61,322,505)
$
1,430,889
$ 39,526,021
Issuance of common stock as follows:
- for cash at an average price of $0.68 per
share less offering costs of $82,819
Stock option and warrant activity as follows:
- stock based compensation for options
issued to officers, employees, consultants
and directors
- exercise of warrants at an average price of
7,353,000
73,530
4,843,691
—
—
1,129,421
$0.50 per share
1,385,353
13,854
685,490
—
—
—
—
—
—
—
4,917,221
—
—
1,129,421
699,344
- stock options exercised at an average price
of $0.51 per share
- for cashless exercise of options
Other Comprehensive Income – Foreign
Currency Translation Adjustment
Net loss for the year ended October 31, 2011
369,355
72,687
3,693
727
185,220
(727)
—
—
—
—
—
—
188,913
—
—
—
—
—
—
—
—
— (12,237,360)
— (1,232,438)
(1,232,438)
(12,237,360)
—
Balance, October 31, 2011
115,110,157
$ 1,151,101
$ 105,201,435 $
— $ (73,559,865) $
198,451
$ 32,991,122
The accompanying notes are an integral part of these consolidated financial statements.
F-12
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SILVER BULL RESOURCES, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock
Number of
Shares
115,110,157
Amount
$ 1,151,101
Additional
Paid-in
Capital
$ 105,201,435
Stock
Subscriptions
Receivable
—
$
Deficit
Accumulated
During
Exploration
Stage
$ (73,559,865)
Other
Comprehensive
Income
$
198,451
Total
$ 32,991,122
Balance, October 31, 2011
Issuance of common stock as follows:
- for cash at an average price of $0.50
per share less offering costs of
$304,244
- for cash at an average price of $0.50
20,755,000
207,550
9,865,706
per share less offering costs of $2,982
295,000
2,950
141,568
Stock option and warrant activity as
follows:
- stock based compensation for options
issued to officers, employees,
consultants and directors
Other Comprehensive Income – Foreign
Currency Translation Adjustment
Net loss for the year ended October 31,
2012
—
—
—
—
—
—
991,110
—
—
—
—
—
—
—
—
—
—
—
10,073,256
—
144,518
—
991,110
(139,971)
(139,971)
—
(13,360,411)
—
(13,360,411)
Balance, October 31, 2012
136,160,157
$ 1,361,601
$ 116,199,819
$
—
$ (86,920,276)
$
58,480
$ 30,699,624
Issuance of common stock as follows:
- for cash at an average price of $0.40
per share with attached warrants less
offering costs of $1,121,947 (Note 10) 22,912,500
229,125
7,813,928
—
—
—
8,043,053
Stock option and warrant activity as
follows:
- stock based compensation for options
issued to officers, employees,
consultants and directors
- fair value of warrants issued to agents
in connection with the offering (Notes
10 and 12)
Other Comprehensive Income – Foreign
Currency Translation Adjustment
Net loss for the year ended October 31,
2013
—
—
—
—
—
—
—
—
576,358
51,672
—
—
—
—
—
—
—
—
—
—
576,358
—
51,672
34,682
34,682
(7,466,580)
—
(7,466,580)
Balance, October 31, 2013
159,072,657
$ 1,590,726
$ 124,641,777
$
—
$ (94,386,856) $
93,162
$ 31,938,809
The accompanying notes are an integral part of these consolidated financial statements.
F-13
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND LIQUIDITY
Silver Bull Resources, Inc. (the “Company”) was incorporated in the State of Nevada on November 8, 1993 as the Cadgie Company
for the purpose of acquiring and developing mineral properties. The Cadgie Company was a spin-off from its predecessor, Precious
Metal Mines, Inc. On June 28, 1996, at a special directors meeting, the Company’s name was changed to Metalline Mining Company.
On April 21, 2011, the Company’s name was changed to Silver Bull Resources, Inc. The Company’s fiscal year-end is October 31. The
Company has not realized any revenues from its planned operations and is considered an Exploration Stage Company. The Company
has not established any reserves with respect to its exploration projects and may never enter into the development with respect to any
of its projects.
The Company engages in the business of mineral exploration. The Company currently owns or has the option to acquire a number of
property concessions in Mexico (collectively known as the “Sierra Mojada Property”). The Company conducts its operations in Mexico
through its wholly-owned subsidiary corporations, Minera Metalin S.A. de C.V. (“Minera”) and Contratistas de Sierra Mojada S.A. de
C.V. (“Contratistas”) and through Minera’s wholly-owned subsidiary Minas de Coahuila SBR S.A. de C.V. (“Minas”).
On April 16, 2010, Metalline Mining Delaware, Inc., a wholly-owned subsidiary of the Company, was merged with and into Dome
Ventures Corporation (“Dome”). As a result, Dome became a wholly-owned subsidiary of the Company. Dome’s subsidiaries include
its wholly-owned subsidiaries Dome Asia Inc. and Dome International Global Inc., which are incorporated in the British Virgin
Islands. Dome International Global Inc.’s subsidiaries include its wholly-owned subsidiaries incorporated in Gabon, Dome Ventures
SARL Gabon and African Resources SARL Gabon, as well as its 99.99%-owned subsidiary, Dome Minerals Nigeria Limited
incorporated in Nigeria. The Company conducts its exploration activities in Gabon, Africa through Dome Ventures SARL Gabon and
African Resources SARL Gabon.
The Company’s efforts have been concentrated in expenditures related to exploration properties, principally in the Sierra Mojada
Property located in Coahuila, Mexico. The Company has not determined whether the exploration properties contain ore reserves that
are economically recoverable. The ultimate realization of the Company’s investment in exploration properties is dependent upon the
success of future property sales, the existence of economically recoverable reserves, the ability of the Company to obtain financing or
make other arrangements for exploration, development, and future profitable production activities. The ultimate realization of the
Company’s investment in exploration properties cannot be determined at this time. Accordingly, no provision for any asset impairment
that may result, in the event the Company is not successful in developing or selling these properties, has been made in the
accompanying condensed consolidated financial statements, except as disclosed in Note 5.
Liquidity, Financial Commitments and Management’s Plans
Since its inception in November 1993, the Company has not generated revenue and has incurred a net loss of $94,260,766 from
inception through October 31, 2013. Accordingly, the Company has not generated cash flow from operations and since inception the
Company has relied primarily upon proceeds from private placements and registered direct offerings of the Company’s equity
securities and warrant exercises as the primary sources of financing to fund the Company’s operations. As of October 31, 2013, the
Company had working capital of $4,718,183 and cash and cash equivalents of $5,251,003. Management will continue to evaluate the
Company’s ability to raise additional capital and if we determine that additional capital is unavailable or available on terms that the
Company determines is unacceptable then the Company will reduce exploration expenditures on the Company’s property concessions
and reduce general and administrative expenditures.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the consolidated financial statements. The
consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity
and objectivity.
Basis of Presentation
The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) and prepared using the accrual method of accounting.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, after elimination of
intercompany accounts and transactions. The wholly owned subsidiaries of the Company are listed in Note 1.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-14
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Use of Estimates
The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates based
on assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the
consolidated financial statements. Actual results could differ from those estimates. Estimates and assumptions are reviewed on an
ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions
to estimates and assumptions are accounted for prospectively.
Significant areas involving the use of estimates include determining the allowance for uncollectible taxes, evaluating recoverability of
property concessions, evaluating impairment of long-lived assets, evaluating impairment of goodwill, establishing a valuation
allowance on future use of deferred tax assets and calculating stock-based compensation.
Revenue Recognition
The Company recognizes revenue when the title and risks and rewards of ownership pass to the buyer, the selling price is fixed and
determinable, persuasive evidence of an arrangement exists and collection of the sale proceeds is considered probable. As of October
31, 2013, the Company has not recognized any revenues.
Cash and Cash Equivalents
Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less at the date of
purchase.
Property Concessions
Property concessions acquisition costs are capitalized when incurred and will be amortized using the units of production method
following the commencement of production. If a property concession is subsequently abandoned or impaired, any capitalized costs will
be expensed in the period of abandonment or impairment. To date, no property concession have reached the production stage.
Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of property concessions.
Exploration Costs
Exploration costs incurred are expensed to the date of establishing that costs incurred are economically recoverable. Exploration
expenditures incurred subsequent to the establishment of economic recoverability are capitalized and included in the carrying amount
of the related property. To date, the Company has not established the economic recoverability of its exploration prospects; therefore,
all exploration costs are being expensed.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation and impairment losses. Assets under construction are
depreciated when they are substantially complete and available for their intended use, over their estimated useful lives. Repairs and
maintenance of property and equipment are expensed as incurred. Costs incurred to enhance the service potential of property and
equipment are capitalized and depreciated over the remaining useful life of the improved asset. Property and equipment are
depreciated using the straight-line, over the estimated useful lives of the related assets as follows:
· Mining equipment – 5 to 10 years
· Vehicles – 4 years
· Building and structures – 40 years
· Computer equipment and software – 3 years
· Well equipment – 10 to 40 years
· Office equipment – 3 to 10 years
Impairment of Long-Lived Assets
Management reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the
related carrying amounts of its assets may not be recoverable. Impairment is considered to exist if the future cash flows on an
undiscounted basis are less than the carrying amount of the long-lived asset. An impairment loss is measured and recorded based on
the difference between book value and fair value of the asset group, as determined through the application of a present value
technique using expected future cash flows to estimate fair value in the absence of a market price. In estimating future cash flows,
assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of cash flows from other
asset groups.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-15
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Goodwill
Goodwill is the purchase premium after adjusting for the fair value of net assets acquired. Goodwill is not amortized but is reviewed for
potential impairment on an annual basis, or when events or circumstances indicate a potential impairment, at the reporting unit level.
The Company performs its annual goodwill impairment tests at April 30th of each fiscal year.
In performing the goodwill impairment tests the Company has elected to first perform a qualitative assessment to determine whether it
is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that this is the
case, the Company is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill
impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If the Company
determines that the fair value of a reporting unit is not less than its carrying amount, the two-step goodwill impairment test is not
required.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets
and liabilities are determined based on temporary differences between the tax basis and accounting basis of the assets and liabilities
measured using tax rates enacted at the balance sheet date. The Company recognizes the tax benefit from uncertain tax positions
only if it is at least “more likely than not” that the tax position will be sustained on examination by the taxing authorities, based on the
technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on
the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the taxing authorities. This accounting
standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.
A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely
than not” standard imposed by this guidance to allow recognition of such an asset. Management recorded a full valuation allowance at
October 31, 2013 and October 31, 2012 against the deferred tax assets as it deems future realization would not meet the criteria
“more likely than not”.
Stock-Based Compensation and Warrants
The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for all stock options awarded
to employees, officers, directors and consultants. The expected term of the options is based upon evaluation of historical and
expected future exercise behavior. The risk-free interest rate is based upon U.S. Treasury rates at the date of grant with maturity
dates approximately equal to the expected life of the grant. Volatility is determined upon historical volatility of the Company’s stock
and adjusted if future volatility is expected to vary from historical experience. The dividend yield is assumed to be none as we have
not paid dividends nor do we anticipate paying any dividends in the foreseeable future. The Company uses the graded vesting
attribution method to recognize compensation costs over the requisite service period.
The Company also used the Black-Scholes valuation model to determine the fair market value of warrants. Expected volatility is
based upon weighted average of historical volatility over the contractual term of the warrant and implied volatility. The risk-free interest
rate is based upon implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the contractual term of the
warrants. The dividend yield is assumed to be none as the Company has not paid dividends nor does not anticipate paying any
dividends in the foreseeable future.
Loss Per Share
Basic loss per share includes no dilution and is computed by dividing net loss available to common shareholders by the weighted
average common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in
the earnings of an entity similar to fully diluted loss per share. Although there were stock options and warrants in the aggregate of
21,848,977 shares, 7,620,002 shares and 6,355,864 shares outstanding at October 31, 2013, 2012 and 2011, respectively, they were
not included in the calculation of loss per share because they would have been considered anti-dilutive.
F-16
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Foreign Currency Translation
During the year ended October 31, 2013, the functional currency of Silver Bull Resources, Inc. and its subsidiaries is the U.S. dollar
except for the Gabonese subsidiaries whose functional currency is the Central African Franc (“$CFA”).
As at November 1, 2011, the Company determined that the functional currency of the Company’s Mexican subsidiaries changed from
the Mexican peso (“$MXN”) to the U.S. dollar. During the year ended October 31, 2013 and October 31, 2012 the Company’s Mexican
foreign operations monetary assets and liabilities were translated into U.S. dollars at the period-end exchange rate and non-monetary
assets and liabilities were translated using the historical exchange rate. The Company’s Mexican foreign operations revenue and
expenses were translated at the average exchange rate during the period except for depreciation of office and mining equipment and
impairment of property concessions which are translated using the historical exchange rate. Foreign currency translation gains and
losses of the Company’s foreign Mexican operations occurring after November 1, 2011 are included in the consolidated statement of
operations.
During the year ended October 31, 2011 assets and liabilities of the Company’s Mexican and Gabonese operations were translated
into U.S. dollars at the period-end exchange rate, and revenue and expenses were translated at the average exchange rate during the
period. Exchange differences arising on translation were disclosed as a separate component of stockholders’ equity. Realized gains
and losses from foreign currency transactions were reflected in the results of operations. Intercompany transactions and balances with
the Company’s Mexican and Gabonese subsidiaries were considered to be planned or anticipated to settle in the foreseeable future
except for $13.4 million of intercompany loans which the Company agreed to convert to equity. All foreign currency transaction gains
and losses on intercompany loans which were considered to be planned or anticipated to settle in the foreseeable future were included
in the consolidated statement of operations.
During the year ended October 31, 2013 and October 31, 2012 the Company’s Gabonese foreign operations were translated into U.S.
dollars consistent with the year-ended October 31, 2011.
Accounting for Loss Contingencies and Legal Costs
From time to time, the Company is named as a defendant in legal actions arising from our normal business activities. The Company
records an accrual for the estimated loss from a loss contingency when information available prior to issuance of our financial
statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the
loss can be reasonably estimated. Disclosure of a loss contingency is made by the Company if there is at least a reasonable
possibility that a loss has been incurred, and either an accrual has not been made or an exposure to loss exists in excess of the
amount accrued. In cases where only disclosure of the loss contingency is required, either the estimated loss or a range of estimated
loss is disclosed or it is stated that an estimate cannot be made. Legal costs incurred in connection with loss contingencies are
considered period costs and accordingly are expensed in the period services are provided.
Recent Accounting Pronouncements Adopted in the Year
Effective November 1, 2012, the Company adopted Accounting Standards Update (“ASU”) 2011-04 “Amendments to Achieve
Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update amended explanations of
how to measure fair value to result in common fair value measurement and disclosure requirements in GAAP and International
Financial Reporting Standards. The adoption of this standard had no material effect on the Company's financial position, results of
operations or cash flows.
Effective November 1, 2012, the Company adopted ASU 2011-05 , “Presentation of Comprehensive Income,” to provide an entity the
option to present the total of comprehensive income, the components of net income, and the components of other comprehensive
income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The
Company chose to use the single continuous statement approach and the update had no effect on the Company's financial position,
results of operations or cash flows.
Effective November 1, 2012 the Company adopted ASU 2011-08 “Intangibles – Goodwill and Other”. This new guidance on testing
goodwill provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the
fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the
currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill
impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is not less
than its carrying amount, the two-step goodwill impairment test is not required. The adoption of this guidance had no material effect on
the Company’s financial position, results of operations or cash flows.
F-17
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Recent Accounting Pronouncements Not Yet Adopted
In December 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-11, "Balance Sheet (Topic 201):
Disclosures about Offsetting Assets and Liabilities." This ASU adds certain additional disclosure requirements about financial
instruments and derivative instruments that are subject to netting arrangements. ASU 2011-11 is effective for fiscal years, and interim
periods within those years, beginning after January 1, 2013, with retrospective application required. The Company does not believe
the adoption of this update will have a material impact on the disclosure requirements for the Company’s consolidated financial
statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are
not believed to have a material impact on the Company's present or future consolidated financial statements.
NOTE 3 – VALUE-ADDED TAX RECEIVABLE
Value-added tax (“VAT”) receivable relates to VAT paid in Mexico and Gabon. As a result of VAT collections in Mexico and Gabon
during the twelve months ended October 31, 2013, the Company estimates net VAT of $338,275 will be received within twelve months
of the balance sheet date.
During the twelve months ended October 31, 2013, the Company has received $599,238 and $497,608, inclusive of interest related to
VAT tax returns, in Mexico and Gabon, respectively. The allowance for uncollectible VAT taxes was estimated by management based
upon a number of factors including the length of time the returns have been outstanding, responses received from tax authorities,
general economic conditions in Mexico and Gabon and estimated net recovery after commissions. During the twelve months ended
October 31, 2013, a provision of uncollectible VAT of $5,167 has been recorded.
A summary of the changes in the allowance for uncollectible taxes for the years ended October 31, 2013 and October 31, 2012 is as
follows:
Allowance for uncollectible VAT taxes – October 31, 2011
Recovery of uncollectible VAT Taxes
Write-off VAT receivable
Foreign currency translation adjustment
Allowance for uncollectible VAT taxes – October 31, 2012
Provision for uncollectible VAT Taxes
Write-off VAT receivable
Foreign currency translation adjustment
Allowance for uncollectible taxes – October 31, 2013
$
$
1,380,818
(875,491)
(256,882)
(44,610)
203,835
5,167
(74,558)
(6,887)
127,557
NOTE 4 – OFFICE AND MINING EQUIPMENT
The following is a summary of the Company's property and equipment at October 31, 2013 and October 31, 2012, respectively:
October 31,
2013
October 31,
2012
$
$
646,761 $
135,669
191,966
89,566
39,637
53,900
1,157,499
(648,748)
508,751 $
799,724
215,618
197,723
141,978
39,637
53,900
1,448,580
(739,258)
709,322
Mining equipment
Vehicles
Buildings and structures
Computer equipment and software
Well equipment
Office equipment
Less: Accumulated depreciation
F-18
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NOTE 5 – PROPERTY CONCESSIONS
The following is a summary of the Company’s property concessions in Mexico and Gabon as at October 31, 2013 and 2012,
respectively:
Sierra
Mojada,
Mexico
Ndjole,
Gabon
Mitzic,
Gabon
Mevang,
Gabon
Ogooue,
Gabon
Total
$
4,846,687
1,547,736
(68,284)
$
2,578,192
—
(490,000)
$
958,801
—
(590,000)
$
306,376
—
(286,710)
$
656,779
—
(570,671)
9,346,835
1,547,736
(2,005,665)
—
(190,299)
(66,171)
(19,666)
(86,108)
(362,244)
6,326,139
807,732
(714,038)
$
1,897,893
$
302,630
$
—
$
—
$
(556,935)
—
—
133,912
19,511
—
—
—
—
8,526,662
807,732
(1,270,973)
153,423
$
6,419,833
$
1,474,870
$
322,141
$
—
$
—
$
8,216,844
$
$
Property Concessions – November 1,
2011
Acquisitions
Impairment
Foreign currency
translation adjustment
Property Concessions – October 31,
2012
Acquisitions
Impairment
Foreign currency translation
adjustments
Property Concessions – October 31,
2013
Sierra Mojada, Mexico
During the year ended October 31, 2013, the Company decided not to pursue further work on certain concessions in Sierra Mojada,
Mexico. As a result, the Company has written off the capitalized property concession balance related to these concessions of
$714,038.
During the year ended October 31, 2012, the Company decided not to pursue further work on certain concessions in Sierra Mojada,
Mexico. As a result, the Company has written off the capitalized property concession balance related to these concessions of $68,284.
Gabon, Africa
During the year ended October 31, 2013, the Company determined that the Ndjole license was impaired as its carrying amounts were
not recoverable from its implied fair value based on the binding letter of agreement with a third party described in Note 18. This
impairment resulted in the Company writing off a portion of the capitalized property concession balance of $556,935 related to the
Ndjole license.
During the year ended October 31, 2012, the Company and AngloGold Ashanti Limited (“AngloGold”) decided not to pursue further
work on the Mevang and Ogooue concessions. As a result, the Company has written off the capitalized property concession balance
related to these concessions of $286,710 for Mevang and $570,671 for Ogooue.
During the year ended October 31, 2012, the Company determined that the Mitzic and Ndjole licenses were impaired as their carrying
amounts were not recoverable from their related estimated future undiscounted cash flows. The fair value of the licenses was
determined using a discounted cash flow model, incorporating unobservable inputs such as anticipated cash inflows and cash
outflows, a risk adjusted discount rate, and other factors. This impairment resulted in the Company writing off a portion of the
capitalized property concession balance of $590,000 and $490,000 related to the Mitzic and Ndjole licenses respectively.
F-19
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NOTE 6 – GOODWILL
Goodwill represents the excess, at the date of acquisition, of the purchase price of the business acquired over the fair value of the net
tangible and intangible assets acquired. As at April 30, 2013, the Company elected to perform a qualitative assessment to determine
whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Based on this assessment
management determined it is not more likely than not that the fair value of the reporting unit is less than its carrying amount.
The following is a summary of the Company’s goodwill balance as at October 31, 2013 and 2012, respectively:
Goodwill – October 31, 2011
Goodwill – October 31, 2012
Goodwill – October 31, 2013
$
$
$
18,495,031
18,495,031
18,495,031
NOTE 7 – PAYABLE TO ANGLOGOLD
Pursuant to the terms of two joint venture agreements between the Company and AngloGold which were terminated effective August
16, 2012, exploration costs were funded 100% by AngloGold through the Company’s wholly owned subsidiary, Dome Gabon SARL.
As at October 31, 2012, the Company had $477,481 ($CFA 241,738,722) of VAT receivable outstanding related to expenditures
incurred by AngloGold, which was included in the payable to AngloGold of $490,095 recorded at October 31, 2012. Based on the
Company’s current legal interpretation of the joint venture agreements, the Company has concluded that AngloGold has no right to the
VAT receivable and related cash collected, because AngloGold abandoned all of its rights and benefits under the joint venture
agreements upon AngloGold’s termination of such agreements. Therefore, the Company has not recorded a payable to AngloGold at
October 31, 2013 and recorded miscellaneous income of $491,522 during the year ended October 31, 2013 related to this legal
interpretation.
NOTE 8 - RELATED PARTY TRANSACTIONS
The Company had an arrangement with Rand Edgar Investment Corp., a company owned by Brian Edgar, the Company's Chairman,
whereby the Company paid approximately $10,000 per month for general corporate development, rent and administrative services for
an office in Vancouver, British Columbia. This arrangement ended on March 31, 2012. During the year ended October 31, 2013,
October 31, 2012 and October 31, 2011, the Company paid $nil, $54,000 and $125,939 respectively to Rand Edgar Investment Corp.
for general corporate development, rent and administrative services which is included in the office and administrative line of the
consolidated statement of operations and comprehensive loss.
NOTE 9 – SHAREHOLDER RIGHTS PLAN
On June 11, 2007, the Board of Directors adopted a Shareholders’ Right Plan through the adoption of a Rights Agreement, which
became effective immediately. In connection with the adoption of the Rights Agreement, the Board of Directors declared a distribution
of one Right for each outstanding share of the Company’s common stock, payable to shareholders of record at the close of business
on June 22, 2007. In accordance with the Rights Plan, one Right is attached to each share of Company common stock issued since
that date. Each Right is attached to the underlying common share and will remain with the common share if the share is sold or
transferred. As of October 31, 2013, there are 159,072,657 shares outstanding with Rights attached.
In certain circumstances, in the event that any person acquires beneficial ownership of 20% or more of the outstanding shares of the
Company’s common stock, each holder of a Right, other than the acquirer, would be entitled to receive, upon payment of the purchase
price, which is initially set at $20 per Right, a number of shares of the Company’s common stock having a value equal to two times
such purchase price. The Rights will expire on June 11, 2017.
F-20
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NOTE 10 - COMMON STOCK
On February 14, 2013, the Company closed a public offering (the “Offering”) for the sale of 22,912,500 units at a price of $0.40 per unit
for gross proceeds of $9,165,000. Each unit was comprised of one share of common stock of the Company and one-half of one
common stock purchase warrant, with each whole warrant exercisable to purchase one share of common stock, at an exercise price of
$0.55, for a period of 18 months from the closing of the Offering. The Company paid the agents on the Offering a cash commission
equal to 6.0% of the gross proceeds, except for $2.5 million in units sold to purchasers arranged by the Company for which the agents
received a 3.0% cash commission. In addition, the agents received 1,187,250 compensation warrants with the same terms as the
other warrants issued in the Offering. The total cash commission paid to the agents was $474,900, the fair value of the agents’
compensation warrants was determined to be $51,672 (Note 12), and the Company incurred other offering costs of $595,375.
On December 13, 2011, the Company closed a registered direct offering for the sale or 295,000 shares of common stock at a price of
$0.50 per share for gross proceeds of $147,500. The Company incurred offering costs of $2,982 related to this offering.
On December 12, 2011, the Company closed a registered direct offering for the sale or 20,755,000 shares of common stock at a price
of $0.50 per share for gross proceeds of $10,377,500. The Company paid a 6% finder’s fee totaling $94,500 to a Canadian finder with
respect to certain non-U.S. purchasers who were introduced by them. The Company incurred other offering costs of $209,744 related
to this offering.
During the year ended October 31, 2011, the Company completed a private placement of 7,353,000 shares of common stock at $0.68
per share. Net proceeds from the private placement were $4,917,221. The Company also issued 1,385,353 shares of common stock
upon the exercise of warrants at an average cash consideration of $0.50 per share. Options to acquire 369,355 shares of common
stock were also exercised at an average exercise price of $0.51 per share. In addition, options to acquire 400,261 shares of common
stock were exercised by way of a cashless exercise whereby the recipients elected to receive 72,687 shares without payment of the
cash exercise price and the remaining options for 327,574 shares were cancelled.
In August 2010, the Company completed a private placement of 200,000 units at a price of $0.60 per unit, with each unit consisting of
one share of restricted common stock and one stock purchase warrant. Each warrant entitled the holder to purchase one share of
common stock. Each whole warrant was exercisable at $0.70 per share and had a term of one year. Net proceeds from this
placement were $120,000.
On April 16, 2010, the Company completed a merger with Dome and issued a total of 47,724,583 shares of common stock for all the
issued and outstanding shares of Dome. Based upon the closing exchange ratio of 0.968818 shares of Silver Bull common shares for
each single share of Dome common stock, the Company determined that 28,009,594 common shares of Silver Bull were issued
pursuant to the special warrant offering and 19,714,989 common shares of Silver Bull were issued for merger consideration. After
deducting offering costs of $1,048,484, the total net proceeds from the special warrant offering were $11,961,516.
Pursuant to ASC 805-10, the 19,714,989 shares issued for merger consideration were measured at $1.26, the closing market price of
the Company’s common stock on April 16, 2010.
On January 10, 2010, Dome raised $13,010,000 through a private placement of special warrants. The private placement was
completed through a syndicate of Canadian investment dealers and each special warrant automatically converted into one share of
Dome common stock immediately prior to the closing of the merger with Dome. The funds were held in escrow pending the closing.
On December 22, 2009, the Company closed a private placement of 6,500,000 units, at a price of $0.46 per unit, with each unit
consisting of one share of common stock of the Company and one common stock purchase warrant of the Company, two of which
warrants entitled the holder to purchase one share of common stock. As a result of the closing of the merger with Dome on April 16,
2010, the warrants issued as part of this private placement were terminated in accordance with their terms. Total proceeds from this
private placement were $2,990,000.
During year ended October 31, 2010, the Company issued 2,308,281 shares of common stock upon the exercise of warrants at an
average cash consideration of $0.41 per share and issued 118,800 shares of common stock at an average market price of $0.81 per
share to its independent directors for services provided. In addition, during the fiscal year ended October 31, 2010, options to acquire
448,938 shares of common stock were exercised by way of a cashless exercise whereby the recipients elected to receive 243,669
shares without payment of the exercised price and the remaining options for 205,262 shares were cancelled.
F-21
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
During the year ended October 31, 2009, the Company completed a private placement of 5,291,952 units at $0.25 per unit. Each unit
consisted of one share of restricted common stock and one half of a warrant. Each whole warrant was exercisable at $0.50 per share
and had a term of 3 years. Net proceeds from these placements were $1,322,988. Also during 2009, the Company issued 3,703,450
shares of common stock for warrants exercised at an average cash consideration of $0.34 per share and issued 129,600 shares of
common stock at an average market price of $0.36 per share to its independent directors for services provided.
During the year ended October 31, 2008, the Company issued 381,250 shares of common stock for warrants exercised at an average
cash consideration of $1.25 per share. In addition, the Company granted 38,000 shares to employees at an average market price of
$2.18. The Company also issued 145,200 shares of common stock at an average market price of $1.69 per share to its independent
directors for certain services provided during the year ended October 31, 2007 and for services provided in the year ended October
31, 2008. The Company had accrued $68,460 as of October 31, 2007 for costs associated with director shares for the year ended
October 31, 2007.
During the year ended October 31, 2007, the Company completed a private placement of 2,413,571 shares of the Company’s
common stock and warrants to purchase 1,206,785 shares of common stock exercisable at $2.42 per share for four years, at a price of
$4.70 per unit, which consists of two shares of common stock and one warrant. Net proceeds from this private placement were
$5,671,893. In addition, the Company issued 2,240,374 shares of common stock for warrants exercised at an average cash
consideration of $1.30 per share and issued 49,120 shares to outside consultants for services provided at an average price of $4.31
per share. Also during 2007, the Company issued 108,000 shares of common stock at an average price of $2.84 per share to its
independent directors for services provided and issued 126,000 shares of common stock in a cashless exercise of options.
During the year ended October 31, 2006, the Company issued 13,456,084 shares of common stock for cash consideration at an
average of $0.83 per share and 73,650 shares valued at $0.80 per share for services received. Included with each share purchased
was a warrant to purchase one share of the Company’s common stock at an exercise price of $1.25 per share with an exercise period
of 5 years. In addition, warrants were exercised for 25,000 shares of common stock for cash consideration at an average of $1.25 per
share. In addition, 248,593 shares of common stock were issued to employees of the Company for prior compensation at an average
value of $0.63 per share during the year ended October 31, 2006.
During the year ended October 31, 2005, the Company issued 476,404 shares of common stock for cash consideration at an average
of $0.98 per share. In addition, 176,772 shares of common stock were issued to officers and employees of the Company at an average
of $1.00 per share in payment of accrued wages. On September 28, 2005 the Company authorized the issuance of 7,500,000 shares
of common stock at a price of $0.80 per share, to include with each share purchased a warrant to purchase one share of the
Company’s common stock at an exercise price of $1.25 per share and with an exercise period of 5 years. Accordingly, options to
purchase 476,404 shares of common stock were issued during the year ended October 31, 2005.
During the year ended October 31, 2004, the Company issued 7,580,150 shares of common stock for cash consideration at $1.00 per
share less issuance costs of $698,863. Officers of the Company were issued 120,655 shares at an average of $1.26 per share in
payment of accrued wages. The Company also issued 141,286 shares in exchange for services received.
During the year ended October 31, 2003, the Company sold 7,000 common stock units with an ascribed cash value of $10,500. The
Company also sold 849,000 shares at an average price of $0.98 per share. The Company also issued 100,000 shares of common
stock under the Penoles agreement for cash, at $2.00 per share. Additionally, 373,925 shares of common stock valued at $468,771
were issued as compensation to officers.
During the year ended October 31, 2002, the Company sold 162,667 common stock units with attached warrants for cash of $244,000.
The Company also issued 50,000 shares of common stock under the Penoles agreement for cash at $2.00 a share. Additionally,
86,078 shares of common stock valued at $104,875 were issued as compensation to officers. On May 20, 2002, the Company
authorized the offering of 1,000,000 common stock units, with each unit consisting of one share of common stock and one warrant
equal to 1/3 of a share of common stock.
During the year ended October 31, 2001, the Company issued 20,000 shares of common stock with attached warrants for cash of
$15,000. Additionally, 57,000 shares of common stock were issued for services valued at $112,680 and for cash of $390, and 250,000
shares of common stock with 125,000 warrants attached were issued for $500,000 in cash.
During the year ended October 31, 2000, the Company sold 1,440,500 shares of its common stock for $3,986,625 cash, issued
120,000 shares of common stock for services valued at $153,360, issued 15,000 shares of common stock for equipment valued at
$25,000 and issued 950,000 shares of common stock for options exercised at $0.86 per share.
F-22
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
During the year ended October 31, 1999, the Company sold 1,068,800 shares of common stock for $1,075,900 cash. In addition the
Company received $300,000 for payment of subscriptions receivable. The Company also issued 55,556 shares for payment of drilling
expenses valued at $50,000.
In February 1998, 200,000 shares of common stock were issued for a mine database. The shares were valued at $1.625 per share,
resulting in a transaction valued at $325,000. Services valued at $22,300 were paid with 41,800 shares of common stock. An
additional 1,398,500 shares of common stock were issued for $1,065,445 cash and receivables, and a subscription receivable of
$300,000, between February and October 1998.
In April 1997, 250,000 common stock shares were issued for cash of $87,500 and 133,800 shares of common stock were issued for
services valued at $45,583. In May and June 1997, 181,600 shares of common stock were issued for $63,560 cash and 62,500 shares
of common stock were issued for services valued at $21,875. In August and October 1997, 420,000 and 75,000 shares of common
stock were issued for cash of $378,000 and $75,000, respectively. Additionally, during August 1997, 100,200 shares of common stock
were issued for debt of $31,530 and 95,000 shares of common stock were issued for services valued at $95,000.
During November 1995, the Company’s directors approved the issuance of 45,000 shares of common stock for services rendered at
$0.01 per share. During June 1996, the Company issued 900,000 shares of common stock for the assignment of mineral rights in the
Sierra Mojada Project in Coahuila, Mexico valued at $0.01 per share to Messrs. John Ryan, Merlin Bingham, and Daniel Gorski, who
had formed a partnership to advance exploration of the mining concession located in Coahuila, Mexico. The partnership had an
informal joint venture agreement with USMX, Inc. covering the mining concessions. By acquiring the partnership interest, the
Company was able to negotiate and sign a formal joint venture agreement with USMX in July 1996.
During the year ended October 31, 1996, the Company issued 1,320,859 shares of common stock for $146,359 in cash. During
October 1996, the Company issued 150,000 shares of common stock for computer equipment valued at $15,000. Also during October
1996, the Company issued 120,000 shares of common stock to Mr. Gorski and an additional 20,000 shares of common stock to Mr.
Ryan for services rendered valued at $14,000.
In January 1996, Mr. Carmen Ridland, in a private sale, sold a controlling interest in the corporation to Mr. Howard Crosby. On
January 12, 1996, Mr. Ridland transferred control of Cadgie Co. to Mr. Crosby and Mr. Robert Jorgensen.
On August 4, 1995 the directors of Cadgie Co. declared a 3:1 forward stock split of the outstanding Cadgie Co. shares, thus increasing
the number of outstanding shares from 192,160 to 576,480.
On August 31, 1994, the directors of Cadgie Co. declared a 1:5 reverse stock split of the outstanding Cadgie Co. shares, thus reducing
the number of outstanding shares from 960,800 to 192,160 shares.
The Company (originally called the Cadgie Company) was formed in August of 1993 and incorporated in November 1993 by Mr.
Carman Ridland of Las Vegas, Nevada as a spin-off from its predecessor, Precious Metal Mines, Inc. The Company issued 960,800
of its $0.01 par value shares to Precious Metal Mines, Inc. for 16 unpatented mining claims located near Philipsburg, Montana
comprising the Kadex property group. Precious Metal Mines, Inc. distributed the 960,800 shares of Cadgie Company to its
shareholders. One share of Cadgie Co. was exchanged for each share of Precious Metal Mines, Inc. held by holders of record as of
August 31, 1993.
NOTE 11 - STOCK OPTIONS
The Company has adopted two active stock option plans. Under the 2006 Stock Option Plan (the “2006 Plan”) the Company may
grant non-statutory and incentive options to employees, directors and consultants for up to a total of 5,000,000 shares of common
stock. Under the 2010 Stock Option and Stock Bonus Plan (the “2010 Plan”), the lesser of (i) 30,000,000 shares or (ii) 10% of the total
shares outstanding are reserved for issuance upon the exercise of options or the grant of stock bonuses.
Options are typically granted with an exercise price equal to the closing market price of the Company’s stock at the date of grant, have
a graded vesting schedule over approximately 1 to 2 years and have a contractual term of 5 to 10 years.
F-23
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
A summary of the range of assumptions used to value stock options granted for the year ended October 31, 2013, 2012 and 2011 are
as follows:
Options
2013
Year Ended October 31,
2012
2011
Expected volatility
Risk-free interest rate
Dividend yield
Expected term (in years)
54% - 70%
61% - 104%
0.29% - 0.88%
0.29% - 0.63%
—
2.50 – 3.50
—
2.50 – 5.00
96% - 113%
0.39% -1.53%
—
2.50 – 3.50
During the year ended October 31, 2013, the Company granted options to acquire 2,515,000 shares of common stock with a
weighted-average grant-date fair value of $0.15 per share. No options were exercised during the year ended October 31, 2013.
During the year ended October 31, 2012, the Company granted options to acquire 4,995,000 shares of common stock with a
weighted-average grant-date fair value of $0.26 per share. No options were exercised during the year ended October 31, 2012.
During the year ended October 31, 2011, options to acquire 369,355 shares of common stock were exercised at an average exercise
price of $0.51 per share. In addition, options to acquire 400,261 shares of common stock were exercised by way of a cashless
exercise whereby the recipients elected to receive 72,687 shares without payment of the exercise price and the remaining options for
327,574 shares were cancelled. The options had a combined intrinsic value of $197,034 at the time of exercise. Also during the year
ended October 31, 2011, the Company granted options to acquire 2,295,000 shares of common stock with a weighted-average grant-
date fair value of $0.58.
The following is a summary of stock option activity for the fiscal years ended October 31, 2013, 2012 and 2011:
Options
Outstanding at October 31, 2010
Granted
Exercised
Forfeited or Cancelled
Expired
Outstanding at October 31, 2011
Granted
Forfeited or Cancelled
Expired
Outstanding at October 31, 2012
Granted
Forfeited or Cancelled
Expired
Outstanding at October 31, 2013
Weighted
Average
Shares
Exercise Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic Value
6,901,692 $
2,295,000
(442,042)
(947,621)
(3,255,121)
4,551,908 $
4,995,000
(2,016,906)
—
7,530,002 $
2,515,000
(839,525)
—
9,205,477
1.59
0.90
0.52
0.82
2.23
1.06
0.53
1.23
—
0.66
0.37
0.67
—
0.58
3.60
$
33,600
3.93
$
12,500
3.45
$
—
The Company recognized stock-based compensation costs for stock options of $576,358, $991,110 and $1,129,421 for the fiscal
years ended October 31, 2013, 2012 and 2011, respectively. As of October 31, 2013, there remains $206,280 of total unrecognized
compensation expense which is expected to be recognized over a weighted average period of 0.53 years.
On September 7, 2010, the Company granted options to purchase 295,000 shares of common stock under the 2010 Stock Option Plan
to twenty employees with an exercise price of $0.73 and an expiration date of five years. The fair market value of the options at the
date of grant was $0.47 per share.
On August 23, 2010, the Company granted stock options to purchase 200,000 shares of common stock under the 2010 Stock Option
Plan to each of its independent directors of the Company with an exercise price of $0.72 and an expiration date of five years. The
Board also granted options on August 23, 2010 to the persons serving on the Board who were not considered independent at the time
of grant being: Brian Edgar (an option to acquire 600,000 shares); Merlin Bingham (an option to acquire 200,000 shares); and Greg
Hahn (an option to acquire 200,000 shares). The fair market value of the 1,800,000 options at the date of grant was $0.46 per share.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-24
Also on August 23, 2010 the Company granted stock options to purchase an aggregate of 1,400,000 shares of common stock under
the 2010 Stock Option Plan to the Company’s executive officers with an exercise price of $0.72 and an expiration date of five years.
The fair market value of the options at the date of grant was $0.47 per share.
In February 2009, the Company granted options to acquire 705,619 shares of common stock with a weighted-average grant-date fair
value of $0.25 to officers, corporate employees and independent directors in consideration for entering into salary deferral agreements.
The stock options have an exercise price of $0.34 and an expiration term of 10 years. The options vested immediately and had a fair
value of $179,436 at date of grant.
On January 18, 2008, the Board granted stock options to purchase 400,000 shares of common stock under the 2006 Stock Option
Plan to the officers of the Company with an exercise price of $2.18 and an expiration date of ten years. The fair market value of the
options at the date of grant was $1.60 per share.
Also on January 18, 2008, the Board of Directors granted options to purchase 200,004 shares of common stock under the 2006 Stock
Option Plan to fourteen Mexican employees with an exercise price of $2.18 and an expiration date of ten years. The fair market value
of the options at the date of grant was $1.67 per share.
On April 17, 2008, the Board of Directors granted options to purchase 150,000 shares of common stock under the 2006 Stock Option
Plan to a legal consultant in Mexico with an exercise price of $2.25 and an expiration date of ten years. The fair market value of the
options at the date of grant was $1.78 per share.
In October 2007, the Company granted stock options to purchase up to 250,000 shares of common stock to an independent director at
$2.85 per share under the 2006 Plan. The fair market value of the options at the date of grant was $2.15 per share
In June 2007, the Company granted stock options to purchase up to 250,000 shares of common stock to the Company’s CFO at $4.30
per share under the 2006 Plan. The fair market value of the options at the date of grant was $3.37 per share.
In February 2007, options for 210,000 shares of the Company’s common stock granted under the Company’s 2001 Equity Incentive
Plan were exercised under the “cashless exercise” provision of the Plan, whereby recipients elected to receive 126,000 shares without
payment of the exercise price, and the remaining options for 84,000 shares were cancelled.
During the year ended October 31, 2006, the Company granted 2,000,000 options to officers under the 2006 Stock Option Plan with
an exercise price of $2.59 and an expiration of ten years. The options had a fair value of $2.18 per share. In addition, the Company
granted 750,000 options to independent directors with an exercise price of $2.59 and an expiration of ten years. These options vested
immediately and were assigned a fair value of $2.18 per share. In addition, the Company extended the contractual life of 310,000 fully
vested stock options held by 19 employees. As a result of this modification, the Company recognized additional compensation
expense of $48,000 for the year ended October 31, 2006.
In 2002, the Company granted 100,000 options with an exercise price of $1.25 and an expiration of seven years. The total value was
calculated at $61,000.
Summarized information about stock options outstanding and exercisable at October 31, 2013 is as follows:
Options Outstanding
Options Exercisable
Number Exercisable
Weighted
Average Exercise
Price
0.56
1.11
2.18
0.63
5,998,331 $
805,000
57,144
6,860,475 $
Number
Outstanding
8,343,333
805,000
57,144
9,205,477
Weighted Ave.
Remaining
Contractual Life
(Years)
3.55
2.30
4.22
3.45
Weighted
Average Exercise
Price
0.52
1.11
2.18
0.58
$
$
Exercise Price
0.37 - 0.73
1.00 - 1.20
2.18
0.37 - 2.18
$
$
F-25
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NOTE 12 - WARRANTS
A summary of warrant activity for the fiscal years ended October 31, 2013, 2012 and 2011 is as follows:
Warrants
Shares
Exercise Price
Weighted
Average
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic Value
Outstanding at October 31, 2010
Exercised
Forfeited or expired
Outstanding at October 31, 2011
Forfeited or expired
Outstanding at October 31, 2012
Expired
Issued in the Offering (Note 10)
Agents compensation warrants (Note 10)
Outstanding at October 31, 2013
Exercisable at October 31, 2013
12,315,677 $
(1,385,353)
(9,126,368)
1,803,956 $
(1,713,956)
90,000 $
(90,000)
11,456,250
1,187,250
12,643,500
12,643,500 $
1.21
0.50
1.30
1.30
1.35
0.34
0.34
0.55
0.55
0.55
0.55
0.60
$
236,073
0.28
$
13,500
0.79
0.79
$
—
—
On February 14, 2013, the Company issued 11,456,250 warrants in connection with the Offering and issued 1,187,250 compensation
warrants to the agents. The fair value of the agent’s compensation warrants was determined to be $51,672 based upon the Black-
Scholes pricing model using a risk free interest rate of 0.22%, expected volatility of 50%, dividend yield of 0%, and a contractual term
of 1.5 years.
No warrants were exercised or issued during the year ended October 31, 2013.
Summarized information about warrants outstanding and exercisable at October 31, 2013 is as follows:
Warrants Outstanding
Warrants Exercisable
Number
Exercise Price
0.55
$
Outstanding
12,643,500
Weighted
Average
Remaining
Contractual Life
(Years)
0.79
Weighted
Average Exercise
Price
0.55
$
No warrants were exercised or issued during the year ended October 31, 2012.
Number Exercisable
12,643,500
$
Weighted
Average Exercise
Price
0.55
During the year ended October 31, 2011, warrants to acquire 1,385,353 shares of common stock were exercised at an average
exercise price of $0.50 per share. The warrants had an intrinsic value of $786,112 at the time of exercise.
Pursuant to the private placement transaction that closed in August 2010, the Company issued warrants to acquire 200,000 shares of
common stock.
In connection with the merger with Dome, the Company issued 2,228,281 warrants with an exercise price of $0.41 to replace all of the
outstanding warrants of Dome at the time of the merger. The fair value of the warrants using the Black-Scholes valuation model was
$1,895,252 using an average risk free interest rate of 0.12%, average expected volatility of 98%, dividend yield of 0%, and average
contractual term of 0.19 years. All of these warrants were subsequently exercised in June 2010. The warrants had an intrinsic value of
$631,669 at the time of exercise.
Pursuant to the private placement transaction that closed in December 2009, the Company issued warrants to acquire 3,250,000
shares of common stock. The warrants were only to be exercisable if the merger agreement between Dome and Silver Bull was
terminated and then only for a term extending until one year following the date of issuance, with an average exercise price of $0.57 per
share of common stock. As a result of the closing of the merger with Dome on April 16, 2010, the warrants issued in this private
placement were terminated in accordance with their terms.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-26
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
During the fiscal year ended October 31, 2010, warrants to acquire 2,308,281 shares of common stock were exercised at an average
exercise price of $0.41 per share. The warrants had an intrinsic value of $686,469 at time of exercise.
In October 2009, warrants for 3,703,450 shares were exercised at an average price of $0.34 per share for total cash proceeds of
$1,249,380. The warrants were exercised pursuant to a short-term one-time offer to four accredited investors to exercise these
warrants early. The Company agreed to reduce the exercise price of 2,900,000 warrants with a stated exercise price of $1.25 and
803,450 warrants with a stated exercise price of $2.42 to $0.32 and $0.40, respectively to secure necessary short-term working capital.
The Company determined the fair value of the warrant inducement to be $126,090 using the Black-Scholes pricing model using risk
free interest rates of 0.04% to 0.66%, expected volatility of 98% to 133%, dividend yield of 0%, and contractual terms of .04 to 1.3
years. Since these warrants were initially issued in connection with two earlier private placements of the Company’s securities and
since the offer was only available to a limited number of warrant holders, the Company recorded the fair value of the warrant
inducement as a deemed dividend and accordingly has increased the net loss applicable to common stockholders for the fiscal year
ended October 31, 2009.
Also in 2009, the Company granted warrants to purchase 90,000 shares of Common Stock with an exercise price of $0.34 and an
expiration term of 4 years to a financial consultant in consideration for entering into a consulting fee deferral agreement. The fair value
of these warrants was determined to be $39,021 based upon the Black-Scholes pricing model using risk free interest rate of 1.96%,
expected volatility of 102%, dividend yield of 0%, and a contractual term of 4 years.
During the fiscal year ended October 31, 2008, warrants for 381,250 shares were exercised at an average price of $1.25 per share for
total cash proceeds of $476,563. The warrants had a total intrinsic value of $478,438 at date of exercise.
On June 4, 2008 the Company issued a warrant to purchase 100,000 shares of common stock to a consultant for financial services at
an exercise price of $2.00 per share. The warrant has a two year term and will vest equally over the term of the consulting
contract. The fair value of these warrants was determined to be $81,838 based upon the Black-Scholes pricing model using risk free
interest rate of 2.47%, expected volatility of 73%, dividend yield of 0%, and a contractual term of 2 years.
During the fiscal year ended October 31, 2007, the Company issued warrants for 600,000 common shares for professional services at
an average exercise price of $3.27 per share and average contractual term of 4.6 years. The fair value of these warrants was
determined to be $1,094,950 based upon the Black-Scholes pricing model using a risk free interest rate of 5%, expected volatility of
80%, and expected term of 1.4 to 3 years. In addition, the Company extended the contractual life of a warrant for 59,610 shares of
common stock in consideration of financial services.
As a result of this modification, the Company recognized additional professional service fees of $68,999 for the year ended October
31, 2007.
During the year ended October 31, 2006 the Company granted warrants for 210,103 shares for services in connection with the
Company’s private placement, with an exercise price of $1.25 and an expiration of 5 years. The fair value of these warrants was
determined to be $403,215 using the Black-Scholes pricing model using a risk free interest rate of 5%, no dividends to be paid, and a
volatility of 80%. Also during the year ended October 31, 2006, the Company issued a warrant for 17,250 shares to an independent
director with an exercise price of $1.25 and an expiration of 5 years. The fair value of this warrant was determined using the Black-
Scholes option pricing model using a risk free interest rate of 5%, no dividends to be paid, and a volatility of 80%. The total value was
calculated at $30,705.
During the year ended October 31, 2005, the Company issued 476,404 common stock units that consisted of 476,354 shares of
common stock and warrants to purchase an additional 476,404 shares of common stock.
The Company did not issue common stock warrants during the year ended October 31, 2004.
During the year ended October 31, 2003, the Company issued 7,000 common stock units that consisted of 7,000 shares of common
stock and warrants to purchase an additional 2,333 shares of common stock.
During the year ended October 31, 2002, the Company issued 162,667 common stock units that were made up of 162,667 shares of
common stock and warrants to purchase an additional 54,222 shares of common stock.
F-27
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
During the year ended October 31, 2001, the Company issued 250,000 shares of common stock with 125,000 warrants attached.
Additionally 20,000 warrants were exercised for $15,000 in cash and services valued at $10,760. The Company also issued 80,000
warrants for services, which were valued at $144,791.
At October 31, 2000, there were outstanding warrants to purchase 996,500 shares of the Company’s common stock, at prices ranging
from $0.75 to $2.00 per share. The warrants, which became exercisable in 1999, but have not been exercised, expired at various
dates through 2005. These warrants were valued at $543,980 using the Black-Scholes option pricing model using a risk free interest of
5%, volatility of 30% and 50% and expected life of 5 to 10 years.
NOTE 13 – INCOME TAXES
Provision for Taxes
The Company files a United States federal income tax return and a Canadian branch return on a fiscal year-end basis and files
Mexican income tax returns for its three Mexican subsidiaries on a calendar year-end basis. The Company and two of its wholly-
owned subsidiaries, Minera and Minas, have not generated taxable income since inception. Contratistas, another wholly- owned
Mexican subsidiary, has historically generated taxable income based upon intercompany fees billed to Minera on the services it
provides.
On April 16, 2010, a wholly-owned subsidiary of the Company was merged with and into Dome, resulting in Dome becoming a wholly-
owned subsidiary of the Company. Dome, a Delaware corporation files tax returns in the United States and Dome Ventures SARL
Gabon and African Resources SARL Gabon file tax returns in Gabon, Africa. Dome and its subsidiaries do not currently generate
taxable income.
The components of loss before income taxes, by tax jurisdiction, were as follows:
For the year ended
October 31,
2012
2011
2013
United States
Canada
Mexico
Gabon
Loss before income taxes
(3,898,000)
(337,000)
(2,734,000)
(433,000)
(4,871,000)
(591,000)
(6,603,000)
(146,000)
$ (7,402,000) $ (13,252,000) $ (12,211,000)
(4,719,000)
(442,000)
(5,521,000)
(2,570,000)
The components of the provision for income taxes are as follows:
Foreign
Current tax expense
Deferred tax expense
For the year ended
October 31,
2012
2013
2011
$
$
65,000 $
—
65,000 $
108,000 $
—
108,000 $
27,000
—
27,000
The Company’s provision for income taxes for the fiscal year ended October 31, 2013 consisted of a tax expense of $65,000 related to
a provision to income taxes expense for Contratistas and the Silver Bull Canadian branch return for the year ended October 31,
2013.
F-28
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The reconciliation of the provision for income taxes computed at the U.S. statutory rate to the provision for income tax as shown in the
statement of operations and comprehensive loss is as follows:
For the year ended
October 31,
2012
2013
2011
Income tax benefit calculated at U.S. Federal Income tax rate
$ (2,591,000) $ (4,638,000) $ (4,274,000)
Differences arising from:
Permanent differences
Benefit from lower foreign income tax rate
Increase in state tax rates
Adjustment to prior year taxes
Inflation adjustment foreign net operating loss
Foreign currency fluctuations
Increase in valuation allowance
Other
Net income tax provision
963,000
88,000
—
199,000
(368,000)
(98,000)
1,833,000
39,000
65,000 $
4,196,000
396,000
—
(109,000)
(261,000)
(143,000)
455,000
212,000
108,000 $
655,000
489,000
1,053,000
(11,000)
(226,000)
310,000
1,989,000
42,000
27,000
$
The components of the deferred tax assets at October 31, 2013 and 2012 were as follows:
Deferred tax assets:
Net operating loss carry forwards – U.S.
Net operating loss carry forwards – Mexico
Stock-based compensation – U.S.
Exploration costs
Other – U.S.
Other – Mexico
Deferred tax liability
Property Concessions
Total net deferred tax assets
Less: valuation allowance
Net deferred tax asset
October 31,
2013
2012
$ 10,123,000 $
9,617,000
99,000
542,000
26,000
44,000
9,559,000
8,618,000
116,000
671,000
25,000
46,000
20,451,000 19,035,000
(629,000)
(630,000)
19,822,000 18,405,000
(19,822,000) (18,405,000)
—
— $
$
In the year ended October 31, 2013, the Company made a re-class correction to its deferred tax net operating loss carry forwards –
U.S. and deferred tax exploration costs for all periods. This was due to a correction to the methodology used to determine exploration
costs on the US tax returns, and resulted in a downward revision of the previously disclosed deferred tax net operating loss carry
forwards – U.S. as of October 31, 2012 of $11.7 million to $9.6 million and deferred tax exploration costs of $1.8 million to $0.7 million
with a corresponding offset to the valuation allowance.
At October 31, 2013 the Company has U.S. net operating loss carry-forwards of approximately $29 million which expire in the years
2019 through 2033. The Company has approximately $34 million of net operating loss carry-forwards in Mexico which expire in the
years 2015 through 2023.
The valuation allowance for deferred tax assets of $19.8 and $18.4 million at October 31, 2013 and 2012, respectively, relates
principally to the uncertainty of the utilization of certain deferred tax assets, primarily net operating loss carry forwards in various tax
jurisdictions. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not
that the deferred tax assets can be realized prior to their expiration. Based on the Company’s assessment it has determined the
deferred tax assets are not currently realizable.
Mexico Tax Legislation
Prior to the Mexican tax reform package described below Mexican companies were subject to a dual tax system comprised of ISR
(Income Tax) and IETU (Flat Tax). Under this tax system Mexican subsidiaries were subject to pay the greater of the ISR and IETU
and therefore the Company determines its deferred income taxes at October 31, 2013 based on the ISR tax regime it expects to be
subject to in the future as of October 31, 2013. In 2012 and 2011 the ISR rate was 30%. The Mexican Senate had approved an ISR
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
rate of 30% in 2013, 29% in 2014 and 28% for 2015 and thereafter. The IETU was 17.5% in 2010 and thereafter.
On December 11, 2013, the Mexican tax reform package was published in the official gazette and will apply as from January 1, 2014.
Amongst other changes the planned corporate tax reductions to 29% in 2014 and 28% thereafter have been repealed and the
corporate tax rate will remain at 30%. In addition the IETU has been repealed.
F-29
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Net Operating Loss Carry-forward Limitation
The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss and tax credit carry forwards if there has
been a change in ownership as described in Section 382 of the Internal Revenue Code. As a result of the Dome merger in April 2010,
substantial changes in the Company’s ownership have occurred that may limit or reduce the amount of net operating loss carry-
forward that the Company could utilize in the future to offset taxable income. We have not completed a detailed Section 382 study at
this time to determine what impact, if any, that ownership changes may have had on our operating loss carry forwards. In each period
since our inception, we have recorded a valuation allowance for the full amount of our deferred tax assets, as the realization of the
deferred tax asset is uncertain. As a result, we have not recognized any federal or state income tax benefit in our consolidated
statement of operations and comprehensive loss.
Accounting for Uncertainty in Income Taxes
During the fiscal years ended October 31, 2013 and 2012, the Company has not identified any unrecognized tax benefits or had any
additions or reductions in tax positions and therefore a reconciliation of the beginning and ending amount of unrecognized tax benefits
is not presented.
The Company does not have any unrecognized tax benefits as of October 31, 2013 and accordingly the Company’s effective tax rate
will not be materially affected by unrecognized tax benefits.
The following tax years remain open to examination by the Company’s principal tax jurisdictions:
United States:
Mexico:
Canada:
Gabon, Africa:
2009 and all following years
2008 and all following years
2009 and all following years
2010 and all following years
The Company has not identified any uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax
benefit will significantly increase or decrease within the next twelve months.
The Company’s policy is to classify tax related interest and penalties as income tax expense. There is no interest or penalties
estimated on the underpayment of income taxes as a result of unrecognized tax benefits.
NOTE 14 – FINANCIAL INSTRUMENTS
Fair Value Measurements
All financial assets and financial liabilities are recorded at fair value on initial recognition. Transaction costs are expensed when they
are incurred, unless they are directly attributable to the acquisition of qualifying assets, in which case they are added to the costs of
those assets until such time as the assets are substantially ready for their intended use or sale.
The three levels of the fair value hierarchy are as follows:
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted
assets or liabilities;
Level 2
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially
the full term of the asset or liability;
Level 3
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and
unobservable (supported by little or no market activity).
F-30
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to
the fair value measurement. As of October 31, 2013 and October 31, 2012, the Company had no financial assets or liabilities required
to be reported for fair value purposes.
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, other receivables,
accounts payable and accrued liabilities and expenses approximate fair value at October 31, 2013 and October 31, 2012 due to the
short maturities of these financial instruments.
Credit Risk
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its
obligations. To mitigate exposure to credit risk on financial assets the Company has established policies to ensure liquidity of funds
and ensure counterparties demonstrate minimum acceptable credit worthiness.
The Company maintains its US Dollar and Canadian Dollar (“$CDN”) cash and cash equivalents in bank and demand deposit
accounts with major financial institutions with high credit standings. Cash deposits held in the United States are insured by the
Federal Deposit Insurance Corporation (“FDIC”) for up to $250,000 and $CDN cash deposits held in Canada are insured by the
Canada Deposit Insurance Corporation (“CDIC”) for up to $CDN 100,000. Certain United States and Canadian bank accounts held by
the Company exceed these federally insured limits or are uninsured as they related to US Dollar deposits held in Canadian financial
institutions. As of October 31, 2013 and 2012, the Company’s cash and cash equivalent balances held in United States and Canadian
financial institutions included $4,844,049 and $2,868,917 respectively, which was not insured by the FDIC or CDIC. The Company has
not experienced any losses on such accounts and management believes that using major financial institutions with high credit ratings
mitigates the credit risk in cash and cash equivalents.
The Company also maintains cash and cash equivalents and restricted cash in bank accounts in Mexico and Gabon. These accounts
are denominated in the local currency and are considered uninsured. As of October 31, 2013 and 2012, the US dollar equivalent
balance for these accounts was $87,889 and $100,105, respectively.
Interest Rate Risk
The Company holds substantially all of the Company’s cash and cash equivalents in bank and demand deposit accounts with major
financial institutions. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the
average cash and cash equivalent and restricted cash balances during the year ended October 31, 2013, a 1% decrease in interest
rates would have resulted in a reduction in interest income for the period of approximately $4,927.
Foreign Currency Exchange Risk
Certain purchases of labor, operating supplies and capital assets are denominated in $CDN, $MXN, $CFA or other currencies. As a
result, currency exchange fluctuations may impact the costs of our operations. Specifically, the appreciation of the $MXN, $CDN or
$CFA against the US dollar may result in an increase in operating expenses and capital costs in US dollar terms. As of October 31,
2013, the Company maintained the majority of its cash balance in US Dollars. The Company currently does not engage in any
currency hedging activities.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
Compliance with Environmental Regulations
The Company’s exploration activities are subject to laws and regulations controlling not only the exploration and mining of mineral
properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate
additional capital outlays or affect the economics of a project, and cause changes or delays in the Company’s activities.
Property Concessions Mexico
To properly maintain property concessions in Mexico, the Company is required to pay a semi-annual fee to the Mexican government
and complete annual assessment work.
F-31
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
In addition seven of the concessions in the Sierra Mojada project are subject to options to purchase from existing third party
concession owners. Pursuant to the option purchase agreements, the Company is required to make certain payments over the terms
of these contracts to obtain full ownership of these concessions as set forth in the table below:
Olympia (1 concession)
Payment Date
March 2014(1)
Payment Amount
$MXN 500,000
(1) If a change of control occurs prior to the payment date, this payment is due
upon the change of control.
Nuevo Dulces Nombres (Centenario) and Yolanda III (2 concessions)
Payment Date
Monthly payment beginning August 2014 and
ending July 2016
Payment Amount(1)
$20,000 per month
(1) Until July 2016, the Company has the option of acquiring Nuevo Dulces
Nombres (100% interest) for $4 million and Yolanda III (100% interest) for $2 million
plus a lump sum payment equal to any remaining monthly payments.
Poder de Dios, Anexas a Poder de Dios and Ampliacion a Poder de Dios (3 concessions)
Payment Date
April 2014
October 2014
April 2015(1)
Payment Amount(1)
$6 million
$6 million
$7 million
(1) Payments shown reflect the option purchase price for a period of six months from the
payment date for the acquisition of 100% of the concessions. Subsequent to April 2015 the option
purchase price is $7 million for the acquisition of 100% of the concession. In addition the Company is
required to make payments of $300,000 in April and October of each year until the option purchase is
made otherwise the Company will lose its interest in the concessions. The option purchase price until
April 2014 is $5 million.
Veta Rica o La Inglesa (1 concession)
Payment Date
April 2014
Payment Amount
$300,000
Property Concessions Gabon
The Company holds title to the Ndjole and Mitzic concessions in Gabon, Africa that require the Company to spend minimum amounts
each term to renew the concessions. Each concession is renewable twice with each renewal lasting for three years. The initial renewal
of the Ndjole concession was granted on June 21, 2012 and the initial renewal of the Mitzic concession was granted on July 24, 2012.
Per the renewed concession licenses, the Company must spend $CFA 2,926,000,000 on exploration work on the Ndjole concession
and $CFA 901,000,000 on exploration work on the Mitzic concession in order to renew these concessions for a third term of three
years. The expenditures during the second period are reduced by $CFA 2,697,462,586 for Ndjole and $CFA 230,627,114 for Mitzic
which represent amounts spent in the second period to October 31, 2013 and amounts carried forward from the initial term for
expenditures incurred in excess of the renewal requirements. The Company must spend $CFA 800,000,000 in the third term per
Gabonese law. The Company may apply for a mining license at any time during these periods. As of October 31, 2013, one U.S.
dollar approximates $CFA 477.
Royalty
The Company has agreed to pay a 2% net smelter return royalty to a third party on certain property concessions within the Sierra
Mojada Property. Total payments under this royalty are limited to $6.875 million.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
F-32
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Office Lease Commitment
The Company entered into a five-year office lease agreement from April 1, 2012 to March 31, 2017 for the Company’s corporate office
in Vancouver, Canada. The monthly lease payment is $CDN 7,506 until March 31, 2014, increasing to $CDN 7,743 on April 1, 2014
with a further increase to $CDN 7,981 on April 1, 2016. As of October 31, 2013, one U.S. dollar approximates $CDN 1.04.
NOTE 16 – SEGMENT INFORMATION
The Company operates in a single reportable segment being the exploration of mineral property interests. The Company has mineral
property interests in Sierra Mojada, Mexico and Gabon, Africa.
Geographic information is approximately as follows:
Net loss for the period
Mexico
Canada
Gabon
United States
For the Year Ended
October 31,
2012
2011
2013
Period from
November 8,
1993
(Inception) To
October 31,
2013
$
(4,357,000) $
(2,657,000)
(453,000)
(7,672,000) $
(3,038,000)
(2,650,000)
—
—
$
(7,467,000) $
(13,360,000) $
(8,878,000) $
(1,244,000)
(325,000)
(1,790,000)
(12,237,000) $
(49,574,000)
(6,981,000)
(3,397,000)
(34,309,000)
(94,261,000)
The following table details allocation of assets included in the accompanying balance sheet at October 31, 2013:
Cash and cash equivalents
Value-added tax receivable, net
Other receivables
Prepaid expenses and deposits
Office and mining equipment, net
Property concessions
Goodwill
United States
$
3,076,000 $
-
-
-
-
-
-
3,076,000 $
Canada
Mexico
Gabon
2,087,000 $
-
20,000
137,000
4,000
-
-
2,248,000 $
23,000 $
327,000
47,000
98,000
480,000
6,420,000
18,495,000
25,890,000 $
65,000 $
11,000
-
2,000
25,000
1,797,000
-
1,900,000 $
Total
5,251,000
338,000
67,000
237,000
509,000
8,217,000
18,495,000
33,114,000
$
The following table details allocation of assets included in the accompanying balance sheet at October 31, 2012:
Cash and cash equivalents
Restricted cash
Value-added tax receivable, net
Other receivables
Prepaid expenses and deposits
Office and mining equipment, net
Property concessions
Goodwill
Other assets
$
United States
101,000
$
-
-
-
-
-
-
-
-
$
101,000
$
Canada
Mexico
Gabon
$
3,013,000
-
-
64,000
157,000
8,000
-
-
44,000
$
3,286,000
$
39,000
-
449,000
52,000
151,000
663,000
6,326,000
18,495,000
-
$
26,175,000
$
48,000
13,000
491,000
-
1,000
38,000
2,201,000
-
-
$
2,792,000
Total
3,201,000
13,000
940,000
116,000
309,000
709,000
8,527,000
18,495,000
44,000
32,354,000
F-33
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The Company has significant assets in Coahuila, Mexico and Gabon, Africa. Although these countries are generally considered
the Company’s
economically stable,
operations. Neither the Mexican government nor the Gabonese government requires foreign entities to maintain cash reserves in
their respective country.
foreign countries could disrupt
that unanticipated events
is always possible
in
it
The following table details allocation of exploration and property holding costs for the exploration properties:
Exploration and property holding costs for the period
Mexico Sierra Mojada
Gabon Ndjole
Gabon Mitzic
Gabon Ogooue
Gabon Mevang
For the Year Ended
October 31,
2012
2013
2011
Period from
November 8,
1993
(Inception) To
October 31,
2013
$
$
(4,514,000) $
(913,000)
(88,000)
—
—
(5,515,000) $
(8,887,000) $
(745,000)
(800,000)
(570,000)
(287,000)
(11,289,000) $
(8,071,000) $
(125,000)
(177,000)
—
—
(8,373,000) $
(50,428,000)
(1,783,000)
(1,065,000)
(570,000)
(287,000)
(54,133,000)
NOTE 17 - SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth a summary of the quarterly results of operations for the years ended October 31, 2013 and 2012:
2013
Revenues
Loss from operations
Other income (expense)
Income tax expense
Net loss
Basic and diluted net loss per common share
2012
Revenues
Loss from operations
Other (expense) income
Income tax expense
Net loss
Basic and diluted net loss per common share
$
$
Q1
Q2
Q3
—
(2,182,408)
87,497
9,171
(2,104,082)
(0.02)
—
(2,147,042)
(32,988)
30,903
(2,210,933)
(0.01)
—
(1,971,259)
531,217
18,613
(1,458,655)
(0.01)
Q1
Q2
Q3
—
(3,434,849)
(153,677)
4,962
(3,593,488)
(0.03)
—
(3,612,507)
288,069
71,686
(3,396,124)
(0.02)
—
(2,505,407)
(185,609)
24,722
(2,715,738)
(0.02)
Q4
—
(1,863,603)
176,714
6,021
(1,692,910)
(0.01)
Q4
—
(3,826,998)
178,776
6,839
(3,655,061)
(0.03)
F-34
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NOTE 18 – SUBSEQUENT EVENT
On December 13, 2013, the Company entered into a binding letter of agreement (the “Transaction”) with a third party to sell all of the
issued and outstanding securities of Dome International Global Inc., a subsidiary of the Company which holds, indirectly, a 100%
interest in and to the Ndjole manganese and gold licenses, for cash consideration of $1,500,000.
The proposed Transaction is subject to a number of terms and conditions, including the party’s entering into a definitive agreement
with respect to the Transaction, the completion of satisfactory due diligence investigations, the completion of a financing by the third
party generating minimum proceeds of $CDN 4.0 million from the sale of securities (on terms to be determined), third party minority
shareholder approval and the approval of the TSX-V and other applicable regulatory authorities. The Company was paid a $25,000
non-refundable deposit upon the signing of the binding letter of agreement. Prior to the closing of the Transaction the Company will
transfer all of the issued and outstanding securities of African Resources SARL Gabon which holds the Mitzic license from Dome
International Global Inc. to another subsidiary of the Company.
F-35
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 21.1
We currently conduct our operations through subsidiaries. The names and ownership structure of our subsidiaries are set forth in the
chart below.
Metalline, Inc. (“Metalline”)
Name
Jurisdiction of
Incorporation or
Organization
Colorado, USA
Ownership Percentage
100% by Silver Bull
Contratistas de Sierra Mojada S.A. de C.V.
Mexico
98% by Silver Bull and 2% by Metalline
Minera Metalin S.A. de C.V.
Mexico
99.998% by Silver Bull and 0.002% by Metalline
Minas De Coahuila SBR S.A. de C.V.
Mexico
100% by Minera Metalin S.A. de C.V.
Dome Ventures Corporation (“Dome”)
Delaware, USA
100% by Silver Bull
Dome Asia Inc.
British Virgin Islands
100% by Dome
Dome International Global Inc.
British Virgin Islands
100% by Dome
Dome Minerals Nigeria Limited
Nigeria
99.99% by Dome International Global Inc.
Dome Ventures SARL Gabon
African Resources SARL Gabon
Gabon
Gabon
100% by Dome International Global Inc.
100% by Dome International Global Inc.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3, as amended (File Nos. 333-172789,
333-172868, 333-174816 and 333-180143), and the Registration Statements on Form S-8 (File Nos. 333-171723, 333-140588 and
333-180142) of Silver Bull Resources, Inc. (the “Company”) of our reports dated January 13, 2014 relating to the audit of the
consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Annual Report
on Form 10-K for the year ended October 31, 2013.
/s/ Hein & Associates LLP
Hein & Associates LLP
Denver, Colorado
January 13, 2014
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 23.2
CONSENT OF JDS ENERGY & MINING INC.
We hereby consent to the incorporation by reference of any mineralized material and other analyses performed by us in our
capacity as an independent consultant to Silver Bull Resources, Inc. (the “Company”), which are set forth in the Company’s Annual
Report on Form 10-K for the year ended October 31, 2013, in the Company’s Registration Statements on Form S-3, as amended (File
Nos. 333-172789, 333-172868, 333-174816 and 333-180143), and Form S-8 (File Nos. 333-171723, 333-140588 and 333-180142), or
in any prospectuses or amendments or supplements thereto. We also consent to the reference to us under the heading “Experts” in
such Registration Statements and any related amendments or prospectuses
Date: January 13, 2014
JDS ENERGY & MINING INC.
/s/ Gord Doerksen
Name: Gord Doerksen
Title: VP Technical Services
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Certifications:
I, Timothy Barry, certify that:
EXHIBIT 31.1
1. I have reviewed this annual report on Form 10-K of Silver Bull Resources, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated: January 13, 2014
By
/s/ Timothy Barry
Timothy Barry, President and Chief Executive Officer
(Principle Executive Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
EXHIBIT 31.2
Certifications:
I, Sean Fallis, certify that:
1. I have reviewed this annual report on Form 10-K of Silver Bull Resources, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated: January 13, 2014
By
/s/ Sean Fallis
Sean Fallis, Chief Financial Officer
(Principal Accounting and Financial Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the
undersigned officer of Silver Bull Resources, Inc. (the “Company”) does hereby certify with respect to the Annual Report of the
Company on Form 10-K for the period ended October 31, 2013 (the “Report”) that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
Dated: January 13, 2014
By
/s/ Timothy Barry
Timothy Barry, President and Chief Executive Officer
(Principle Executive Officer)
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of
Chapter 63 of Title 18 of the United States Code). It shall not be deemed filed for purposes of Section 18 of the Securities Exchange
Act of 1934 (15 U.S.C. Section 78r) or otherwise subject to the liability of that section. It shall also not be deemed incorporated by
reference into any filing under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except
to the extent that the Company specifically incorporates it by reference.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the
undersigned officer of Silver Bull Resources, Inc. (the “Company”) does hereby certify with respect to the Annual Report of the
Company on Form 10-K for the period ended October 31, 2013 (the “Report”) that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
Dated: January 13, 2014
By
/s/ Sean Fallis
Chief Financial Officer
(Principal Accounting and Financial Officer)
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of
Chapter 63 of Title 18 of the United States Code). It shall not be deemed filed for purposes of Section 18 of the Securities Exchange
Act of 1934 (15 U.S.C. Section 78r) or otherwise subject to the liability of that section. It shall also not be deemed incorporated by
reference into any filing under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except
to the extent that the Company specifically incorporates it by reference.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.