SEC Company Response from DYNARESOURCE, INC. (DYNR) (CIK 0001111741) (DYNR) — Nov 14, 2012
DYNARESOURCE, INC. (DYNR) (CIK 0001111741)
Date: Nov. 14, 2012 · CIK: 0001111741 · Accession: 0001121781-12-000343
AI Filing Summary & Sentiment
File numbers found in text: 000-30371
Referenced dates: October 31, 2012
Letter
Division of Corporate Finance RE: DynaResource, Inc. Form 10-K for Fiscal Year Ended December 31, 2011 Filed April 2, 2012 File No. 000-30371
Dear Mr. Reynolds:
We received your letter dated October 31, 2012 with comments to the referenced Annual Report on Form 10-K for DynaResource, Inc. (the “Company”), File No. 000-30371. We have restated the Commission’s comments below and have included our responses to each comment.
General
1. We note that you disclose mineral resources throughout your filing. As a company incorporated in Delaware, the provisions in Industry Guide 7 preclude the use of any terms other than proven or probable reserves for disclosure in filings with the United States Securities and Exchange Commission, pursuant to paragraph (b)(5)(3) of Industry Guide 7. Please substantially revise your filing and remove all mineral resource disclosure.
Response: By way of background, the Company formally became a British Columbia “reporting issuer” and, consequently, subject to the Canadian securities disclosure regime, in February of this year. More precisely, under the laws of British Columbia, the Company is now subject to BC Instrument 51-509, entitled “Issuers Quoted in the U.S. Over-the-Counter Markets” and under Section 1 of BC Instrument 51-509 is now an “OTC reporting issuer” in British Columbia.
OTC reporting issuers are required to comply with various Canadian securities laws. One of such laws is National Instrument 43-101 (“NI 43-101”), entitled “Standards of Disclosure for Mineral Projects.” Required disclosures covered by NI 43-101 include reporting of mineral resources.
Both BC Instrument 51-509 and NI 43-101 are “foreign” law.
***
The instructions to paragraph (b)(5) of Industry Guide 7 make clear that mineral resource estimates are an appropriate subject for disclosure if “such information is required to be disclosed by foreign or state law . . . .” The reporting of mineral resources is indeed required of the Company, by virtue of its status as an OTC reporting issuer under Canadian law. Accordingly, the Company respectfully does not agree with the Commission’s comment that removal of mineral resource disclosure from the Form 10-K is appropriate.
The Company will continue to abide by the requirements of BC Instrument 51-509 and NI 43-101 in order to maintain its status as a fully-compliant OTC reporting issuer under Canadian law.
2. We note that you have included a general disclaimer regarding Canadian mineral resource and mineral reserve reporting standards on page 4 of your disclosure. This appears to be a disclaimer that Canadian incorporated companies include in their United States filings and is not applicable to companies incorporated in the United States. Please advise.
Response: Page 4 of the Company’s Form 10-K contains a section under the heading “IMPORTANT NOTE REGARDING CANADIAN DISCLOSURE STANDARDS” to describe the Canadian securities disclosure regime which is referenced in the response to comment #1, immediately above. As a point of information, the disclosure regime is not limited to Canadian public companies, but extends to foreign (that is, non-Canadian) public companies, including those which have become subject to subject to BC Instrument 51-509.
The Company is subject to BC Instrument 51-509, is an “OTC reporting issuer” in British Columbia, and is subject to the Canadian securities disclosure regime.
3. The terms ore and ore grade are generally synonymous with the term reserve pursuant to paragraph (a)(1) of Industry Guide 7. Since you do not have a mineral reserve as defined in paragraph (a) of Industry Guide 7, please remove the term ore from your disclosure.
Response: The Company will update its disclosure via an amendment to the Form 10-K, to remove the term “ore” from its disclosure.
Item 2 Properties page 15
4. We note your disclosure in this section, referring to mines and other mineral properties that exist in the proximity of your property. Such disclosure may cause investors to infer that your property also has commercial mineralization, because of its proximity to these mines and properties. Please describe only geology, history, or exploration results that are directly related to the properties that your company has the right to explore or mine. Accordingly, remove information about any mines, prospects, adjacent or analogous properties, deposits, occurrences, or exploration activities by other companies operating in or near your properties and instead focus the disclosure solely on your company’s property.
Response: The Company will update its disclosure via an amendment to the Form 10-K, to remove from its disclosure references to other mineral properties that exist in the proximity of the Company’s property.
5. For each of your properties please provide a clear statement that the property is without known reserves and the proposed program is exploratory in nature, pursuant to paragraph (b)(4)(i) of Industry Guide 7.
Response: The Company will update its disclosure via an amendment to the Form 10-K, to provide a clear statement that the property is without known reserves and that currently, the Company’s drilling program is exploratory in nature. The Company proposes the following text:
No Known Reserves
The SJG property is without known reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.
The quantity and grade of the reported “inferred resources” in the mineral resource estimate contained in this Form 10-K are estimates only. There has been insufficient exploration to define any mineral reserves on the property, and it is uncertain if further exploration will result in discovery of mineral reserves.
Currently, the Company’s drilling programs are exploratory in nature.
For the mineral resource estimate contained in this Form 10-K, a cutoff grade of 2.0 gpt was selected assuming the mineral deposit will be mined by a highly selective underground operation with small equipment.
6. Please provide an overview of the exploration and mining permit requirements for companies operating in Mexico. Include in you overview the permits required to explore or mine, any fees or bonding requirements necessary to explore or mine, the Government agencies responsible for any applicable permits, and a discussion pertaining to the time frame to obtain any permits or approvals to explore or mine.
Response: The Company will update its disclosure via an amendment to the Form 10-K, to add the following proposed text:
Overview of the exploration and mining permit requirements for companies operating in Mexico
A. In respect of permit requirements for mineral exploration and mining in Mexico, the most relevant applicable laws, regulations and official technical norms are the following: the Federal Mining Act, and its Regulations, the Federal Environmental Protection and Ecological Equilibrium Act, and its Regulations, the Federal Sustainable Forestry Development Act and its Regulations, the Federal Explosives and Firearms Act, the National Waters Act and the Mexican Official Norm 120.
B. To carry out mineral exploration
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CORRESP
1
filename1.htm
DynaResource,
Inc.
222
W. Las Colinas Blvd.
Suite
744 East Tower
Irving,
Texas 75039
(972)
868-9066
November 14, 2012
Mr. John Reynolds
Assistant Director
Division of Corporate Finance
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
RE:
DynaResource, Inc.
Form 10-K for Fiscal Year Ended December 31, 2011
Filed April 2, 2012
File No. 000-30371
Dear Mr. Reynolds:
We received
your letter dated October 31, 2012 with comments to the referenced Annual Report on Form 10-K for DynaResource, Inc. (the “Company”),
File No. 000-30371. We have restated the Commission’s comments below and have included our responses to each comment.
General
1. We note
that you disclose mineral resources throughout your filing. As a company incorporated in Delaware, the provisions in Industry
Guide 7 preclude the use of any terms other than proven or probable reserves for disclosure in filings with the United States
Securities and Exchange Commission, pursuant to paragraph (b)(5)(3) of Industry Guide 7. Please substantially revise your filing
and remove all mineral resource disclosure.
Response:
By way of background, the Company formally became a British Columbia “reporting issuer” and, consequently, subject
to the Canadian securities disclosure regime, in February of this year. More precisely, under the laws of British Columbia, the
Company is now subject to BC Instrument 51-509, entitled “Issuers Quoted in the U.S. Over-the-Counter Markets” and
under Section 1 of BC Instrument 51-509 is now an “OTC reporting issuer” in British Columbia.
OTC
reporting issuers are required to comply with various Canadian securities laws. One of such laws is National Instrument 43-101
(“NI 43-101”), entitled “Standards of Disclosure for Mineral Projects.” Required disclosures covered
by NI 43-101 include reporting of mineral resources.
Both BC Instrument
51-509 and NI 43-101 are “foreign” law.
***
1
The instructions
to paragraph (b)(5) of Industry Guide 7 make clear that mineral resource estimates are an appropriate subject for disclosure if
“such information is required to be disclosed by foreign or state law . . . .” The reporting of mineral resources
is indeed required of the Company, by virtue of its status as an OTC reporting issuer under Canadian law. Accordingly, the Company
respectfully does not agree with the Commission’s comment that removal of mineral resource
disclosure from the Form 10-K is appropriate.
The Company
will continue to abide by the requirements of BC Instrument 51-509 and NI 43-101 in order to maintain its status as a fully-compliant
OTC reporting issuer under Canadian law.
2. We note
that you have included a general disclaimer regarding Canadian mineral resource and mineral reserve reporting standards on page
4 of your disclosure. This appears to be a disclaimer that Canadian incorporated companies include in their United States filings
and is not applicable to companies incorporated in the United States. Please advise.
Response:
Page 4 of the Company’s Form 10-K contains a section under the heading “IMPORTANT NOTE REGARDING CANADIAN DISCLOSURE
STANDARDS” to describe the Canadian securities disclosure regime which is referenced in the response to comment #1, immediately
above. As a point of information, the disclosure regime is not limited to Canadian public companies, but extends to foreign (that
is, non-Canadian) public companies, including those which have become subject to subject to BC Instrument 51-509.
The Company
is subject to BC Instrument 51-509, is an “OTC reporting issuer” in British Columbia, and is subject to the Canadian
securities disclosure regime.
3. The terms
ore and ore grade are generally synonymous with the term reserve pursuant to paragraph (a)(1) of Industry Guide 7. Since you do
not have a mineral reserve as defined in paragraph (a) of Industry Guide 7, please remove the term ore from your disclosure.
Response:
The Company will update its disclosure via an amendment to the Form 10-K, to remove the term “ore” from its disclosure.
Item 2 Properties page 15
4. We note
your disclosure in this section, referring to mines and other mineral properties that exist in the proximity of your property.
Such disclosure may cause investors to infer that your property also has commercial mineralization, because of its proximity to
these mines and properties. Please describe only geology, history, or exploration results that are directly related to the properties
that your company has the right to explore or mine. Accordingly, remove information about any mines, prospects, adjacent or analogous
properties, deposits, occurrences, or exploration activities by other companies operating in or near your properties and instead
focus the disclosure solely on your company’s property.
Response:
The Company will update its disclosure via an amendment to the Form 10-K, to remove from its disclosure references to other mineral
properties that exist in the proximity of the Company’s property.
2
5. For each
of your properties please provide a clear statement that the property is without known reserves and the proposed program is exploratory
in nature, pursuant to paragraph (b)(4)(i) of Industry Guide 7.
Response:
The Company will update its disclosure via an amendment to the Form 10-K, to provide a clear statement that the property is without
known reserves and that currently, the Company’s drilling program is exploratory in nature. The Company proposes the following
text:
No Known Reserves
The SJG property
is without known reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.
The quantity
and grade of the reported “inferred resources” in the mineral resource estimate contained in this Form 10-K are estimates
only. There has been insufficient exploration to define any mineral reserves on the property, and it is uncertain if further exploration
will result in discovery of mineral reserves.
Currently, the
Company’s drilling programs are exploratory in nature.
For the mineral
resource estimate contained in this Form 10-K, a cutoff grade of 2.0 gpt was selected assuming the mineral deposit will be mined
by a highly selective underground operation with small equipment.
6. Please
provide an overview of the exploration and mining permit requirements for companies operating in Mexico. Include in you overview
the permits required to explore or mine, any fees or bonding requirements necessary to explore or mine, the Government agencies
responsible for any applicable permits, and a discussion pertaining to the time frame to obtain any permits or approvals to explore
or mine.
Response:
The Company will update its disclosure via an amendment to the Form 10-K, to add the following proposed text:
Overview
of the exploration and mining permit requirements for companies operating in Mexico
A. In
respect
of permit
requirements
for
mineral
exploration
and
mining
in Mexico,
the
most
relevant
applicable
laws,
regulations
and
official
technical
norms
are
the
following:
the
Federal
Mining
Act,
and
its
Regulations,
the
Federal
Environmental
Protection
and
Ecological
Equilibrium
Act,
and
its
Regulations,
the
Federal
Sustainable
Forestry
Development
Act
and
its
Regulations,
the
Federal
Explosives
and
Firearms
Act,
the
National
Waters
Act
and
the
Mexican
Official
Norm
120.
B. To
carry
out
mineral
exploration