Marvion Inc. 10-K

ITEM 1. BUSINESS Overview We are an exploration stage company and that there is no assurance that a commercially viable mineral deposit exist on any of our properties and that further exploration will be required. Our exploration target is to find exploitable minerals on our properties and to raise adequate funding to begin processing our land. Our success depends on achieving that target and becoming cash flow positive once production begins. There is the likelihood of our mineral claims containing little or no economic mineralization or reserves of gold and other minerals. There is the possibility that our claims do not contain any reserves and funds that we spend on exploration will be lost. Even if we complete our current exploration program and are successful in identifying a mineral deposit, we will be required to expend substantial funds to bring our claims to production. We are unable to assure you we will be able to raise the additional funds necessary to implement any future exploration or extraction program even if mineralization is found. It is our objective in fiscal year 2014 to identify mineral prospect properties of merit, conduct preliminary exploration work, and if results are positive, to process mineral resources through a market where we believe capital is transitioning to the safety of gold. Our management contends that this business model is timely in a world of financial and currency instability with escalating mineral demand. However, as the landscape for gold changed in April of 2013, raising adequate capital became much more difficult to secure at a reasonable rate. To ensure the viability of the Company, management entered into an asset purchase agreement with Gunner Gold LLC, which closed in September 2013. The asset purchase agreement allows the Company to retain critical assets such as our mining claim to the land of Bureau of Land Management (“BLM”) and the patented Hull Lode claim. It also grants a royalty to the Company on revenues produced on the BLM land while giving the Company 3.3 million units of Gunner Gold, LLC. Our areas of exploration are in geopolitically stable North American areas. We have acquired 3 sets of mineral properties in the state of Arizona. The first is federal mining claims on BLM land totaling 435 acres. The second was 130.76 acres of patented land we leased for an initial term of two years with an option to buy from Judgetown LLC. This lease option to the Judgetown LLC patented property has been sold to Gunner Gold, LLC in September 2013. This relieved the Company of a large and growing debt to Judgetown LLC. The lease agreement with Judgetown was effective on October 15, 2012 and was sold in September 2013. The third property is referred to as the Hull land and is approximately 20 acres of patented land which we have purchased with funds borrowed from Freedom Boat and remains in Bonanza’s possession but is being leased to Gunner Gold LLC for 2 years commencing in September 2013. The Company also sold its Yukon 25 plant to Gunner Gold, LLC. Bonanza Goldfields Corp also retired certain debt with proceeds from the asset purchase agreement. This investment into Gunner Gold, LLC and the reduction of debt will allow us to redefine a corporate strategy in light of the underperformance of the gold mining industry in 2013. Management believes that the current structure allows investors to benefit from a rebound in gold but in the event that the gold price remains at current levels the Company now has the flexibility to examine entering other businesses. 4 Historical Background: The Judgetown lease, with an effective date of October 15, 2012, was executed on or before September 30, 2012 between our Company and Judgetown LLC, an Arizona Limited Liability Company located in Arizona. The leased premises consist of 130.76 acres in the county of Yavapai, Arizona in the Date Creek Mountain range. The lease is exclusive to the Company and our successors and assigns all of Judgetown LLC’s interest in and to all mining rights and minerals beneath the surface of, within, or that may be produced from the premises. The lease granted the following to us for a period of two years unless terminated pursuant to the lease; Mining and Access Rights, Cross Mining, Commingling, Deposit of Waste Materials, Treatment and Water Rights. The lease obligation, as amended, is $320,000 for the period commencing on January 15, 2013. An option to purchase the land was also granted for a price of $1,500,000 less lease payments. The lease with an option to purchase was amended on February 1, 2013 to reflect a new owner and to amend the payment schedule and amount. As of October 2013,our leased lands consist of 38 lode claims covering about 455 acres of patented, private property claims and BLM claims in the Date Creek Mountains, Arizona consisting of both alluvial and mineralized quartz deposits, as well as the presence of certain rare earth elements. A Preliminary Geological Survey as well as subsequent testing and assays of the leased claims were prepared by Auric Resources International, Inc. of Wickenburg, Arizona. Shareholders can access the report and test results at our website: www.bonanzagoldfields.com (such website and its contents are not to be incorporated by reference to this report). Highlights from the report include: ● The large land package with widespread areas of anomalous gold values; ● Although some preliminary testing has been done on portions of the property, the majority of the land package has virgin placer gravels and large quartz veins that have never been explored or tested. The geologic setting of the property is favorable for the concentration of placer gold in the local gravels that occur in drainage channels and elevated benches and for lode gold that occurs within the early Proterozoic granitic rocks as auriferous quartz fissure veins with locally abundant sulfides and iron oxides. ● Auriferous quartz and quartz-sulfide veins occur on the leased claims. These veins ranged up to several feet in width and have strike lengths ranging from hundreds to thousands of feet. ● Prior to commencing the survey, extensive samplings were analyzed locally at multiple depths demonstrating the potential for high grade gold findings throughout the property. Modern access for heavy equipment is already in place through Bonanza’s privately constructed roads, and rail is localized. Unique features appear ubiquitous throughout the immediate area, including greenstone dike extensions, placer gravel deposits, and vestiges of numerous pre-historic waterfalls. Additionally, lode gold possibilities exist due to the extensions of schist and mineralized quartz veins in the immediate area of the Congress Mine. Bonanza management believes the alluvial deposits originate from two ancient rivers that flowed in opposing directions during separate geological periods. ● Our most recent gold assays occurred during the month of July 2012 and were surface level rock chip assays on the Company's Bureau of Land Management (BLM) claims located near the Piedmont Mine area. 5 ● The assays were completed based on the geological teams' recommendation to study the Piedmont Mine. Bonanza's geological team staked out and acquired the Piedmont in December 2011 as part of the planned leased claims expansion. The assays were completed at a third party globally recognized assayer. ● Table 1: Surface area rock chip samples on our BLM land claims in the Piedmont Mine area TARANTULA Au (Fire) Au (Fire 2) Au (Fire 2) Control # ppb Grams/per ton Ounces/per ton 681 >3000 20.2 0.65 682 >3000 45.5 1.46 683 52 n/a n/a 684 47 n/a n/a 685 13 n/a n/a *Assays reported in grams and ounces per ton **Conversion based on 31.1 grams = 1 troy ounce of gold Rare Earth Metal Tests: ● The Company also tested for the most prevalent and critical rare earth metals (REM) in the Arizona geographic region, which are Cerium, Lanthanum, Scandium, Yttrium. The tests proved positive for all four rare earth elements. The Company is now planning future tests for the other 13 critical rare earth elements and for estimates of concentration. The plan is to test for the remaining 13 metals in Canadian testing facilities where more advanced analysis can be performed. ● Major Rare Earth Metals Uses (listed by metal): ● Cerium is used in auto catalysts, petroleum refining, and in metal alloys. ● Lanthanum is used in hybrid engines and metal alloys. ● Scandium is used in sports equipment, the firearms industry and dental applications. ● Yttrium is used in red color, fluorescent lamps, ceramics, and as an agent in metal alloys with applications to superconductors and medical devices. We expanded our geological footprint with the acquisition of the Piedmont Mine, gold and silver mine in operation until 1940. The Piedmont Mine has been deemed by the Bonanza geological team a strategic addition to leased claims. The acquisition expands the geological footprint to 38 lode mining claims covering about 600 acres of contiguous property. There are gold-bearing quartz fissure veins that closely follow “greenstone” (andesite or diabase) dikes that occur along east-west and northwest-southeast trending structures in early Proterozoic granitic rocks. The veins range from a few inches to several feet in width, with up to several hundred feet and unknown depth. The mineralogy of the veins consists of auriferous quartz with silver and varying amounts of sulfides, primarily pyrite with smaller amounts of galena, chalcopyrite, and sphalerite, and locally molybdenite. Hematite is locally prevalent as masses and relic structures formed from oxidation of the pyrite. The highest grade gold is generally associated with the highest concentrations of pyrite. 6 We have not completed a Canadian NI 43-101 report or an American equivalent and do not know what our proven reserves are, but we are in the process of doing an internal resource estimate based on the placer material run to date and the assays we have completed and are in the process of completing on our load material. This will include our rock chip analysis that can be used to estimate load material and is being conducted by our internal geologist and we are using an accredited external assayer in Prescott, Arizona named Copper State Labs. Although some preliminary testing has been done on portions of the property, the majority of the land package has virgin placer gravels and large quartz veins that have never been explored or tested. Additional exploration (mapping, sampling, bulk-sampling geophysics, drilling, etc.) must be conducted in order to determine the areal extent, volumes, grades, and values of auriferous quartz veins and gravels within the expanded claim block. The large land package with widespread areas of anomalous gold values; proximity to the Congress Mine; large iron oxide rich quartz veins which exhibit mineralogic and structural similarities to the Congress, Niagra, Queen of the Hills, Golden Wave and other mineralized, economic vein systems in the area; and the presence of placer gold in widespread gravels indicates that the Tarantula Property may host a large, potentially economic gold deposit and undoubtedly represents an excellent exploration target with potential for both placer and lode gold production from auriferous placers and veins. There was some surface disturbance before Bonanza Goldfields acquired the property. There are a few existing adits and test pits, and a network of roads built by the previous owner who was selling boulders to housing developments. There is no known contamination of the area. The mining activity appears to be limited to small adits and test pits. Remediation of the site will be an ongoing process. Excavations will first be filled with the oversize material which has been separated by grizzly from the bank run feed materials from each excavation. Finally, the upper 6” - 12” of soil, which has been stored during initial site preparation, will be placed on top of the oversize materials in order to enhance revegetation of the area. Care will be taken to prevent erosion on slopes, and where necessary runoff will be diverted by water bars and terracing. All improved access roads will be graded to natural contour and water bars will be utilized to prevent erosion. Since some of the area of operations is near a natural drainage, efforts will be taken to ensure the natural flow is restored upon completion of the operation. A breakdown of the exploration timetable and budget, including estimated amounts that will be required for each exploration activity, such as geophysics, geochemistry, surface sampling, drilling, etc. for each prospect are as follows: The timetable will depend on the availability of financing. The exploration plan would begin with a surface sampling program estimated to take 3 weeks and to cost approximately $35,000 to complete. Multi-element analyses will be performed on each sample and the geochemical analyses along with the local geology and the visible outcrops of mineralized quartz would be used to determine the best drill targets. The analyses and interpretation of the data will take an estimated 6 weeks to complete at a cost of $25,000. Assuming a cost of $50 per foot of core drilling, 8 drill targets, and an average depth of 500 feet, the drilling program will cost approximately $200,000. Our first phase is to set up the plant and then run placer material and test the results (including rock chip samples) to obtain an internal resource estimate on our patented properties. Also, we plan to obtain all necessary licenses to operate on the BLM land. Our second phase would be to move as much placer volume through our plant as possible if the placer levels are economical and to expand that plant to have significantly more operating volume. Third, we plan to secure financing for a load operation to add to our placer capacity. If placer material is not economical and load tests to be more economical then we plan to move to load given financing is available. 7 On September 20, 2013, we entered into an Amended and Restated Asset Purchase Agreement with Gunner Gold, LLC. Pursuant to the terms of Amended and Restated Asset Purchase Agreement, Gunner Gold, LLC has agreed to purchase certain assets and assume certain liabilities from us for a purchase price of 3,300,000 units of Gunner Gold, LLC stock. We also granted Gunner Gold, LLC the right to conduct mining operations on our BLM properties with the option to acquire the mineral rights for 700,000 additional units of Gunner Gold, LLC’s stock. The Company will receive 5% of the net proceeds, after the payment of all maintenance costs, earned by Gunner Gold from the mining operation on BLM properties. The Company received $307,500 at the closing, part of which was used to completely retire the Tonaquint Inc. debt and pay other obligations. Gunner Gold has agreed to pay $339,500 over a period of one year to retire other debts of the Company. On October 4, 2013, we entered into a Term Sheet with Tonaquint wherein Tonaquint will loan the Company up to $100,000. The funds will be used to pay the cost related to the Company’s SEC filings. The Company is still finalizing the term with Tonaquint and has not yet signed a final agreement. Description of work completed on the property and its present condition There has been significant work completed on the property. First, the roads have been improved to be completely usable for all types of equipment such as loaders, dump truck, back hoes, all types of cars, and even larger scale trucks. Second, a water retention pond holding just under 1 million gallons of water and currently between 700,000 – 800,000 gallons was created. Third, a gold processing plant has been installed which is specifically a Goldfield International Yukon 25 plant and finishing table. Fourth, enhancement to the plant, such as a new sluice system and a staging area for placer material processing was finished. All of this was done on the Hull land which is patented property. Fifth, a slime pond was created along with a sophisticated water retention system connected between the plant and the large retention pond. Sixth, fencing around the pond for safety purposes was set up. Seventh, an additional water well to the well already on the land was drilled. This all occurred between October 2012 and December 2012 using the proceeds from sale of our common stock and proceeds from our issuance of a convertible note.. The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment The Goldfield International Yukon 25 plant was purchased new in October 2012 along with the finishing table. The plant is therefore considered by us to be in very good condition. There have been no subsurface improvements since we have been pursuing placer material since setting up the plant. Description of equipment, infrastructure, and other facilities The infrastructure has been newly established with competent personnel and functional equipment. Additionally, we have a tool shed needed for maintenance. We have two wells (one of which is solar powered) that have the capacity to pump a total of 12 gallons per minute which is adequate for our present operations. Our power supply comes from 2 generators which are on the property. Description of our sampling procedures Our geologist, Arne Stenseth, collects and maintains custody of the samples. The rock chip samples are collected as representative samples of the outcrop or vein. The rock chips are bagged and labeled. The labeled bags are sent to either Copper State Analytical Lab in Prescott, AZ or to Skyline Assayers & Laboratories in Tucson, AZ. The labs perform multi-element analyses by ICP, and gold and silver are determined by fire assay. Concentrates collected from the finishing table are also collected by Mr. Stenseth, who maintains custody of the samples. The concentrates are bagged and labeled and sent to the same laboratories as above for the same analyses. 8 Off-Balance Sheet Arrangements We do not have any 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 is material to investors. Limited Operating History; Need for Additional Capital There is no historical financial information about us on which to base an evaluation of our performance. We are an exploration stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our property, and possible cost overruns due to increases in the cost of services. To become profitable and competitive, we must conduct the exploration of our properties before we start into production of any minerals we may find. Employees As of June 30, 2013, the Company had 2 employees. WHERE YOU CAN FIND MORE INFORMATION You are advised to read this Form 10-K in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.