72316--3/31/2009--NORD_RESOURCES

related topics

{loss, insurance, financial}

{gas, price, oil}

{stock, price, share}

{competitive, industry, competition}

{stock, price, operating}

{cost, contract, operation}

{cost, regulation, environmental}

{interest, director, officer}

{tax, income, asset}

{personnel, key, retain}

{control, financial, internal}

{capital, credit, financial}

{debt, indebtedness, cash}

{regulation, change, law}

{cost, operation, labor}

Risks Related to Our Company We have a history of losses, and our future profitability will depend on the successful operation of the Johnson Camp Mine, which cannot be assured. The start-up of the Johnson Camp Mine and development of new mining operations on the Johnson Camp property will continue to require the commitment of substantial resources. Unforeseen conditions may affect our mining and processing efficiency, and we may not be able to execute the leaching operation as planned if we do not maintain proper control of ore grade. We may never achieve our production estimates since they are dependent on a number of assumptions and factors beyond our control. A major increase in our input costs, such as those related to acid, electricity, fuel and supplies, may have an adverse effect on our financial condition. Shortages of sulfuric acid, electricity and fuel, may have an adverse effect on our financial condition. Continuation of our mining production is dependent on the availability of a sufficient water supply to support our mining operations. Our estimates of reserves are inherently subject to error, particularly since we have no recent operating history on which to base such estimates. Our actual results may differ due to unforeseen events and uncontrollable factors that can have significant adverse impacts. Our estimates of reserves are based in large part on sampling data produced by third parties and on amounts of metallurgical testing that are less extensive than normal. In addition, our expected copper recovery rates at the Johnson Camp Mine exceed historical experience at the property. There is no assurance that we will be able to meet these expectations and projections at an operational level. Copper recovery rates for approximately 15% of our estimated total reserves may be less than optimal due to the presence of copper sulfide mineralization below the elevation of 4,560 feet. We have evaluated the commercial viability of the Johnson Camp Mine based on an estimate of ore reserves that is premised on a geologic resource model and estimate previously prepared that was based largely on drilling, sampling and assay data that had been developed by Cyprus Mines Corporation, Arimetco Inc. and Summo U.S.A. Corporation, the accuracy of which cannot be assured. Cyprus, Arimetco and Summo used different approaches to drilling, sampling and assay analysis, with the result that their respective results may not be comparable and thereby increase the risk of an overestimation of ore reserves. Limited sampling work has been performed at the Johnson Camp Mine, and Bikerman Engineering Technology Associates concluded that it is therefore not possible at this time to verify the entire drill hole electronic database used for the current resource model and ore reserve estimates. Bikerman Engineering Technology Associates has largely assumed the reasonableness and accuracy of the drilling, sampling and assay methodologies and data which constitute a fundamental variable input in the feasibility study. Our estimate of ore reserves at the Johnson Camp Mine is based on total copper assays rather than on acid soluble copper assays and our expectations with respect to copper recovery are based on results of metallurgical testing that may not be duplicated in larger scale tests under onsite conditions or during production. As a result, there is a risk that we may have over estimated the amount of recoverable copper. We will require additional permits and renewals of permits to reactivate the Johnson Camp Mine, the availability of which cannot be assured. We have incurred substantial debt and have granted a security interest in our assets. If we are unable to repay our loans when they become due, the lenders would be entitled to realize upon their security by taking control of all or a portion of our assets. We may require additional financing to complete the ramp up of operations at the Johnson Camp Mine, the availability of which cannot be assured. Our indebtedness, as well as the current global recession, disruption in financial markets and lower copper prices generally, could, among other things, impede our access to capital or increase our cost of capital, which would have an adverse effect on our ability to fund our working capital and other capital requirements. Title to the Johnson Camp property may be subject to other claims. We do not insure against all risks, and we may be unable to obtain or maintain insurance to cover the risks associated with our operations at economically feasible premiums. Losses from an uninsured event may cause us to incur significant costs that could have a material adverse effect upon our financial condition. We compete with larger, better capitalized competitors in the mining industry. This may impair our ability to maintain or acquire attractive mining properties, and thereby adversely affect our financial condition. We are dependent on our key personnel, and the loss of any such personnel could adversely affect our Company. In order to be successful during start-up and into production, we will have to expand and maintain our workforce. We may not be successful in recruiting the necessary personnel, or in managing the new challenges that we will face with any significant growth. The actual costs of reclamation are uncertain, and any additional amounts that we are required to spend on reclamation may have a material adverse effect on our financial condition. Our directors and officers may have conflicts of interest. New legislation, including the Sarbanes Oxley Act of 2002, may make it difficult for us to retain or attract officers and directors. There are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected. Our officers and directors, and three shareholders holding 10% or more of our common stock, hold a significant amount of our issued and outstanding stock which may limit non affiliated stockholders to influence corporate matters. Future sales of our common stock may depress our stock price thereby decreasing the value of your investment. The securities markets in the United States and Canada have experienced a high level of price and volume volatility recently, and the market price of our securities have also experienced wide fluctuations There can be no assurance that continual fluctuations in our share price will not occur. If we fail to obtain a listing on an established stock exchange, you may be subject to U.S. federal income tax on the disposition of your securities. We have not obtained a tax opinion to the effect that there has not been a change of control either during the time preceding the completion of our unregistered special warrant offering in September 2007, or immediately following conversion of the special warrants into the underlying shares of common stock and warrants. If a change in control is deemed to have occurred, our Company may not be able to fully utilize our net operating loss carry forwards. Broker dealers may be discouraged from effecting transactions in our common shares because they are considered a penny stock and are subject to the penny stock rules. This could severely limit the market liquidity of the shares. In the event that an investment in our shares is for the purpose of deriving dividend income or in expectation of an increase in market price of our shares from the declaration and payment of dividends, the investment will be compromised because we do not intend to pay dividends. Risks Related to Our Industry The feasibility of our mine plan is based on certain assumptions about the sustainability of the current price of copper. We may be adversely affected by fluctuations in copper prices. Our operations will involve the exploration, development and production of copper and other metals, with the attendant risks of damage to or loss of life or property and legal liability. Government regulation impacting the mining industry may adversely affect our business and planned operations. Certain groups opposed to mining may interfere with our efforts to reactive the Johnson Camp Mine. Our operations are subject to environmental risks and environmental regulation. Our failure to manage such risks or comply with such regulation will potentially expose us to significant liability. Our failure to contain or adequately deal with hazardous materials may expose us to significant liability for which we are not insured.

Full 10-K form ▸

72316--3/31/2009--NORD_RESOURCES_CORP