Brookmount Explorations Inc.

What they do

The company holds a 100% beneficial interest in the Mercedes 100 property, consisting of seven mineral claims in the Central Cordillera of the Peruvian Andes. It has not generated revenue and operates as an exploration-stage enterprise. Its only subsidiary, Brookmount Explorations, Inc. SAC, is an inactive shell company in Peru. Shares trade on the OTC-BB under BMXI and on the Berlin and Frankfurt exchanges under B6T.

Revenue drivers

• No revenue-generating operations — The company has no producing mines or revenue; all activities are exploration-stage.
• Mercedes 100 property — The sole mineral property is the Mercedes 100 base and precious metal (Ag, Au) property in Peru, which remains at the exploration stage with no defined reserves.
• 722161 B.C. option (terminated) — A 2006 option to acquire 722161 B.C. Ltd, which held a 56% interest in Rock Creek area claims in British Columbia, was terminated in 2008 after default.

Recent performance

For the nine months ended August 31, 2010, the company earned no revenues and incurred operating expenses of $207,436, down from $259,176 in the same 2009 period. Related party transactions totaled $183,880, including $90,000 in consulting fees, $90,000 in management fees, and $3,880 in interest on loans. As of August 31, 2010, $414,033 was due to the President and CEO and a private company controlled by him for cash loans, fees, and expenses. The company remains in the exploration stage with no revenue.

Strategy

Management's near-term plan is to complete a secondary exploration program on the Mercedes 100 property at an estimated cost of $250,000. It also anticipates spending $60,000 on professional fees, $120,000 on management fees, $120,000 on consulting fees, $40,000 on travel, $40,000 on promotional expenses, and $40,000 on other administrative expenses over the next 12 months, for total expenditures of $670,000. The company states it cannot proceed without additional financing and anticipates equity financing from common stock sales or director loans, but has no arrangements in place.

Risks

• No revenue or operating history — The company has never earned revenue and is an exploration-stage enterprise with no defined mineral reserves.
• Need for additional financing — Management states that without additional financing, the company cannot proceed with its exploration program or meet administrative expenses.
• Related party dependence — As of August 31, 2010, $414,033 was owed to the President and CEO and a private company controlled by him, creating dependence on related-party support.
• Terminated option agreement — The 2006 option to acquire 722161 B.C. Ltd was terminated on April 30, 2008, after the company failed to cure a default, and approximately $80,000 remains recorded as a liability.

Outlook

Management plans to complete a secondary exploration program on the Mercedes 100 property and has budgeted $670,000 for total expenditures over the next 12 months. The company expects to fund these activities through equity financing or director loans but has no arrangements in place. Without additional funding, the company will be unable to proceed with its exploration or administrative plans.