##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2007
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 1-11887
 CANYON RESOURCES CORPORATION
   
 þ o
  o o þ
 o þ




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##### 



CANYON RESOURCES CORPORATION
FORM 10-Q
For the Nine Months ended September 30, 2007
 TABLE OF CONTENTS
 PART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    Page 1Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    Page 17Item 3. Quantitative and Qualitative Disclosures About
Market Risk
    
    Page 28Item 4. Controls and Procedures
    
    Page 29PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    Page 30Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds
    
    Page 30Item 3. Defaults Upon Senior Securities
    
    Page 31Item 4. Submission of Matters to a Vote of
Security Holders
    
    Page 31Item 5. Other Information
    
    Page 31Item 6. Exhibits
    
    Page 31SIGNATURES
    
    Page 32Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements
   Consolidated Balance Sheets
    
    Page 2Consolidated Statements of Operations
    
    Page 3Consolidated Statement of Changes in Stockholders Equity
    
    Page 4Consolidated Statements of Cash Flows
    
    Pages 5-6Notes to Interim Consolidated Financial Statements
    
    Pages 7-16Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    Page 17Item 3. Quantitative and Qualitative Disclosures About
Market Risk
    
    Page 28Item 4. Controls and Procedures
    
    Page 29
 1




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CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  September 30,
    
    
    December 31,2007
    
    
    2006ASSETSCash and cash equivalents
    
    $
    3,751,900
    
    
    $
    1,513,700Short term investments
    
    
    500,000
    
    
    
    2,500,000Accounts receivable
    
    
    4,800
    
    
    
    47,300Metal inventories
    
    
    67,800
    
    
    
    47,300Prepaid insurance
    
    
    234,400
    
    
    
    171,700Other current assets
    
    
    119,200
    
    
    
    146,800Total current assets
    
    
    4,678,100
    
    
    
    4,426,800Property, plant and mine development, net
    
    
    9,095,700
    
    
    
    8,719,800Restricted cash
    
    
    3,323,400
    
    
    
    3,431,300Other noncurrent assets
    
    
    246,200
    
    
    
    246,700Total assets
    
    $
    17,343,400
    
    
    $
    16,824,600LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    406,800
    
    
    $
    659,000Asset retirement obligations
    
    
    1,088,200
    
    
    
    1,180,100Payroll liabilities
    
    
    122,800
    
    
    
    171,700Legal settlement accrual
    
    
    206,200
    
    
    
    343,700Other current liabilities
    
    
    22,700
    
    
    
    37,800Total current liabilities
    
    
    1,846,700
    
    
    
    2,392,300Notes payable
    
    
    825,000
    
    
    
    825,000Capital leases
    
    
    50,400
    
    
    
    65,800Asset retirement obligations
    
    
    2,777,200
    
    
    
    3,021,400Total liabilities
    
    
    5,499,300
    
    
    
    6,304,500Commitments and contingencies (note 10)Common stock ($.01 par value) 150,000,000 shares
authorized; issued
and outstanding: 53,037,800 at September 30, 2007,
and 44,161,800 at December 31, 2006
    
    
    530,400
    
    
    
    441,600Capital in excess of par value
    
    
    145,172,900
    
    
    
    140,266,900Retained deficit
    
    
    (133,859,200
    )
    
    
    (130,188,400
    )Total stockholders equity
    
    
    11,844,100
    
    
    
    10,520,100Total liabilities and stockholders equity
    
    $
    17,343,400
    
    
    $
    16,824,600
  2




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##### Table of Contents



CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUESales
    
    $
    181,100
    
    
    $
    2,400
    
    
    $
    248,300
    
    
    $
    1,008,800EXPENSESCost of sales
    
    
    170,600
    
    
    
    
    
    
    
    231,000
    
    
    
    866,600Depreciation, depletion and amortization
    
    
    11,500
    
    
    
    8,600
    
    
    
    33,200
    
    
    
    24,200Selling, general and administrative
    
    
    861,000
    
    
    
    1,005,600
    
    
    
    2,819,500
    
    
    
    2,644,300Exploration
    
    
    443,200
    
    
    
    381,800
    
    
    
    1,314,800
    
    
    
    1,115,000Accretion expense
    
    
    41,900
    
    
    
    50,700
    
    
    
    125,700
    
    
    
    152,300Gain on asset disposals
    
    
    (440,000
    )
    
    
    
    
    
    
    (404,900
    )
    
    
    1,088,200
    
    
    
    1,446,700
    
    
    
    4,119,300
    
    
    
    4,802,400Operating loss
    
    
    (907,100
    )
    
    
    (1,444,300
    )
    
    
    (3,871,000
    )
    
    
    (3,793,600
    )OTHER INCOME (EXPENSE)Interest income
    
    
    94,900
    
    
    
    119,700
    
    
    
    245,300
    
    
    
    256,000Interest expense
    
    
    (14,900
    )
    
    
    (15,700
    )
    
    
    (45,300
    )
    
    
    (42,100
    )Gain on sale of securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    882,200Gain (loss) on derivative instruments
    
    
    
    
    
    
    240,900
    
    
    
    
    
    
    
    (69,600
    )Registration rights penalties
    
    
    
    
    
    
    (102,000
    )
    
    
    
    
    
    
    (102,000
    )Other
    
    
    
    
    
    
    200
    
    
    
    200
    
    
    
    (84,400
    )80,000
    
    
    
    243,100
    
    
    
    200,200
    
    
    
    840,100Net loss
    
    $
    (827,100
    )
    
    $
    (1,201,200
    )
    
    $
    (3,670,800
    )
    
    $
    (2,953,500
    )Basic and diluted net loss per share
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.08
    )
    
    $
    (0.07
    )Basic and diluted weighted-average
shares outstanding
    
    
    53,037,800
    
    
    
    43,824,500
    
    
    
    48,164,000
    
    
    
    40,735,500
  3




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CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 Common Stock
    
    
    Capital
    
    
    
    
    
    
    TotalNumber of
    
    
    At Par
    
    
    in Excess
    
    
    Retained
    
    
    StockholdersShares
    
    
    Value
    
    
    of Par Value
    
    
    Deficit
    
    
    EquityBalances, January 1, 2007
    
    
    44,161,800
    
    
    $
    441,600
    
    
    $
    140,266,900
    
    
    $
    (130,188,400
    )
    
    $
    10,520,100Share-based compensation amortized
    
    
    52,500
    
    
    
    500
    
    
    
    291,400
    
    
    
    
    
    
    
    291,900Stock and warrants issued for cash
net of issuance costs of $247,200
    
    
    8,823,500
    
    
    
    88,300
    
    
    
    4,614,600
    
    
    
    
    
    
    
    4,702,900Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,670,800
    )
    
    
    (3,670,800
    )Balances, September 30, 2007
    
    
    53,037,800
    
    
    $
    530,400
    
    
    $
    145,172,900
    
    
    $
    (133,859,200
    )
    
    $
    11,844,100
  4




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CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months ended September 30,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (3,670,800
    )
    
    $
    (2,953,500
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation, depletion and amortization
    
    
    33,200
    
    
    
    24,200Receivable write-off
    
    
    
    
    
    
    13,800Impairment of inventory
    
    
    
    
    
    
    17,600Gain on asset dispositions
    
    
    (404,900
    )
    
    
    Gain on sale of securities
    
    
    
    
    
    
    (882,200
    )Share based compensation expense
    
    
    291,900
    
    
    
    294,900Purchase of short term investments
    
    
    
    
    
    
    (6,501,800
    )Warrant extension cost
    
    
    
    
    
    
    70,800Loss on derivative instruments
    
    
    
    
    
    
    69,600Accretion of asset retirement obligation
    
    
    125,700
    
    
    
    152,300Changes in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    42,500
    
    
    
    (13,500
    )Increase in inventories
    
    
    (20,500
    )
    
    
    (75,800
    )Increase in prepaid and other assets
    
    
    (34,600
    )
    
    
    (294,400
    )Decrease in accounts payable and accrued liabilities
    
    
    (270,700
    )
    
    
    (42,000
    )Decrease in asset retirement obligations
    
    
    (461,800
    )
    
    
    (1,056,100
    )Decrease (increase) in restricted cash
    
    
    107,900
    
    
    
    (116,600
    )Total adjustments
    
    
    (591,300
    )
    
    
    (8,339,200
    )Net cash used in operating activities
    
    
    (4,262,100
    )
    
    
    (11,292,700
    )Cash flows from investing activities:Purchases and development of property and equipment
    
    
    (678,100
    )
    
    
    (1,045,500
    )Redemption of short term investments
    
    
    2,000,000
    
    
    
    2,001,800Proceeds on asset disposition
    
    
    490,000
    
    
    
    10,000Proceeds from sale of securities
    
    
    
    
    
    
    882,200Net cash provided by investing activities
    
    
    1,811,900
    
    
    
    1,848,500Cash flows from financing activities:Issuance of stock
    
    
    4,950,100
    
    
    
    5,100,000Issuance cost
    
    
    (247,200
    )
    
    
    (302,900
    )Issuance of warrants
    
    
    
    
    
    
    357,200Payments on capital lease obligations
    
    
    (14,500
    )
    
    
    (4,900
    )Net cash provided by financing activities
    
    
    4,688,400
    
    
    
    5,149,400Net increase(decrease) in cash and cash equivalents
    
    
    2,238,200
    
    
    
    (4,294,800
    )Cash and cash equivalents, beginning of period
    
    
    1,513,700
    
    
    
    5,649,200Cash and cash equivalents, end of period
    
    $
    3,751,900
    
    
    $
    1,354,400
  5




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CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
 Supplemental disclosures of cash flow information:
 Nine months ended September 30,2007
    
    
    2006Interest paid
    
    $
    45,300
    
    
    $
    42,100Income taxes paid
    
    $
    
    
    
    $
    Supplemental disclosures of noncash financing activities:Issued 30,000 shares for option on the Suitcase/Mineral Hill properties
    
    $
    
    
    
    $
    30,300Fair value of amended warrants
    
    $
    
    
    
    $
    282,200Issued 535,000 series A warrants related placement agent fee
    
    $
    
    
    
    $
    219,300Issued 330,900 series A warrants related placement agent fee
    
    $
    50,100
    
    
    $
    Issued 992,600 series B warrants related placement agent fee
    
    $
    266,500
    
    
    $
    
  6




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. Nature of Operations and Liquidity:
        7




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2. Basis of Presentation:
 Management Estimates and Assumptions:
  
    
    mineral reserves that are the basis for future cash flow estimates;
    
    units-of-production amortization determination;
    
    completion of feasibility studies;
    
    recoverability and timing of gold production from the heap leaching process;
    
    environmental, reclamation and closure obligations;
    
    asset impairments (including estimates of future cash flows);
    
    useful lives and residual values of intangible assets;
    
    fair value of stock based compensation;
    
    fair value of financial instruments and nonmonetary transactions;
    
    valuation allowances for deferred tax assets; and
    
    contingencies and litigation.
  Consolidation Principles:
 3. Restricted Cash:
  September 30,
    
    
    December 31,2007
    
    
    2006Kendall reclamation project
    
    $
    2,379,100
    
    
    $
    2,401,300Briggs Mine
    
    
    837,400
    
    
    
    442,900Seven-Up Pete Joint Venture
    
    
    52,500
    
    
    
    553,400Reward Project
    
    
    33,700
    
    
    
    33,700Other
    
    
    20,700
    
    
    
    3,323,400
    
    
    
    3,431,300Current portion
    
    
    
    
    
    
    Noncurrent portion
    
    $
    3,323,400
    
    
    $
    3,431,300
  8




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##### Table of Contents



4. Metal Inventories:
   5. Property, Plant and Mine Development:
  As of September 30, 2007Depreciation
    
    
    Asset Value
    
    
    Accumulated
    
    
    Net BookMethod
    
    
    at Cost
    
    
    Depreciation
    
    
    ValueBuildings and equipment
    
    1 - 5 Years SL
    
    $
    5,803,600
    
    
    $
    3,931,700
    
    
    $
    1,871,900Mine development
    
    UOP(a)
    
    
    2,094,100
    
    
    
    
    
    
    
    2,094,100Mineral interest
    
    UOP
    
    
    8,751,300
    
    
    
    3,820,900
    
    
    
    4,930,400Asset retirement cost
    
    UOP
    
    
    199,300
    
    
    
    
    
    
    
    199,300$
    16,848,300
    
    
    $
    7,752,600
    
    
    $
    9,095,700
 
 (a)
    
    Unit-of-Production, or UOP, is a depreciation method that calculates depreciation expense
over the estimated proven and probable reserves of the related property. As of December 31, 2006Depreciation
    
    
    Asset Value
    
    
    Accumulated
    
    
    Net BookMethod
    
    
    at Cost
    
    
    Depreciation
    
    
    ValueBuildings and equipment
    
    1 - 5 Years SL
    
    $
    6,004,800
    
    
    $
    4,047,200
    
    
    $
    1,957,600Mine development
    
    UOP(a)
    
    
    1,637,900
    
    
    
    
    
    
    
    1,637,900Mineral interest
    
    UOP
    
    
    8,745,900
    
    
    
    3,820,900
    
    
    
    4,925,000Asset retirement cost
    
    UOP
    
    
    199,300
    
    
    
    
    
    
    
    199,300$
    16,587,900
    
    
    $
    7,868,100
    
    
    $
    8,719,800
  9




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6. Asset Retirement Obligations:
  Balance, December 31, 2006
    
    $
    4,201,500Settlement of liabilities
    
    
    (461,800
    )Accretion expense
    
    
    125,700Balance, September 30, 2007
    
    
    3,865,400Current portion
    
    
    1,088,200Noncurrent portion
    
    $
    2,777,200
 7. Notes Payable:
  Balance, December 31, 2006
    
    $
    825,000Conversions / retirements
    
    
    Balance, September 30, 2007
    
    
    825,000Current portion
    
    
    Noncurrent portion
    
    $
    825,000
   8. Outstanding Warrants:
  Range of Exercise
    
    Shares Underlying
    
    
    Weighted Average
    
    
    Weighted AveragePrices
    
    Warrants Outstanding
    
    
    Remaining Contractual Life
    
    
    Exercise Price$0.50-$1.00
    
    
    10,378,061
    
    
    3.0 years
    
    $
    0.69$1.01-$1.50
    
    
    7,155,729
    
    
    1.2 years
    
    $
    1.30Total/average
    
    
    17,533,790
    
    
    2.2 years
    
    $
    0.94
   10




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9. Equity Transactions:
     10. Commitments and Contingencies :
 (a)
    
    Kendall Mine ReclamationThe Kendall Mine operates under permits granted by the Montana DEQ. In February 2002, the
DEQ issued a decision that a comprehensive Environmental Impact Statement (EIS) was needed
for completion of remaining reclamation at Kendall. The Montana DEQ has yet to complete its
work on this EIS. The Companys estimate to achieve mine closure could be impacted by the
outcome of an agency decision following an EIS. The Company has deposited $2.2 million in
an interest bearing account with
the DEQ for reclamation at the Kendall Mine which is currently ongoing.
 11




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##### Table of Contents



(b)
    
    Briggs Mine Surety BondsThe Briggs Mine operates under permits granted by various agencies including BLM, Inyo
County, California, the California Department of Conservation, and the Lahontan Regional
Water Quality Control Board (Lahontan). The Company has posted cash and reclamation bonds
with these agencies in the amount of $4.3 million of which $4.2 million are reclamation
bonds supported by a surety. All surety bonds are subject to annual review and adjustment
and in March 2007, the Company posted a $0.2 million cash reclamation bond with Inyo County
as an inflation adjustment.In 1999, in response to a demand for an increase in collateral by the surety company who
issued the above described bonds, the Company granted a security interest in 28,000 acres of
mineral interests in Montana. The Company further agreed to make cash deposits with the
surety company totaling $1.5 million over a three year period at the rate of $0.5 million
per year, commencing June 30, 2001. The Company made a $0.3 million deposit in March 2007,
after the Company received notice from the surety that Canyon was in default of its
obligations under the collateral agreement. In June 2007, the surety company filed a civil
action in the U.S. District Court for the District of Colorado against the Company for
monies due of $1.25 million and unspecified costs, damages and legal expenses. The Company
answered the complaint in July 2007.In September 2007, the Company settled the complaint through negotiations with the surety
company. The settlement required the Company to make a $250,000 collateral deposit in early
October 2007 and additional collateral deposits totaling $751,000 no later than December 31,
2010. The Company has the option to make accelerated deposits to the collateral account upon
certain events and any accelerated deposits will be applied against the next scheduled
payment and total deposits will not exceed the additional $751,000 left to be funded as of
November 1, 2007. The suretys request for monies as collateral represents a reimbursable
deposit that is included in restricted cash to support required future reclamation of the
Briggs Mine site and therefore no liability has been accrued.(c)
    
    McDonald Gold ProjectA lawsuit was filed against the State of Montana to recover value lost due to changes in the
Montana mining law and the cancellation of mineral leases related to the Companys
wholly-owned Seven-Up Pete Joint Ventures interest in the McDonald Gold Project. Phelps
Dodge, a wholly-owned subsidiary of Freeport-McMoRan Copper & Gold Inc., retains a one-third
interest in any proceeds which may be received from the currently active takings lawsuit.In April 2006, the Companys complaint under the takings lawsuit was dismissed in U.S.
District Court for the District of Montana and the Company filed a notice of appeal to the
U.S. Court of Appeals for the Ninth Circuit. Briefs have been submitted to the U.S. Court of
Appeals for the Ninth Circuit. In addition, the Company has filed a breach of contract
complaint against the State of Montana related to the termination of the McDonald Gold
Projects state mineral leases.The takings lawsuit was heard in the U.S. Court of Appeals for the Ninth Circuit on November
7, 2007 and the results of that hearing may take up to a year to be announced.(d)
    
    Kendall Mine LawsuitsIn October 2001, a plaintiff group including members of the Shammel, Ruckman and Harrell
families filed suit in the State of Montana District Court against the Company and its
wholly-owned subsidiary, CR Kendall Corporation. The complaint alleges violation of water
rights, property damage, trespass and negligence in connection with the operation of the
Kendall Mine and seeks unspecified damages and punitive damages.
 12




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In August 2002, a Preliminary Injunction was issued in Montana District Court on behalf of
the Kendall Mine plaintiff group in connection with the Companys auction of certain mineral
rights and fee lands unrelated to the CR Kendall Corporation or its operation. In October
2002, the Court issued a Supplemental Order which sequesters any proceeds realized from the
auction until such time as the lawsuit is concluded.In February 2007, the Company entered into a settlement and release agreement with eight of
the twelve plaintiffs in this suit. The Companys share of the settlement was $0.1 million
and maintains a balance of $0.2 million recorded as a legal settlement accrual on the
consolidated balance sheet as of September 30, 2007. As of September 30, 2007, $0.2 million
is held by the Court as required by the above Supplemental Order. The Companys share of the
settlement was paid out of the funds held by the Court. The case with the remaining
plaintiffs is scheduled for trial on September 22, 2008.(e)
    
    Asset Exchange AgreementThe Adelaide and Tuscarora properties were optioned as part of the Asset Exchange Agreement
with Newmont. Under this agreement, we are required to spend a total of $3.0 million on both
projects over five years to earn our interest in the properties, including a $250,000 firm
commitment in 2007. The Company has the ability to sublease either property to third parties
to meet its obligations under the agreement. As of September 30, 2007 approximately $0.2
million has been spent during 2007.
 11. Fair Value of Financial Instruments:
  Cash and Cash Equivalents, Receivables, Short-term Investments and Restricted Cash:
 Long-term Debt:
 12. Income Taxes:
 Accounting for Uncertainty in Income Taxes
 13. Share-Based Compensation:
   13




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2007
    
    2006Expected volatility
    
    60%
    
    50%Expected option term
    
    0.8-2.5 years
    
    2.5-3.0 yearsWeighted-average risk-free interest rate
    
    4.1%-5.0%
    
    4.3%-5.0%
 Stock Options
  2007
    
    
    2006Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseNumber
    
    
    Price
    
    
    Number
    
    
    PriceOutstanding
 beginning of the year
    
    
    2,580,526
    
    
    $
    1.30
    
    
    
    1,757,526
    
    
    $
    1.77Grants
    
    
    500,000
    
    
    $
    0.70
    
    
    
    839,526
    
    
    $
    1.07Exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeitures
    
    
    (300,000
    )
    
    $
    0.84
    
    
    
    (480,000
    )
    
    $
    2.00Expirations
    
    
    (149,526
    )
    
    $
    1.77
    
    
    
    (139,526
    )
    
    $
    1.73Outstanding  end of the period
    
    
    2,631,000
    
    
    $
    1.22
    
    
    
    1,977,526
    
    
    $
    1.42Exercisable  end of the period
    
    
    2,246,000
    
    
    $
    1.26
    
    
    
    1,877,526
    
    
    $
    1.45
  14




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##### Table of Contents



Stock Grants
  Weighted-Average
    
    
    TotalAmount
    
    
    Price
    
    
    Fair ValueNonvested  beginning of the year
    
    
    202,500
    
    
    $
    0.93
    
    
    $
    188,950Grants
    
    
    117,970
    
    
    
    0.64
    
    
    
    75,001Vested
    
    
    (90,006
    )
    
    
    0.68
    
    
    
    (60,909
    )Forfeitures
    
    
    (65,464
    )
    
    
    0.90
    
    
    
    (58,842
    )Nonvested  end of period
    
    
    165,000
    
    
    $
    0.87
    
    
    $
    144,200
  14. Earnings per Share:
 Earnings per Share
 15. Recently Issued Financial Accounting Standards:
 The Fair Value Option for Financial Assets and
Financial Liabilities Fair Value Measurements.
 Fair Value Measurements
 15




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##### Table of Contents



16. Subsequent Event:
  16




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##### Table of Contents



ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview of the Third Quarter 2007 and Future Outlook
 Summary of sources and uses of cash during the quarter?
  
    
    Selling, general and administrative spending amounted to approximately $0.9 million.
 o
    
    Includes holding costs at the Briggs Mine of
$0.4 million.
 
    
    Exploration and development spending amounted to $0.4 million including amounts capitalized.
    
    Asset retirement obligation spending amounted to $0.2 million primarily for the Kendall
Mine operations and continued leach pad dewatering at the Briggs Mine.
    
    Sources of cash during the quarter included gold sales of $0.2 million and asset sales
of $0.5 million.
 What are our results of operation?
  What have we done to increase shareholder value?
      17




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##### Table of Contents



How much property and mineralized material do we now control?
  Fee
    
    FeeProperty/Location
    
    Surface
    
    Mineral
    
    Patented (b)
    
    UnpatentedBriggs Mine  California
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5,090Reward Project  Nevada
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    2,008Seven-Up Pete  Montana
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    1,390CR Nevada  Nevada
    
    
    560
    
    
    
    840
    
    
    
    
    
    
    
    6,960Industrial
Minerals   Montana
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210CR Montana  Montana
    
    
    
    
    
    
    907,943
    
    
    
    
    
    
    
    Sand Creek JV  Wyoming (a)
    
    
    8,560
    
    
    
    4,284
    
    
    
    
    
    
    
    3,397CR Kendall  Montana
    
    
    
    
    
    
    
    
    
    
    1,085
    
    
    
    Total acreage
    
    
    9,120
    
    
    
    913,067
    
    
    
    1,480
    
    
    
    19,055
 
 (a)
    
    Canyon currently controls 70% of the Sand Creek JV through the Converse JV.(b)
    
    Patented claims are owned fee simple which combine the surface and mineral estates.  MineralizedMaterial
    
    Average Gold
    
    Cut-off GoldProperty/Location
    
    (Million Tons)
    
    Grade (opt)
    
    Grade (opt)Briggs Mine  Inyo County, California
    
    
    26.99
    
    
    
    0.031
    
    
    
    0.10-0.01Cecil R  satellite deposit
    
    
    5.75
    
    
    
    0.024
    
    
    
    0.015Mineral Hill  satellite deposit
    
    
    2.31
    
    
    
    0.035
    
    
    
    0.015Suitcase  satellite deposit
    
    
    0.33
    
    
    
    0.052
    
    
    
    0.01535.38
    
    
    
    0.030Reward Project  Beatty, Nevada
    
    
    12.74
    
    
    
    0.025
    
    
    
    0.010Seven-Up Pete  Lincoln, Montana
    
    
    17.00
    
    
    
    0.035
    
    
    
    0.020Total mineralized material
    
    
    65.12
    
    
    
    0.031
  How is the Briggs re-start going?
   18




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##### Table of Contents



What progress have we made on the Briggs satellite deposits?
    What progress have we made on the Reward Project?
   What are our plans for the Seven-Up Pete property?
  What is happening on our uranium joint ventures?
  19




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##### Table of Contents



What is the status of the Companys legal cases?
 Surety Bonds
  Kendall Mine
  20




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##### Table of Contents



McDonald Takings
 (Seven-Up Pete
Venture, et al. v The State of Montana)
   Liquidity & Capital Resources
     Financing Transactions
   21




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##### Table of Contents



Debt
  Capital Expenditures
  Outstanding Warrants
  UnderlyingExpiration Date
    
    Shares
    
    
    Exercise PriceMarch 14, 2008
    
    
    2,304,726
    
    
    $
    1.03October 17, 2008 (a)
    
    
    2,536,766
    
    
    $
    0.64December 1, 2008
    
    
    1,765,503
    
    
    $
    1.30December 1, 2008
    
    
    231,000
    
    
    $
    0.76June 1, 2009
    
    
    3,085,500
    
    
    $
    1.50May 25, 2011
    
    
    7,610,295
    
    
    $
    0.70Total/average
    
    
    17,533,790
    
    
    $
    0.94
 
 (a)
    
    These represent the Series A Warrants from the May 25, 2007 private placement financing that
have an exercise date of twelve months after the effectiveness of the registration statement. The
registration statement that was filed on June 29, 2007 was declared effective on October 17, 2007. 22




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##### Table of Contents



Results of Operations  Three Months Ended September 30, 2007 versus Three Months Ended September 30, 2006
  
    
    Positive variance of $0.2 million in revenue was offset by $0.2 million negative
variance in cost of sales.
    
    Positive variance of $0.2 million in selling, general and administrative costs due
primarily to cost reduction measures.
    
    Negative variance of $0.1 million in exploration costs.
    
    Positive variance of $0.4 million for a gain on sales of excess mining equipment.
   Three Months Ended
    
    
    Three Months EndedSeptember 30, 2007
    
    
    September 30, 2006Average
    
    
    
    
    
    
    
    
    
    
    AverageGold
    
    
    Price Per
    
    
    Revenue
    
    
    Gold
    
    
    Price Per
    
    
    RevenueOunces
    
    
    Oz.
    
    
    $000s
    
    
    Ounces
    
    
    Oz.
    
    
    $000sGold sales
    
    
    265
    
    
    $
    680
    
    
    $
    180
    
    
    
    
    
    
    
    
    
    
    $
    Silver sales
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2$
    181
    
    
    
    
    
    
    
    
    
    
    $
    2
   Results of Operations  Nine Months Ended September 30, 2007 versus Nine Months Ended September 30, 2006
  
    
    Negative variance of $0.1 million in gross margin from gold sales due to the reduction
in gold sales and production as a result of the depletion of gold ounces on the leach pad.
    
    Negative variance of $0.2 million in selling, general and administrative costs due
primarily to the lack of gold production to allocate general and administrative costs.
    
    Negative variance of $0.2 million in exploration costs due to increased exploration
drilling.
    
    Positive variance of $0.4 million for a gain on sales of excess mining equipment.
 23




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##### Table of Contents




    
    Negative variance of $0.9 million related to last years gain on sales of securities.
    
    Positive variance of $0.3 million related to last years fair market adjustment on
warrant liabilities, warrant extension expense, and registration rights penalties.
   Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006Average
    
    
    
    
    
    
    
    
    
    
    AverageGold
    
    
    Price Per
    
    
    Revenue
    
    
    Gold
    
    
    Price Per
    
    
    RevenueOunces
    
    
    Oz.
    
    
    $000s
    
    
    Ounces
    
    
    Oz.
    
    
    $000sGold sales
    
    
    365
    
    
    $
    677
    
    
    $
    247
    
    
    
    1,735
    
    
    $
    579
    
    
    $
    1,005Silver sales
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    4$
    248
    
    
    
    
    
    
    
    
    
    
    $
    1,009
 Contractual Obligations
  Payments due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLong term debt obligations
    
    $
    825,000
    
    
    $
    
    
    
    $
    
    
    
    $
    825,000
    
    
    $
    Capital lease obligations
    
    
    70,700
    
    
    
    20,300
    
    
    
    50,400
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    241,100
    
    
    
    82,900
    
    
    
    158,200
    
    
    
    
    
    
    
    Purchase obligations
    
    
    1,041,400
    
    
    
    290,400
    
    
    
    500,000
    
    
    
    251,000
    
    
    
    Asset retirement
obligations
    
    
    3,865,400
    
    
    
    1,088,200
    
    
    
    2,598,900
    
    
    
    107,400
    
    
    
    70,900Total
    
    $
    6,043,600
    
    
    $
    1,481,800
    
    
    $
    3,307,500
    
    
    $
    1,183,400
    
    
    $
    70,900
 Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  24




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##### Table of Contents



Reserves and Mineralized Material:
   Impairments of Long-Lived Assets:
 Accounting for the Impairment or Disposal of
Long-Lived Assets
 Asset Retirement Obligations:
 25




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##### Table of Contents



Warrant Liability: Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Companys Own Stock Accounting for Registration
Payment Arrangements Accounting for Contingencies
 Stock-Based Compensation: Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  Income Taxes: Accounting for Uncertainty in Income Taxes
 Potential Litigation Liabilities:
 26




---



##### Table of Contents



Other Matters
 Federal Legislation
  Dividends
  Recently Issued Accounting Standards
 The Fair Value Option for Financial Assets and
Financial Liabilities Fair Value Measurements.
 Fair Value Measurements
 27




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##### Table of Contents



ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Prices
    Interest Rates
  Foreign Currency
  28




---



##### Table of Contents



ITEM 4 CONTROLS AND PROCEDURES
 DISCLOSURE CONTROLS AND PROCEDURES
   CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
   29




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##### Table of Contents



PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
   (Seven-Up Pete
Venture, et al. v The State of Montana)
   Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  30




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13(a)-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200231.2
    
    Certification of Chief Financial Officer pursuant to Rule
13(a)-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200232.1
    
    Certification of Chief Executive Officer pursuant to U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 31




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##### Table of Contents



SIGNATURES
  CANYON RESOURCES CORPORATIONDate: November 8, 2007
    
    /s/ James K. B. Hesketh

James K. B. HeskethPresident and Chief Executive Officer(Principal Executive Officer)Date: November 8, 2007
    
    /s/ David P. SuleskiDavid P. SuleskiChief Financial Officer, Treasurer and

Corporate Secretary(Principal Financial and Accounting Officer)
 32




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##### Table of Contents



EXHIBIT INDEX
 EXHIBITNUMBER
    
    DESCRIPTION31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 33