UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

Commission file Number:  0-50915

MCNAB CREEKGOLD CORP.

(Exact nameof small business issuer as specified in its charter)

 

Nevada

(State orother jurisdiction of incorporation or organization)

 

98-0343710

(I.R.S.Employer Identification Number)

 

Suite 1128,789 West Pender Street

Vancouver,B.C.  V6C 1H2

(Address ofprincipal executive offices)

 

(604)669-9330

(Issuer'stelephone number)

 

Check whether the issuer (1) filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.  [ X ] Yes  [  ] No

Indicate by check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Exchange Act).

(check one):  Yes [X  ]    No [ ]

State the number of shares outstanding of each of the issuer's classes ofcommon equity, as of the latest practicable date:

  35,859,200 common shares as at September 30, 2006

Transitional Small Business Disclosure Format (check one):  Yes [  ]    No [X ]

 

----

 

 

MCNAB CREEK GOLD CORP.

INDEX

PART 1.

FINANCIAL INFORMATION

> 
Item 1.

Financial Statements:

Balance Sheets as of March 31, 2006 and September 30, 2006

Statements of Operations for the six months ended September 30,          2006 and 2005 and the period from February 15, 2001 (Inception) to          September 30, 2006

Statement of Stockholders' Equity (Deficiency) for the period          February 15, 2001 (Inception) to September 30, 2006

Statements of Cash Flows for the six months ended September 30,          2006 and 2005 and for the period from February 15, 2001 (Inception) to          September 30, 2006

Notes to Financial Statements

Item 2

Plan of Operation

Item 3

Controls and Procedures

PART II.

OTHER INFORMATION

Item 1

Legal Proceedings

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3

Defaults Upon Senior Securities

Item 4

Submission of Matters to a Vote of Security Holders

Item 5

Other Information

Item 6

Exhibits and Reports on Form 8K

SIGNATURES
** 

MCNAB CREEK GOLD CORP.**
(An exploration stagecompany)

 

Interim FinancialStatements

(Expressed in U.S.Dollars)

 
**September 30, 2006

 

 **
(Unaudited)

 

 

 
**Index**
Balance Sheets

Interim Statements of Operations

Statement of Stockholders' Equity (Deficiency)

Interim Statements of Cash Flows

Notes to the Interim Financial Statements

 

 

 

 
**MCNAB CREEKGOLD CORP.**
(Anexploration stage company)

 

NOTES TO THEINTERIM FINANCIAL STATEMENTS

September30, 2006 

(Expressedin U.S. Dollars) 

(Unaudited)** 

1. Nature and Continuance of Operations**
The Company was formed on February 15, 2001 under the laws ofthe State of Nevada, USA and commenced operations at that time. The Company'smineral interests are in the exploration stage. The financial statements arepresented in US dollars and have been prepared by management in accordance withgenerally accepted accounting principles in the United States ("US GAAP") on agoing concern basis, which contemplates the realization of assets and thedischarge of liabilities in the normal course of business for the foreseeablefuture.

The Company has incurred a loss of $43,607 during the sixmonths ended September 30, 2006 and at September 30, 2006 has an accumulateddeficit of $278,021 and has a working capital deficiency of $28,348.  Theability of the Company to continue as a going concern is uncertain and dependantupon achieving a profitable level of operations and on the ability of theCompany to obtain necessary financing to fund ongoing operations.  The outcomeof these matters cannot be predicted at this time.

These financial statements do not give effect to anyadjustments which would be necessary should the Company be unable to continue asa going concern and therefore be required to realize its assets and dischargeits liabilities in other than the normal course of business and at amountsdifferent from those reflected in the accompanying financial statements.

The Company has not generated any operating revenues to date.Management believes that the Company has adequate funds to carry on operationsfor the upcoming fiscal year but intends to obtain additional funding byborrowing from directors and officers, who have agreed to contribute up to$50,000 as non-interest bearing loans, and through private placements. 

Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements havebeen prepared in accordance with generally accepted accounting principles in theUnited States ("US GAAP") for interim financial information and with theinstructions to Form 10-QSB of Regulation S-B. They may not include allinformation and footnotes required by US GAAP for complete financial statements.However, except as disclosed herein, there has been no material changes in theinformation disclosed in the notes to the financial statements for the yearended March 31, 2006 included in the Company's Form 10-KSB filed with theSecurities and Exchange Commission. The interim unaudited financial statementsshould be read in conjunction with those financial statements included in theForm 10-KSB. In the opinion of Management, all adjustments considered necessaryfor a fair presentation, consisting solely of normal recurring adjustments, havebeen made. Operating results for the period ended September 30, 2006 are notnecessarily indicative of the results that may be expected for the year endingMarch 31, 2007. 
****
 

 
** 

MCNAB CREEK GOLD CORP.

(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)
 

2.**Significant Accounting Policies**
Principles of Accounting

These financials statements are stated in US dollars and havebeen prepared in accordance with US GAAP. 

Mineral Property Interests

Under US GAAP mineral property exploration costs are expensedas incurred. Mineral property acquisition costs are accounted for as tangibleassets using the guidance in EITF 04-02 "*Whether Mineral Rights are Tangibleor Intangible Assets*". Management reviews the carrying value of mineralproperty costs for impairment whenever circumstances could indicate that thecarrying amount may not be recoverable. To date, the Company has impaired allacquisition costs of exploration properties pending results of its explorationwork indicating the existence and recoverability of mineral resources.

(c) Accounting Estimates

The preparation of financial statements in conformity with USGAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period.  Actual results coulddiffer from those estimates and assumptions reported amounts of revenues andexpenses during the reporting period.  Actual results could differ from thoseestimates and assumptions.

(d) Loss per Share

Loss per share is computed using the weighted average numberof shares outstanding during the period.  Diluted loss per share is equivalentto basic loss per share because there are no dilutive securities. Loss per sharefor the period ended September 30, 2005 has been adjusted to reflect the 20:1forward split of the Company's common shares effective April 30, 2006 (Note 5).

(e) Foreign Currency Translation

The Company considers the US dollar as its functionalcurrency. 

At the transaction date, each asset, liability, revenue andexpense is translated into US dollar equivalents by the use of the exchange ratein effect at that date.  At period end, monetary assets and liabilities arere-measured by using the exchange rate in effect at that date.  The resultingforeign exchange gains and losses are included in operations.

(f) Equipment

Equipment consists of computer equipment, which is recordedat cost and is depreciated using the declining balance method at a rate of 30%per annum.

 
**MCNAB CREEK GOLD CORP.

(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)
 

2.**Significant Accounting Policies (cont'd...)**
(g) Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at aspecific point in time, based on relevant information about financial marketsand specific financial instruments.  As these estimates are subjective innature, involving uncertainties and matters of significant judgment, they cannotbe determined with precision.  Changes in assumptions can significantly affectestimated fair values.

The respective carrying value of certain on-balance-sheetfinancial instruments approximated their fair value. These financial instrumentsinclude cash, accounts payable and accrued liabilities and due to a director.Fair values were assumed to approximate carrying values for these financialinstruments, since they are short term in nature.  Management is of the opinionthat the Company is not exposed to significant interest or credit risks arisingfrom these financial instruments.  The Company is operating outside of theUnited States of America and has exposure to foreign currency risk due to thefluctuation of the currency in which the Company operates and the US dollars.The Company does not use any hedging instruments.

(h) Income Taxes

The Company recognizes deferred tax liabilities and assetsfor the expected future tax consequences of events that have been recognized inthe Company's financial statements or tax returns using the liability method. Under this method, deferred tax assets and liabilities are determined based onthe temporary differences between the financial statement and tax bases ofassets and liabilities using enacted tax rates in effect in the years in whichthe differences are expected to reverse.

(i) Long-Lived Assets Impairment

The carrying value of long-lived assets with fixed ordeterminable lives are reviewed for impairment whenever events or changes incircumstances indicate the recoverable value may be less than the carryingamount. Recoverable value determinations are based on management's estimates ofundiscounted future net cash flows expected to be recovered from specific assetsor groups of assets through use or future disposition. Impairment charges arerecorded in the period in which determination of impairment is made bymanagement. 

Assets with indefinite or indeterminable lives are notamortized and are reviewed for impairment on a reporting basis using fair valuedeterminations through management's estimate of recoverable value. 

(j) Asset Retirement Obligations

The Company recognizes a liability for future retirementobligations associated with the Company's mineral properties.  The estimatedfair value of the assets retirement obligation is based on the current costescalated at an inflation rate and discounted at a credit adjusted rate.  Thisliability is capitalized as part of the cost of the related asset and amortizedover its 
**MCNAB CREEK GOLD CORP.**
(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)** 

2.**Significant Accounting Policies (cont'd...)**
(j) Asset Retirement Obligations (cont'd...)

productive life.  The liability accretes until the Companysettles the obligation.  As of September 30, 2006 and March 31, 2006, theCompany had no asset retirement obligation.

(k) Stock-based Compensation

In December 2004, the FASB issued SFAS No. 123R, "Share-BasedPayment", which replaced SFAS No. 123, "Accounting for Stock-Based Compensation"and superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees".In January 2005, the Securities and Exchange Commission ("SEC") issued StaffAccounting Bulletin ("SAB") No. 107, "Share-Based Payment", 

which provides supplemental implementation guidance for SFASNo. 123R. SFAS No. 123R requires all share-based payments to employees,including grants of employee stock options, to be recognized in the financialstatements based on the grant date fair value of the award. SFAS No. 123R was tobe effective for interim or annual reporting periods beginning on or after June15, 2005, but in April 2005 the SEC issued a rule that will permit mostregistrants to implement SFAS No. 123R at the beginning of their next fiscalyear, instead of the next reporting period as required by SFAS No. 123R. Thepro-forma disclosures previously permitted under SFAS No. 123 no longer will bean alternative to financial statement recognition. Under SFAS No. 123R, theCompany must determine the appropriate fair value model to be used for valuingshare-based payments, the amortization method for compensation cost and thetransition method to be used at date of adoption. The transition provisionsinclude prospective and retroactive adoption methods. Under the retroactivemethod, prior periods may be restated either as of the beginning of the year ofadoption or for all periods presented. The prospective method requires thatcompensation expense be recorded for all unvested stock options and restrictedstock at the beginning of the first quarter of adoption of SFAS No. 123R, whilethe retroactive methods would record compensation expense for all unvested stockoptions and restricted stock beginning with the first period restated. TheCompany has adopted the requirements of SFAS No. 123R which did not have anyimpact on the financial statements as, to date, the Company has not granted anystock options or any other share based payments. 

The Company accounts for equity instruments issued inexchange for the receipt of goods or services from other than employees inaccordance with SFAS No. 123 and the conclusions reached by the Emerging IssuesTask Force in Issue No. 96-18, "Accounting for Equity Instruments That AreIssued to Other Than Employees for Acquiring or in Conjunction with SellingGoods or Services" ("EITF 96-18").  Costs are measured at the estimatedfair market value of the consideration received or the estimated fair value ofthe equity instruments issued, whichever is more reliably measurable.  Thevalue of equity instruments issued for consideration other than employeeservices is determined on the earlier of a performance commitment or completionof performance by the provider of goods or services as defined by EITF 96-18.

 
**MCNAB CREEK GOLD CORP.**
(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)** 

2.**Significant Accounting Policies (cont'd...)**
(l) Risk management:

Environmental risk:

The Company is engaged in mineral exploration and developmentand is accordingly exposed to environmental risks associated with mineralexploration activity. The Company is currently in the initial exploration stageson its property interests and has not determined whether significant sitereclamation costs will be required. The Company would only record liabilitiesfor site reclamation when reasonably determinable and when such costs can bereliably quantified.

The Company is not exposed to significant interest rate orcredit risk.

(m) Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, "Accountingfor Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133and 140", to simplify and make more consistent the accounting for certainfinancial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting forDerivative Instruments and Hedging Activities", to permit fair valueremeasurement for any hybrid financial instrument with an embedded derivativethat otherwise would require bifurcation, provided that the whole instrument isaccounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140,"Accounting for the Impairment or Disposal of Long-Lived Assets", to allow aqualifying special-purpose entity to hold a derivative financial instrument thatpertains to a beneficial interest other than another derivative financialinstrument. SFAS No. 155 applies to all financial instruments acquired or issuedafter the beginning of an entity's first fiscal year that begins after September15, 2006, with earlier application allowed. This standard is not expected tohave a significant effect on the Company's future reported financial position orresults of operations.

In March 2006, the FASB issued SFAS No. 156, "Accounting forServicing of Financial Assets, an amendment of FASB Statement No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishmentsof Liabilities". This statement requires all separately recognized servicingassets and servicing liabilities be initially measured at fair value, ifpracticable, and permits for subsequent measurement using either fair valuemeasurement with changes in fair value reflected in earnings or the amortizationand impairment requirements of Statement No. 140. The subsequent measurement ofseparately recognized servicing assets and servicing liabilities at fair valueeliminates the necessity for entities that manage the risks inherent inservicing assets and servicing liabilities with derivatives to qualify for hedgeaccounting treatment and eliminates the characterization of declines in fairvalue as impairments or direct write-downs. SFAS No. 156 is effective for anentity's first fiscal year beginning after September 15, 2006.  This adoption ofthis statement is not expected to have a significant effect on the Company'sfuture reported financial position or results of operations.
**MCNAB CREEK GOLD CORP.**
(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)** 

2.**Significant Accounting Policies (cont'd...)**
(m) Recent Accounting Pronouncements (cont'd...)
****
In September 2006, FASB issued SFAS No. 157, *"Fair ValueMeasures"*("SFAS No. 157"). This Statement defines fair value, establishes aframework for measuring fair value in generally accepted accounting principles (GAAP),expands disclosures about fair value measurements, and applies under otheraccounting pronouncements that require or permit fair value measurements. SFAS No. 157does not require any new fair value measurements. However, the FASB anticipatesthat for some entities, the application of SFAS No. 157 will change currentpractice. SFAS No. 157 is effective for financial statements issued for fiscalyears beginning after November 15, 2007, which for the Company would be itsfiscal year beginning April 1, 2008. The Company is currently evaluating theimpact of SFAS No. 157 but does not expect that it will have a material impacton its financial statements. 

In September 2006, the FASB issued SFAS No. 158, "Employers'Accounting for Defined Benefit Pension and Other Postretirement Plans." ThisStatement requires an employer to recognize the over funded or under fundedstatus of a defined benefit post retirement plan (other than a multiemployerplan) as an asset or liability in its statement of financial position, and torecognize changes in that funded status in the year in which the changes occurthrough comprehensive income.  SFAS No. 158 is effective for fiscal yearsending after December 15, 2006. The Company does not expect that theimplementation of SFAS No. 158 will have any material impact on its financialposition and results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin("SAB") No. 108, "Considering the Effects of Prior Year Misstatements whenQuantifying Misstatements in Current Year Financial Statements." SAB No. 108addresses how the effects of prior year uncorrected misstatements should beconsidered when quantifying misstatements in current year financial statements.SAB No. 108 requires companies to quantify misstatements using a balance sheetand income statement approach and to evaluate whether either approach results inquantifying an error that is material in light of relevant quantitative andqualitative factors. SAB No. 108 is effective for periods ending afterNovember 15, 2006. The Company is currently evaluating the impact of adoptingSAB No. 108 but does not expect that it will have a material effect on itsfinancial statements. 
**Equipment****June 30, 2006
 **March 31, 2006******Cost **Accumulated Amortization **Net Book Value ** ****Cost **Accumulated Amortization **Net Book Value 
$       432 
$              312 
$        120 ** **
$        432 
$        233 
$       199 ** 

 

 

MCNAB CREEK GOLD CORP.

(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)
 
**4. Due to Director**
The amount due to a director of $13,030 at September 30, 2006and March 31, 2006 is unsecured, non-interest bearing and has no specific termsfor repayment.
**5. Common Stock**
During the six months ended September 30, 2006, the Companyentered into the following stock related transactions:

(a) The Company completed a forward split of its commonshares on a 20:1 basis as of April 30, 2006. 

(b) The Company retained Wannigan Capital Corp. ("Wannigan")to provide consulting services. The Company issued to Wannigan 100,000 at aprice of $0.10/share (post forward split) of its $0.0001 par value common sharesas compensation.

The Company received $49,747 as common stock subscribedtowards the issuance of 500,000 (post forward split) shares of common stock at aprice of $0.10 per share. 

The Company issued 500,000 (post forward split) shares ofcommon stock at a price of $0.10 per share. Proceeds of $253 are receivable atSeptember 30, 2006. 

The common shares of the Company are all of the same class,are voting and entitle stockholders to receive dividends. Upon liquidation orwind-up, stockholders are entitled to participate equally with respect to anydistribution of net assets or any dividends which may be declared.
**Additional Paid-In Capital**
The excess of proceeds received for shares of common stockover their par value of $0.0001, less share issue costs, is credited toadditional paid-in capital.
**6. Donated Capital**
The Company records transactions of commercial substance withrelated parties at fair value as determined with management. Effective April 1,2006, the Company recognizes donated services to officers of the Company forrent, valued at $500 per month, totalling $1,500 ($Nil - September 30, 2005) forthe three months ending September 30, 2006 and $3,000 ($Nil - September 30,2005) for the six months ending September 30, 2006.
**Related Party Transactions**
The Company entered into a consulting agreement, dated July1, 2006, with Spectre Investments Inc. ("Spectre"), a company related to afamily member of the President of the Company. Spectre provides consultingservices to public companies and will be paid a fee of US $5,000 per month for aperiod of 2 years. The consulting agreement can be terminated within 30 daysnotice. 
**MCNAB CREEK GOLD CORP.

(An exploration stagecompany)

 

NOTES TO THE INTERIMFINANCIAL STATEMENTS

September 30, 2006 

(Expressed in U.S.Dollars) 

(Unaudited)
 

8. Segmented Information

The Company's business is operating in one segment, being thelocating and exploration of mineral properties, and in one geographical area,the USA.
**9. Income Taxes**
At September 30, 2006, the Company has accumulatednon-capital loss carry-forwards of approximately $278,000, which are availableto reduce taxable income in future taxation years. These losses expire beginning2026. Due to the uncertainty of realization of these loss carry-forwards, a fullvaluation allowance had been provided for this deferred tax asset.
** **
 

 
** 

 

 **
 
** ****Item 2. Plan of Operations**
We are a junior mineral exploration company. We seek toexplore our mineral interests in the SMH Property located in Eureka County,Nevada. Subsequent to the year ended March 31, 2006, management decided todiscontinue holding an interest in the Roxy Prospect located in Pershing County,Nevada. We will be exploring the SMH claims in phases. Our proposed work programis set out in detail under the Plan of Operation section.

The Company's acquisition of its SMH Property and Roxy Property werenegotiated at arm's length with Mr. E.L. Hunsaker III before he became adirector of the Company. However, in view of a potential conflict of interest inMr. Hunsaker remaining as a director of the Company, he has resigned hisposition as a director of the Company and has been replaced by Mr. ChristopherR. Verrico. 

The SMH 31-50 claims were transferred to McNab Creek Gold Corporation byvirtue of a Quitclaim Deed executed in January 2004 by Scoonover Exploration LLCof Elko, Nevada. E.L. Hunsaker III, is a managing member of ScoonoverExploration LLC (Scoonover Exploration a Nevada Limited Liability Company). The claims were acquired for the consideration of $3,500; with a 2.5% netsmelter return royalty retained by Scoonover (the 2.5% net smelter returnroyalty was sold to Golden Patriot Corp., of which E.L. Hunsaker III is also adirector). The SMH quitclaim is recorded in Eureka County Nevada Book 374, Page001-003.

The Roxy 1-8 claims were transferred to McNab Creek Gold Corporation byvirtue of a Quitclaim Deed executed in July 2004 by Scoonover Exploration LLC ofElko, Nevada. E.L. Hunsaker III, is a managing member of Scoonover ExplorationLLC (Scoonover Exploration a Nevada Limited Liability Company).  The claimswere acquired for the consideration of $3,500; with a 2.5% net smelter returnroyalty retained by Scoonover (the 2.5% net smelter return royalty was sold toGolden Patriot Corp., of which E.L. Hunsaker III is also a director). The Roxyquitclaim is recorded in Pershing County Nevada Book 384, Page 740-742.Subsequent to the year ended March 31, 2006, management decided to discontinueholding an interest in the Roxy Prospect.

There is no assurance that a commercially viable mineral deposit exists onany one of our properties. Extensive exploration will be required before we canmake a final evaluation as to the economic and legal feasibility of anypotential deposit.

Description of Our Exploration Properties

**SMH PROSPECT**
Location and Access

The SMH Prospect comprises 400 acres in 20 unpatented and contiguous lodeclaims. An unpatented mining claim is a particular parcel of Federal land,valuable for a specific mineral deposit or deposits. It is a parcel for which anindividual has asserted a right of possession. The right is restricted to theextraction and development of a mineral deposit. The rights granted by a miningclaim are valid against a challenge by the United States and other claimantsonly after the discovery of a valuable mineral deposit. The claims are locatedsouth of the Carlin Trend, Figure 1, more specifically in Section 23, 26 and 35of Township 26 North and Range 52 East in Eureka County Nevada. Subject to a2.5% production royalty, the claims were transferred to McNab Creek GoldCorporation by virtue of a Quitclaim Deed executed in January, 2004 by ScoonoverExploration LLC of Elko, Nevada. The name of the claims and their BLM SerialNumbers are given in Table 1. Company is currently in the process of re-stakingthese claims.

Unpatented mining claims consist of U.S. Federal controlled ground for whichthe proprietary mineral rights have been claimed; one claim covers approximately20.7 acres and is obtained by completing a proscribed set of monumentation,postings and filings (described by Nevada law) generally described as:
Erect four corner locations monuments and one location monument
File appropriate documentation and pay appropriate fees with U.S.  Department of the Interior-Bureau of Land Management
File appropriate documentation and pay appropriate fees with County  Recorder in county where claims are located.
**Table 1.**Claim NameBLM Serial NumberSMH 31NMC925335SMH 32NMC925336SMH 33NMC925337SMH 34NMC925338SMH 35NMC925339SMH 36NMC925340SMH 37NMC925341SMH 38NMC925342SMH 39NMC925343SMH 40NMC925344SMH 41NMC925345SMH 42NMC925346SMH 43NMC925347SMH 44NMC925348SMH 45NMC925349SMH 46NMC925350SMH 47NMC925351SMH 48NMC925352SMH 49NMC925353SMH 50NMC925354
Accessibility and Physiography

The SMH Prospect is reached by driving approximately 22 miles west on U.S.Interstate Highway 80 to Carlin, Nevada, then 41 miles south on Nevada StateHighway 278 to Mineral Hill Road then approximately 4.8 miles east to the AikenCanyon access road and 3.4 miles southeast to the property.

The SMH Property is accessible by a combination of paved roads and allweather gravel roads from Carlin in the north and from Eureka in the south. Bothtowns are the nearest population centers. Exploration trails abound in andaround the Carlin and Battle Mountain areas while in areas of moderate androlling topography, most places are negotiable by 4x4 vehicles even in theabsence of roads. Within the property itself, the topography is moderate, risingfrom 6,650 ft on the southwestern part of the property to 7,000 ft on thenortheastern part of the property. The climate is arid giving rise to sparsevegetation and generally stunted plant growth.

History

Most previous work completed on the SMH Property involved geologic mapping,soil and rock chip sampling, trenching, test pitting and reverse circulationdrilling. The latest work carried out on the property was rock chip sampling byboth Newmont Explorations and later by Independence Mining in 1999.

Cominco owned a large block of land in the Sulphur Spring range that includedthe SMH ground. Of four drill holes completed by Cominco in the area in 1988,two holes, MHS-1 and MHS-4 were located on the SMH Property. Only the data onMHS-4 is available which shows no detectable gold.

Following the Cominco drilling, the Dickenson-Nevada J.V. partners made up ofReserve Industries Corporation, Precambrian Exploration and Dickenson MinesLimited operated the WHY claims and collected 183 soil samples of which 118samples came from several disparate lines and 65 samples came from a claimpost-based soil grid (i.e. 600 x 750 feet spacing). Assays from these sampleswere rather low for gold but trace elements did identify several prospectivetargets.

Asamera leased the WHY claims from Dickenson - Nevada J.V. in August, 1990and initiated a ten-hole AIRTRAC drilling program along with backhoe trenching,geochemical rock chip sampling and sagebrush biogeochemical sampling. Asamera to36 rock chip samples in three trenches and drilled a 500-foot drill hole on theeastern side of the property. Data from this hole is not available.

All of the Asamera AIRTRAC drill holes were shallow, from 35 to 50 feet. Onlyone of the holes (WHY -2) intersected any significant mineralisation - 0.013optAu from 5-35 feet in jasperoid along the north-south fault.

Sagebrush sampling identified three low-grade multi element and goldanomalies in the south central part of the WHY claim group. Two of the anomaliestrend east-west across the roughly north-south stratigraphic trend of thelithologies and cut across several lithologic units.

In August, 1992, AUR leased the WHY claims from Reserve Industries who wasacting on behalf of the Dickenson - Nevada J.V. partners. In the same year ofacquisition, AUR completed three trenches and an unspecified number of testpits. A total of 61 rock chip and 9 soil samples were collected. No significantassays resulted from the trench and test pit sampling.

Between July and August, 1993, AUR drilled 3,935 feet in nine reversecirculation drill holes using a tire-mounted Ingersol-Rand TH100 rig.

Regional Setting

The SMH Property is situated between the Carlin and the Battle Mountain -Eureka structural trends. The rocks that host gold in the Carlin and BattleMountain areas are present in the SMH Property. The Carlin and Battle Mountaintrends are parallel northwesterly alignments of gold and silver depositsstretching between 60 to 70 kilometers. Geophysical studies indicate that bothtrends lie along ancient zones of crustal weaknesses resulting in fault zonesextending deep into the earth's mantle providing conduits for sustainedhydrothermal gold mineralisation. In most deposits, microscopic gold is hostedin Paleozoic carbonate rocks, most particularly, the upper units of the RobertsMountains Formation.

Property Geology

Units of the Vinini Formation primarily underlie the SMH property. Previouswork has subdivided the formation into separate sedimentary units comprisinglaminated silty limestone (Ovll), massive limestone (Ovl), black thinly beddedchert (Ovc), grey siliceous shale, siltstone and chert (Ovs), Quartzite (Ovq)and argillaceous mudstone and siltstone (Ovm). The Vinini Formation (westernassemblage rocks) is the fault contact with the Robert Mountains Formation ofthe (eastern assemblage rocks). Previous drilling and sampling close to thefault returned anomalous gold values.

**ROXY PROSPECT**
Location and Access

The Roxy Prospect is located in un-surveyed Sections 5, 6, 7, and 8, of T27N,R38E, and MDB&M as shown in Figure 1. The area is within the southeasternportion of the Kennedy Mining District in the State of Nevada. The land packageconsists of eight unpatented lode claims (NMC860160 to NMC860167) along theeastern margin of the southern East Range.

Access is via I-80 to Winnemucca, Nevada, thence south along Grass Valleyroad, approximately 55 miles through Grass Valley, past the Gold Bank Hills,through Pleasant Valley, almost to McKinney Pass. The Property liesapproximately three miles west of the main dirt road and two miles north ofMcKinney pass. Access may also be gained via I-80 to Battle Mountain. FollowState Road 305 southwest, turning west onto Lander County Road that goes pastBattle Mountain Gold's Copper Canyon operations. This road turns to gravel pastthe mine entrance and heads thorough Buffalo and Dixie valleys, around the southend of the Tobin Range, thence north along Spring Creek through the Sou Hills,to the south end of Pleasant Valley, again almost to McKinney Pass. Subsequentto the year ended March 31, 2006, management decided to discontinue holding aninterest in the Roxy Prospect

History

Discovery of silver-gold ore occurred in what would become the KennedyDistrict in 1891. The discovery and development, in 1893, of the Imperial andGold Note mines brought around 500 hopeful prospectors to the area. The KennedyDistrict produced almost 85,000 ounces of silver, more than 3,900 ounces ofgold, plus 62,439 pounds of copper and 101,479 pounds of lead, between 1903 and1950. Production came primarily from north and northwest trending quartz veins.The early mines in the district produced free-milling gold-silver ores fromoxidized portions of the veins. Ores were processed through a 20-stamp mill.Subsequent production came from lessees who produced small shipments ofgold-silver ore. According to NBM&G Bulletin 89 Geology and Mineral Deposits ofPershing County, Nevada (Johnson, 1977), mines of the district ". . . operatedintermittently until 1950, but the greatest period of development andproductivity was between 1893 and 1905."

Geology

A large Triassic granitic pluton, cut on its northern margin by a Tertiarygranodiorite, dominates the geology of the Kennedy District. These stocksintrude Paleozoic Pumpernickel and Havallah formations and Mesozoic KoipatoGroup rocks. Mapping compiled by Johnson (1977) reveals a north verging thrustemplacing undifferentiated Pennsylvanian-Permian Pumpernickel Formation westwardover Triassic metavolcanics of the Koipato Group. Carbonates may also comprisepart of the lower plate of the thrust.

Mineralization and Geochemistry

The north-central Nevada region, around the SMH Properties,has a long history of mining activity. The majority of the jobs in the northernNevada counties (Lander, Humboldt, Eureka, and Elko) are associated with themining industry. Heavy equipment and operators are available from severalsources in the local area. The nearby towns have extensive support and equipmentavailability. Skilled and experienced manpower is readily available in the localarea.
*Competitors*
Historically, the State of Nevada has been rich in mineral reserves. Areas ofNevada have been explored and in some cases staked through mineral explorationprograms. Large areas remain unstaked and areas reopen as claims expire. Thecost of staking and re-staking new mineral claims and the costs of most phaseone exploration programs are relatively modest. In many more prospective areas,extensive literature is readily available with respect to previous explorationand development activities. These facts make it possible for a junior mineralexploration company such as ours to be very competitive with other similarcompanies. In the case of the properties which we currently own, we purchasedthem inexpensively from another junior mineral exploration company. We are incompetition with hundreds of other junior exploration companies who areevaluating and re-evaluating prospective mineral properties in the State ofNevada.

In effect, we are also competitive with senior companies who are doing grassroots exploration. In the event our exploration activities uncover prospectivemineral showings, we anticipate being able to attract the interest of betterfinanced industry partners to assist on a joint venture basis in more extensiveexploration. We are at a competitive disadvantage compared to establishedmineral exploration companies when it comes to being able to complete extensiveexploration programs on claims which we hold or may hold in the future. If weare unable to raise capital to pay for extensive claim exploration, we will berequired to enter into joint ventures with industry partners which will resultin our interest in our claims being substantially diluted.

Unless we conclude an aggressive property acquisition program which carrieswork commitments, we will be able to continue operating on modest cash reservesfor the next 18 months. We currently have cash on hand of $7,668. Management ofthe Company has committed up to $50,000 in loan proceeds to ensure that theCompany is able to continue its operations for at least the next 12 months.
*Governmental Regulations*
We are not in a business which requires government approval for principalproducts or services. In the event mining claims which we own or which weacquire in the future prove to host viable ore bodies, we would be required toapply for numerous government approvals in order to commence mining. All coststo obtain the necessary government approvals would be factored into technicaland viability studies in advance of a decision being made to proceed withdevelopment of an ore body.

The mining industry in the United States is highly regulated. We have hiredMr. Michael H. Sandidge as a mining exploration consultant. Mr. Sandidge hasextensive industry experience and is familiar with all government regulationsrespecting the initial acquisition early exploration of mining claims in Nevada.The mining consultants who we retain have extensive industry experience and arefamiliar with all government regulations respecting the initial acquisition andearly exploration of mining claims in Nevada. We are unaware of any proposed orprobable government regulations which would have a negative impact on the miningexploration industry in Nevada. We propose to adhere strictly to the regulatoryframework which governs mining operations in Nevada.
*Research and Development*
We have not expended any funds on research and development activities and donot expect to do so in the foreseeable future.

Employees

We currently have one full time employee, namely Kenneth Townsend, ourPresident, C.F.O. and director. The time spent by this employee on our businessis directly proportional to our level of activity on a month to month basis. Mr.Townsend typically spends 50 to 100 hours per month on our business.

We employ Mr. Michael Sandidge as a consultant to our company. Mr. Sandidgeis a registered professional geologist in the state of Washington with a MSdegree in geology from University of Texas at El Paso and an undergraduatedegree in geology from University of Washington. His work experience includesresearching and consulting from 1982 to present. He worked on several projectswhile an undergraduate and graduate student, they included investigating thepetroleum potential of the Overthrust Belt of southwestern United States andnorthern Mexico, structural interpretation of the Kootenay Arc of southernBritish Columbia, Canada, structural and intrusive history of the CentralCoastal Plutonic Province, western British Columbia, Canada, tectonic evaluationand metallogenic potential of the Lake Baikal and Tien Shan regions of theformer Soviet Union, and the tectonic and metallogenic evolution of the XolapaComplex of southern Mexico. He worked as a consultant in both exploration andenvironmental programs in Arizona (AZCO Mining Company, 200Mt Sanchez copperdeposit) and northern Mexico from 1993-1994, environmental and resourceexpansion in Arizona (Phelps Dodge Corporation, Morenci Mine) in 1995, preciousmetal potential of northern Argentina (Homestake/Argentina Gold Corporation) in1996, regional reconnaissance and precious metal potential of the Maricunga Beltand structural evaluation of the 1.2Bt Cerro Casale deposit (Bema Gold) in 1996,project management and precious metal potential of the Andacollo Project (SierraLa Plata Corporation) in 1997, regional platinum group minerals (PGM) evaluationof the Kola Peninsula (Outukumpu) in 1997, epithermal precious metal potentialin Far East Russian Federation (Cyprus/AMAX/Far East Geological Institute) in1998. Presently, Michael Sandidge is VP of Exploration for West Hawk DevelopmentCorporation, a publicly listed, Toronto Stock Exchange Venture Exchange, basedin Vancouver, British Columbia, Canada. 

On May 10, 2006 the Company entered into a six- month Consulting Agreementwith Wannigan Capital Corp. to provide assistance in its day-to-day operations.Specifically, they assist in interaction with the Company's auditors, transferagent and regulatory authorities. Wannigan Capital Corp received 100,000 commonshares of the Company as remuneration.

 
**3. Related Party Transactions**
The amount due to a director of $13,030 at September 30, 2006and March 31, 2006 is unsecured, non-interest bearing and has no specific termsfor repayment.

The Company records transactions of commercial substance withrelated parties at fair value as determined with management. Effective April 1,2006, the Company recognizes donated services to officers of the Company forrent, valued at $500 per month, totalling $1,500 ($Nil - September 30, 2005) forthe three months ending September 30, 2006 and $3,000 ($Nil - September 30,2005) for the six months ending September 30, 2006.

 
**Item 3 - Controls and Procedures**
As required by Rule 13a-15 under the Exchange Act, as of the end of theperiod covered by this report, being September 30, 2006, we have carried out anevaluation of the effectiveness of the design and operation of our company'sdisclosure controls and procedures.  This evaluation was carried out under thesupervision and with the participation of our management, including ourpresident and chief executive officer Mr. Kenneth G. Townsend.  Mr. Townsend isalso the chief financial officer of our company.  Based upon that evaluation,Mr. Townsend concluded that our disclosure controls and procedures are effectiveas of the end of the period covered by this report.  There have been nosignificant changes in our internal controls over financial reporting thatoccurred during our most recent fiscal quarter that have materially affected, orare reasonably likely to materially affect our internal controls over financialreporting.

Disclosure controls and procedures are controls and other procedures that aredesigned to ensure that information required to be disclosed in our company'sreports filed or submitted under the Exchange Act is recorded, processed,summarized and reported, within the time periods specified in the Securities andExchange Commission's rules and forms.  Disclosure controls and proceduresinclude, without limitation, controls and procedures designed to ensure thatinformation required to be disclosed in our reports filed under the Exchange Actis accumulated and communicated to management, including our president and chiefexecutive officer as appropriate, to allow timely decisions regarding requireddisclosure.
**PART II

OTHER INFORMATION**
Item 1.

LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against ourcompany, nor are we involved as a plaintiff in any material proceeding orpending litigation.  There are no proceedings in which any of our directors,officers or affiliates, or any registered or beneficial shareholder, is anadverse party or has a material interest adverse to our interest.

Item 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In December, 2005, we sold 383,760 shares at $0.10 per share to onesubscriber.  This issuance of shares is a conversion of the Issuer'sindebtedness owed to Kenneth Townsend, our C.E.O. and President, in the amountof US$38,376.00 as of September 30, 2005.  This purchaser is not a U.S. personas defined in Rule 902(k) of Regulation S, and no sales efforts were conductedin the U.S., in accordance with Rule 903(c).  This subscriber acknowledged thatthe securities purchased must come to rest outside the U.S., and thecertificates contain a legend restricting the sale of such securities until theRegulation S holding period is satisfied in accordance with Rule 903(b)(3)(iii)(A).

Also in November and December, 2005, we sold 440,000 common shares at $0.10per share to four (4) subscribers under Regulation S.  All ofthese subscribers were friends,relatives or business associates of management and accordingly not members ofthe public.  None of the offerees or purchasers are U.S. persons as defined inRule 902(k) of Regulation S, and no sales efforts were conducted in the U.S., inaccordance with Rule 903(c).  Subscribers to the offering acknowledge that thesecurities purchased must come to rest outside the U.S., and the certificatescontain a legend restricting the sale of such securities until the Regulation Sholding period is satisfied in accordance with Rule 903(b)(3)(iii)(A).
The Company completed a forward split of its common shares ona 20:1 basis as of April 30, 2006. 

In April 2006 the Company sold 442,900 (post forwardsplit) shares of common stock at a price of $0.10 per share. The subscriberwas a friend, relative or business associates of management and accordingly nota member of the public.  The offeree or purchaser is not a U.S. person asdefined in Rule 902(k) of Regulation S, and no sales efforts were conducted inthe U.S., in accordance with Rule 903(c).  Subscribers to the offeringacknowledge that the securities purchased must come to rest outside the U.S.,and the certificates contain a legend restricting the sale of such securitiesuntil the Regulation S holding period is satisfied in accordance with Rule903(b)(3)(iii)(A).

On November 13, 2006 the Company sold 400,000 (post forward split) shares ofcommon stock at a price of $0.25 per share carrying a warrant that allows thesubscriber to purchase 400,000 additional shares of the Company's common sharesat a price of $0.50 for a period of two years. The offeree or purchaser is not aU.S. person as defined in Rule 902(k) of Regulation S, and no sales efforts wereconducted in the U.S., in accordance with Rule 903(c).  Subscribers to theoffering acknowledge that the securities purchased must come to rest outside theU.S., and the certificates contain a legend restricting the sale of suchsecurities until the Regulation S holding period is satisfied in accordance withRule 903(b)(3)(iii)(A).

 

Item 3

DEFAULTS UPON SENIOR SECURITIES

None

Item 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 21, 2006 the Company and a majority of Shareholders approved a 20:1forward split of its common stock.

Item 5

OTHER INFORMATION

None

Item 6

EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits

None

(b)

Reports on Form 8-K

March 16, 2006

May 24, 2006

 

 

 

 
**SIGNATURES**
In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized.
**MCNAB CREEK GOLD CORP.**
 

Dated:  November 15, 2006

Per:

/s/Kenneth G. Townsend

Kenneth G. Townsend,

President, C.E.O., C.F.O., Secretaryand Director

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